Delta quickly took advantage of portions included in a deal it reached with its pilots granting increases in the number of large regional jets it's allowed to fly, and it inked an agreement with Republic Airways Holdings for its subsidiary to start Embraer 170 flights under the Delta Connection banner next year.

Pilots at Delta in November ratified a deal increasing the limit of 70-seat jets to 82 by the end of 2005, 106 in 2006 and 125 in 2007.

Under Delta's deal with Republic Airways Holdings, the latter's Republic Airlines subsidiary will fly 16 Embraer 170s. Embraer said it is having "advanced" discussions with Republic to buy the planes. The talks include the substitution of an existing order for eight 50-seat ERJ-145s for the larger 70-seat 170s.

Republic Airlines is still finalizing its operating certificate with FAA, which it expects to complete by the time the Delta service begins. Eight planes are scheduled for delivery in 2005, followed by the remaining eight in 2006. Each aircraft will be configured for six first-class and 64 coach seats.

Republic's status as the only independent regional flying the Embraer 170 gives the carrier an edge, UBS said, leading the investment firm to upgrade the company from neutral to buy. UBS reasoned that both United and Delta would be interested in the 22 Embraer 170s flown by US Airways if the carrier liquidates. "As the only airline able to put the Embraer 170s to work immediately, Republic would be first in line for business," UBS said.