American Eagle switch from CRJ's to ERJ's
Embraer on Thursday clinched a deal worth up to USD$4 billion to supply larger regional jets for American Airlines' regional network, sending shares up on hopes for stable production this year.
Embraer and Republic Airways signed a contract for 47 E-175 jets, with an option to acquire an additional 47 aircraft. The new aircraft will be operated by Republic under the American Eagle brand.
The contract provides welcome relief for the order-starved Brazilian plane maker after it lost the first major US order for regional jets under union deals allowing regional affiliates to fly larger planes. In December, Canadian rival Bombardier booked a Delta deal for up to USD$3.29 billion.
And the battle for pent-up demand in the US is just getting started, according to Paulo Cesar de Souza e Silva, the head of Embraer's commercial aviation unit.
"American is still going to buy more of that size plane," Silva said in an interview, laying out the sales campaigns ahead. "We've got American, United, US Airways and regional operators too. In the next 18 months those campaigns will determine orders for about 250 to 400 planes."
Shares of Embraer jumped over 11 percent in early Sao Paulo trading, their biggest one-day rise in almost four years, before paring their gains to be up 9 percent.
Embraer's new contract is subject to court approval due to bankruptcy proceedings at American Airlines -- approval that the plane maker said it expects by the end of March.
