ANALYSIS: SkyWest E-175 order pushes United 50-seat RJ drawdown

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United Airlines has set the stage for its regional fleet restructuring with orders for at least 70 76-seat jets, as it moves forward with plans to reduce its 50-seat regional jet fleet.

SkyWest Inc announced an agreement for its subsidiary SkyWest Airlines to operate 40 Embraer 175s for the Chicago-based mainline carrier today. Deliveries will begin in April 2014 and continue through 2015, says Mike Kraupp, chief financial officer of the regional carrier.

United Airlines

The aircraft join 30 E-175s that United ordered in April and will be delivered during the same period. The carrier has yet to select an operator for these aircraft.

Including options, United could have a fleet of 110 E-175s in a few years. The bulk of these are likely to be used to replace 50-seat regional jets.

"Right now we have too many 50-seaters that we want to upgauge to 70- or 76-seaters," says Ron Baur, vice-president of fleet at United, onboard the airline's first revenue Boeing 787 flight since January on 20 May. He declines to comment on how many 50-seaters the airline plans to remove from its regional fleet, but says that there is a need to keep some of the smaller jets.

However United plans to do it, it is limited to 450 regional aircraft by 2016 under the joint agreement with its pilots that was ratified in December 2012. This is split between 153 aircraft with up to 76 seats, 102 aircraft with up to 70 seats and 195 aircraft with up to 50 seats, according to the Air Line Pilots Association (ALPA).

The carrier had 21 aircraft with 71 to 76 seats (Bombardier Dash 8 Q400s), 153 aircraft with up to 70 seats (Bombardier CRJ700s and Embraer 170s) and 384 aircraft with up to 50 seats (Bombardier CRJ200s, Dash 8 Q200s and Dash 8 Q300s, and Embraer EMB-120s, ERJ-135s and ERJ-145s) at the end of March, according to an April fleet plan.

United regional fleet, 31 March

United Airlines

Based on these numbers, United would have to reduce the number of up to 50-seat aircraft at a rate of about 2.7 for every one E-175 in order to achieve the 450 aircraft cap by 2016. The falls to 2.3 50-seaters for every one large regional aircraft if the 11 Q400s that will be added to the Express fleet this year are included.

These calculations assume no changes to the carrier's existing fleet of CRJ700s and E-170s with up to 70 seats.

By comparison, Delta Air Lines is reducing the number of 50-seat regional jets in its fleet at a rate of about two for every one 76-seat Bombardier CRJ900. Its regional fleet restructuring is slated to be complete in 2015.

SkyWest Inc has no agreements with United to reduce the number of 50-seat regional jets that it flies for the carrier, says Kraupp. A "small number" of aircraft will come off contract in the third quarter with the remaining fleet contracted through 2015, he adds.

The St. George, Utah-based regional carrier operates 75 CRJ200s, 70 CRJ700s, nine EMB-120s, nine ERJ-135s and 242 ERJ-145s, according to SkyWest and United.

SkyWest has no "owenership risk" associated with the ERJ-135 and ERJ-145s that are flown by ExpressJet Airlines for United, says Kraupp. The aircraft are owned and financed by the mainline carrier, he says.