Embraer Books 'Milestone' SkyWest Deal For 40 E-jets

By Reuters
May 21, 2013
Credit: Embraer

SkyWest, the world’s largest regional airline group, agreed to buy at least 40 new jets from Brazilian planemaker Embraer SA, in a deal that could climb to 200 aircraft and a total price tag of more than $8 billion.

“This is truly a milestone order for Embraer,” Paulo Cesar de Souza e Silva, the head of Embraer’s commercial aviation unit, said in a Tuesday announcement calling the deal one of the biggest ever for both SkyWest and the world’s largest regional jet maker.

The first 40 E175s, which SkyWest will fly for United Airlines (UAL.N), enter directly into Embraer’s order backlog, while orders for another 60 planes are conditioned on the operator’s future contracts with major airlines. SkyWest also has options for an additional 100 aircraft, bringing the potential value of the contract to $8.3 billion at list prices.

With that, Embraer has all but guaranteed the rebound of its commercial aircraft division, which had slumped to about half of revenue as the company trimmed production on weak order flow.

The order also helps put Embraer ahead of its chief rival, Canada’s Bombardier Inc (BBDb.TO), in the race for new demand from major U.S. airlines, who are snapping up planes with up to 76 seats due to labor contracts renegotiated last year.

Embraer already booked an order directly with United Continental Holdings Inc last month for as many as 70 new regional jets. That guaranteed stable production in the coming year, executives said, and boosted the chances that output would rise as much as 15 percent next year to around 2012 levels.

Deliveries on the SkyWest contract are set to begin in the second half of 2014.

(Reporting by Brad Haynes; Additional reporting by Bangalore Newsroom; Editing by Maureen Bavdek)

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