Embraer suffered a blow to its regional jet business yesterday as the Midwest Air group cancelled the last outstanding order for ERJ-140s as the manufacturer's first quarter results show a 10% slide in deliveries.
For the three months to 31 March, Embraer delivered 27 aircraft, down from 30 in the same three months of last year. The Brazilian regional jet manufacturer says it delivered 21 aircraft to airline customers during the quarter, including four ERJ-145s, eight E-170s, one E-175 and eight E-190s.
Although the figure is down from the 30 aircraft delivered in the same period of 2005, Embraer says it still expects to deliver 145 aircraft this year. “Approximately 60% of the aircraft deliveries forecast for 2006 will be concentrated in the second half of the year,” it says.
However, this target suffered a setback in the form of the cancellation by Midwest of its long-standing order for 20 44-seat ERJ-140s. This contract termination also eliminates the last ERJ-140 order from Embraer’s books. Embraer has previously hinted it will end ERJ-140 family production this year and this cancellation could formalise this decision. The manufacturer was not immediately available for comment.
Could the sun set on Embraer's 44-seat ERJ-140 regional jet following the cancellation of its final outstanding order?
The parent to Milwaukee, Wisconsin-based mainline operator Midwest Airlines and regional Midwest Connect signed a deal for 20 firm orders and 20 options in August 2001 to re-equip Midwest Connect (formerly Skyway Airlines). But in the years following the 11 September, 2001 terrorist attacks, Midwest deferred deliveries of the Embraer regional jets several times.
After evaluating Midwest’s future fleet requirements, and determining that the ERJ-140 “did not fit into our business plan.” The carrier’s management in January this year “negotiated the terms of the [order] termination with Embraer”, senior vice president of corporate affairs Carol Skornicka says. Midwest is “writing off $1 million of the purchase deposit” to Embraer, she adds.
The airline says it is evaluating options to expand its mainline and regional airline subsidiaries, and is not ruling out larger-sized regional jets. Midwest is planning fresh talks with Embraer and other aircraft manufacturers for potential new orders.
“We are receiving [delivery of] our last Boeing 717 in May, and then we’re in the analysis phase of what the next growth will be in terms of additional aircraft” for both Midwest Airlines and Midwest Connect, says Skornicka.
This could include larger regional jets, including the Embraer 170 family of aircraft.
Four Legacy 600s were delivered to the business jet market and two E-170s were delivered to the defence and government market, Embraer adds in its first quarter figures.