American Airlines is close to finalising an order for large regional aircraft, under a procurement programme that it dubs "project Panama".

The Fort Worth-based carrier is "pretty close" to selecting either the Bombardier CRJ900 or the Embraer 175 and moving forward on a purchase agreement, says a source familiar with the discussions. They note that progress has been slower than the airline had anticipated but that a deal should be done by the end of the year.

The order including options and purchase rights is in the "ballpark" of about 60 aircraft, they say. This is feasible under the limits put in place by a memorandum of understanding (MOU) between American, US Airways and their respective pilots unions this past December.

American and US Airways plan to merge at the end of the third quarter, subject to regulatory approval.

The MOU allows for a 66- to 76-seat regional aircraft fleet that totals 40% of the combined mainline narrowbody fleet after 2016, which equals 322 aircraft based on a projected 805 narrowbody aircraft at the end of the year. Exempted from the restriction are 76 CRJ900s and E-175s with 79 seats that are already in US Airways' regional fleet.

The new American would likely have to reduce the number of small regional aircraft in order to make room for the new jets and stay within an overall regional fleet cap of 75% of the narrowbody mainline fleet.

The two carriers have 188 66- to 76-seat aircraft either in their fleets, on order or option. This includes 13 CRJ900s that will replace 50-seat aircraft at US Airways later this year.

American and its advisor SkyWorks Capital met with at least two manufacturers regarding a potential order in the Dallas-Fort Worth area from 19 to 22 March, recent US bankruptcy court documents show. This was following responses to a request for proposals earlier in the year.

The documents also show that American engaged SkyWorks to provide "advisory assistance" for project Panama, including "assisting the debtors in pursuing a regional jet aircraft order and obtaining manufacturing financing and/or backstop financing in connection with such order".

American has been understood to be looking for additional 66- to 76-seats regional jets, since it announced an agreement with Republic Airlines for 47 Embraer E-175s in January. The US Bankruptcy Court for the Southern District of New York approved the Republic deal on 12 March.

The Republic agreement also includes an additional 47 options for E-175s.

Paulo Cesar Silva, president and chief executive of Embraer Commercial Aviation, told Flightglobal at the Paris air show in June that the airframer was competing for a large regional jet contract from American. He said that he expected the order to be finalised in the second half of the year.

Embraer confirms that it is in talks with American regarding a potential order for 76-seat aircraft.

Bombardier says that it is in discussions with American along with a number of other customers.

American and SkyWorks decline to comment.

Source: Air Transport Intelligence news