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Potential orders could prompt Embraer to boost E-Jet production

Embraer has filled up delivery slots for E-Jets next year at current production levels, but could boost output by 10-15% if it receives new orders, says chief executive Frederico Curado.

Only six months after facing a severe backlog shortage, the order by United Airlines for 30 E-175s that was announced on 29 April means the Embraer has sold out its production slots for next year. The United deal follows a Republic Airways order for 47 E-175s that was confirmed in late March, and keeps Embraer's production line active through early 2015.

Embraer was forced to reduce E-Jet output by 10-15% after expected deals with North American carriers were postponed until this year. Now the Brazilian manufacturer is considering increasing production to accommodate any new orders signed with a requirement to deliver the aircraft in 2014.

"Probably with that [United] order we pretty much are sold out at the current level of production for next year as far as commercial jets," Curado told market analysts on 30 April teleconference to discuss the company's first quarter earnings.

But Embraer is still pursuing several large orders in the North American market this year for E-175s and smaller deals elsewhere for E-190/195s.

Embraer has estimated that North American airlines are currently in the process of buying between 300 and 400 new jets in the 76-seat class for delivery of the next three to five years. So far, three airlines - United, Republic and Delta Air Lines, which selected the Bombardier CRJ900 - have ordered a total of a 117 aircraft since December, or roughly one-third of the estimated re-fleeting total.

Embraer still expects American Airlines to place a larger order for 76-seat jets for its regional subsidiary American Eagle, which currently operates 118 ERJ-145s, 74 ERJ-140s and 47 CRJ700s. Other US regional airlines also could sign firm orders this year for new jets, Curado says.

Embraer also expects that United and Republic may convert at least some of the combined options for 87 more E-175s that were included in the firm orders, perhaps extending the company's current backlog into 2016.

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