Embraer and AMR in discussions over large RJ order

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American Airlines-parent AMR is in discussions with Embraer regarding a possible order for large regional jets.

Marcio Nobre Migon, head of the aircraft financing department at the Brazilian development bank BNDES, says that the Fort Worth-based carrier is in discussions with Embraer and other airframers regarding an order, on the sidelines of the Ascend Aviation 2020 Finance Forum in San Francisco today.

American is understood to be considering the Embraer 170 or 175 or the Bombardier CRJ900.

The airline has argued throughout its chapter 11 bankruptcy restructuring that "right-gauging" its regional feed to include more larger jets, which refers to those with between 66 seats and 76 seats, is critical to its future success.

American is limited to 47 63-seat Bombardier CRJ700s operated by its regional affiliate American Eagle Airlines under its previous pilots contract.

The carrier's pilots will vote on a new contract beginning 1 December that would allow it to increase the number of large jets in its feeder fleet to 120 aircraft immediately and possibly more in the future based on the number of narrowbody aircraft in the mainline fleet. Voting concludes on 15 December.

Separately, Migon describes a deal with AMR to restructure $1.75 billion in debt against 166 small Embraer regional jets operated by American Eagle as a "wholesale discount". He says that it avoided a potential return of the majority of the fleet to the manufacturer all at once. Embraer and BNDES would have faced difficulty placing that number of aircraft in the current market, he adds.

The bankruptcy court approved the deal on 9 November. The agreement cut outstanding debt against the aircraft by more than a third to $1.08 billion and allows the regional carrier to immediately return 18 ERJ-135s to the manufacturer.

An additional 21 ERJ-135s are on one- to two-year leases from Embraer while 59 ERJ-140s and 68 ERJ-145s were refinanced under the deal. Migon says that the -135s could be returned to the airframer at the end of the leases.