Big wins for both Bombardier Inc (BBDb.TO) and Embraer SA (EMBR3.SA) have heated up the battle in the regional-jet market, as North America’s largest airlines dole out big fleet renewal orders after a long hiatus.
In a market that is a virtual duopoly, the short-hop, narrow-body jets manufactured by Brazil’s Embraer have outsold those from Canada’s Bombardier for at least eight years.
But signs of newfound sales aggression from Bombardier, and its desire not to lose ground in its traditional North American stronghold, could mean a fierce campaign for orders expected from U.S. No. 1 carrier United Airlines (UAL.N) and smaller rival US Airways (LCC.N).
“That will be the next big horse race out there,” said Brian Foley, who runs his own aviation research firm in Sparta, New Jersey. “I’m sure both Embraer and Bombardier are in some preliminary discussions, and we could see that being the next news item, this year even.”
Bombardier was off to a strong start in December with an order worth up to $3.29 billion from Delta Air Lines (DAL.N). But Embraer’s win on Thursday of a deal worth up to $4 billion to supply the regional network of AMR Corp’s (AAMRQ.PK) American Airlines puts it neck-and-neck in the U.S. contest.
With production levels hinging on new orders, fresh momentum for Bombardier could unseat Embraer as the world’s No. 3 supplier to commercial airlines, after Boeing Co (BA.N) and Airbus (EAD.PA).
Embraer’s head of commercial aviation, Paulo Cesar de Souza e Silva, said on Thursday the surge in demand by U.S. carriers was just beginning. American’s regional-jet needs were not satisfied by the Embraer order.
Aerospace analyst Scott Hamilton of Leeham Co said Bombardier stood a good chance in the next round of orders from American for planes that ferry up to 120 passengers from smaller airports to bigger hubs. “This is not an exclusive deal for Embraer. American Eagle has such a large mixed fleet of Embraers and Bombardiers that I still view this as an opportunity for Bombardier.”
The fight for orders will be ferocious, as both planemakers are hungry to expand their skinny regional-jet order books, hurt by years of slow growth and airlines’ shift to bigger planes.