Strong oil prices and the euro zone crisis threaten to cut short the recovery of an increasingly competitive aircraft manufacturing industry, the head of Brazil's jet builder Embraer told Reuters on the eve of the Paris Air Show.

Frederico Curado also said in an interview late on Sunday that one of Embraer's main clients, JetBlue Airways Corp , could significantly cut its orders.

His comments could reinforce concerns that the impact of high oil prices on the aviation industry is beginning to spread to suppliers and aircraft manufacturers.

The industry was recovering nicely and then the issue of the Arab countries and the oil price hike hit, Curado said, adding that the Greek debt situation also weighed on the industry outlook.

With airline profits expected to fall from $16 billion in 2010 to around $4 billion this year, their appetite for new aircraft could fall, Curado said.

The viability (of airlines) is again at risk.

Embraer, one of Brazil's flagship exporters, itself could see a substantial fall in orders. JetBlue, the U.S. low-cost airline, is unlikely to exercise its options for 100 jets, Curado said.

JetBlue, which was the first major client for Embraer's 100-seat aircraft in 2003, could even cut back outstanding firm orders for 51 jets, depending on whether it chooses the competing Airbus A320neo, Curado said.

If that happens, we could have a bigger risk with JetBlue.

Embraer is already feeling heightened competition from new aircraft models, such as Sukhoi's Superjet 100 and Bombardier's CSeries, which is still being developed.

As certification for the planes approaches, (competition) tends to increase, Curado said.

Critics say Embraer's lack of a comprehensive offering of planes in the growing large-jet market could hurt its chances to win orders from airlines that want to buy aircraft of multiple sizes from one provider.

The Brazilian company expects to decide by year-end whether to remodel its current family of 70-122 seat aircraft or launch an entirely new, larger model, its chief executive said.

Despite strong headwinds, the industry outlook is a bit better than last year, Curado said. Compared to the climate at last year's Paris Air Show, which resembled that of a funeral due to the global recession, the industry is much more optimistic, he said.

Embraer expects to fulfill its projected 102 commercial jet deliveries this year, despite delays caused by difficulties with supplies from Japan following the earthquake there in March. For each delivered commercial aircraft, Embraer hopes to clench one new order this year, Curado said.

(Writing by Raymond Colitt; Editing by Diane Craft)

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