US regional airline group SkyWest has agreed to buy at least 40 Embraer E175s, in a deal that could climb to 200 aircraft and a total price tag of more than USD$8 billion.
Artist impression of an Embraer E175 for United Express. Image: Embraer.
"This is truly a milestone order for Embraer," Paulo Cesar de Souza e Silva, the head of Embraer's commercial aviation unit, said in a Tuesday announcement calling the deal one of the biggest ever for both companies.The first 40 E175s, which SkyWest will fly for United Airlines, enter directly into Embraer's order backlog, while orders for another 60 planes depend on the operator's upcoming contracts with major airlines. SkyWest also has options for an additional 100 aircraft, bringing the potential value of the contract to USD$8.3 billion at list prices.With that, Embraer has all but guaranteed the rebound of its commercial aircraft division, which had slumped to about half of revenue as the company trimmed production on weak order flow.The order also secures Embraer's lead over its chief rival, Canada's Bombardier, in the race for new orders from major US airlines, who are snapping up planes with up to 76 seats due to labour contracts renegotiated last year."This announcement further entrenches Embraer's lead with regards to the current regional jet campaign with major North American carriers," analyst Walter Spracklin of RBC Dominion Securities wrote in a note.Embraer already booked an order directly with United last month for 70 new regional jets. That guaranteed stable production in the coming year, executives said, and boosted the chances that output would rise by 15 percent next year to around 2012 levels.Combined with an order for the American Airlines network, Embraer has booked 117 firm orders and 247 options and conditional orders with US carriers this year.Bombardier's last major contract with a US airline was a December deal with Delta Air Lines for 40 firm orders and 30 options.Embraer's deliveries on the SkyWest contract are set to begin in the second half of 2014.Source: Reuters
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