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SkyWest expects more deals to follow MRJ order within six months

US regional carrier SkyWest Inc expects to conclude more deals for 70- and 90-seat aircraft within the next six months, following-up on its commitment to buy 100 Mitsubishi MRJ90s on 11 July, says chief financial officer Michael Kraupp.

The carrier's 725-aircraft fleet includes more than 500 less-efficient 50-seat regional jets, a type that many of its mainline partners are hoping to replace through scope clause relief.

Both Bombardier and Embraer have proposed 76-seat offerings for the SkyWest requirement, but negotiations with Mitsubishi progressed more quickly. The agreement in principle that was announced last week should be consummated by a firm order within a few weeks, Kraupp says.

The timing lag between the MRJ and future follow-on deals is driven by SkyWest's different needs.

The first MRJ90 is not scheduled for delivery until 2017, and SkyWest is signing a deal now to lock-in early delivery slots in Mitsubishi's production skyline, Kraupp says.

Whereas the negotiations for 76-seaters are for more near-term fleet requirements, some of which remain unresolved as mainline carriers await the outcome of scope clause changes and the effects of the American Airlines emergence from bankruptcy on regional operations later this year.

"We're very dependent on what the majors want to do," says Kraupp.

Not surprisingly, price considerations are another factor prolonging negotiations with Bombardier and Embraer, he adds.

SkyWest Inc's two major operating units, SkyWest Airlines and ExpressJet, have suffered slower growth and creeping cost increases amidst a recession and a series of bankruptcy restructurings at their major airline partners.

Though it is clear that SkyWest wants airframers to propose bargain prices, Kraupp insists that announcing the MRJ deal was not intended even partly as a message to Bombardier and Embraer to lower their prices.

"It does not take an announcement for us to be able to do that," he says. "That's been a consistent message for SkyWest all along."

But Kraupp is careful to keep his options open in case needs change or the airframers' pricing falls short of his expectations. It remains, possible he says, that SkyWest will not order any new aircraft at all for several years. The carrier instead could simply extend the leases on its current fleet of 50-seaters to 2015 or 2016, he says.

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