Republic Airways is in talks with American Airlines regarding a capacity purchase agreement for large regional jets, as the mainline carrier restructures its fleet under bankruptcy court protection.

Timothy Dooley, chief financial officer of Republic, says that the regional carrier is cautiously optimistic that they will reach an agreement with American to fly some of the up to 255 large regional jets that are allowed under the carrier's new pilots contract, at the 2012 Dahlman Rose Global Transportation Conference in New York today.

The US Bankruptcy Court for the Southern District of New York approved American's motion to reject its pilots contact on 4 September. This allows the carrier to implement its proposed term sheet with the additional regional jets.

"We think last nights ruling is a beneficial one for us," says Dooley. "[Now] we can really start working with American on their future fleet plan as a standalone entity."

American's regional partner American Eagle operates 47 63-seat Bombardier CRJ700s currently. The remainder of its regional jet fleet has 50 seats or less.

The Fort Worth-based Oneworld carrier sees larger regional jets as necessary to compete with its competitors. The aircraft would allow American to optimise capacity on its routes.

Republic would have to acquire new aircraft for a potential American contract. All of its large regional jet fleet is under contract with other carriers currently.

Dooley says that the airline's longest standing relationship is with Embraer but that there are other large regional jets available on the market, on the sidelines of the conference.

American would likely be interested in Embraer 170 or 175 size regional jets, he adds.

Source: Air Transport Intelligence news