AIRSHOW-UPDATE 2-Embraer launches next E-Jets to strong demand, SkyWest orders up to $9.4 bln

Mon Jun 17, 2013 2:56pm EDT

* Firm order for 100 E-175 jets from SkyWest
    * Embraer shares up 5.87 pct, highest in 6 years
    * E-Jet overhaul to cost $1.7 billion over eight years


    By Brad Haynes
    PARIS, June 17 (Reuters) - Brazilian planemaker Embraer SA
 launched a bigger and more efficient lineup of
commercial E-Jets at the Paris Airshow, with a robust show of
demand as it pushed deeper into a segment that rival Bombardier
had staked out with its new narrow-body CSeries.
    The world's largest regional airline group, SkyWest
, signed an order for 100 upgraded E-175s and options
for 100 more -- worth a combined $9.36 billion at list price --
confirming a Reuters report earlier on Monday as the Brazilians
gained momentum in a long-running regional jet duel.
    International Lease Finance Corp said it wanted 50 of the
new jets, split between the larger E-190 and E-195, with options
for the same number of planes. Similar letters of intent from
five unnamed airlines on four continents brought total demand to
365 potential orders for the next-generation E-Jets at launch --
rivaling what Canada's Bombardier Inc has won for its
CSeries in over three years of commercial activity.
    "This is a huge vote of confidence from the market," said
Paulo Cesar Silva, head of commercial aviation for
Embraer, which aims to maintain its leadership of the market for
70- to 130-seat jets, capturing 40 to 45 percent of an estimated
6,400 deliveries over the next 20 years.
    For decades Bombardier and Embraer have scrapped over the
airliner segment below the radar of industry giants Airbus
 and Boeing Co by selling smaller passenger jets
to feed airport hubs and run off-peak flights more efficiently.
After the heavyweights unveiled fuel-saving engines for their
smaller narrow-body jets in recent years, the Brazilians and
Canadians are answering with their own more efficient offerings.
    Chief Executive Frederico Curado said Embraer would invest
$1.7 billion over the next eight years to overhaul the E-Jet
family with new wings, upgraded avionics and Pratt &
Whitney-geared turbo fans. Bombardier's research and capital
spending on the clean-sheet CSeries will cost an estimated $3.3
billion.
    Embraer's second-generation jets will cost airlines about 15
percent more than current models, Silva said, while burning at
least 16 percent less fuel per seat. Fuel savings on the biggest
E-Jet, the E-195, should reach 23 percent as the model gains
three rows of seats, landing squarely in the 110- to 130-seat
segment where the CSeries is set to enter service next year.
    Shares of Embraer rose 5.87 percent in Sao Paulo trading on
Monday to 19.85 reais, touching their highest levels in some six
years.
    Embraer will drop the E-170 from its next generation of
E-Jets, making the E-175 its smallest re-engined jet. With one
additional row of seats, the E-175 will help the Brazilians'
efforts to defend their position in the U.S. aviation market,
where most carriers' regional fleets are capped at 76 seats,
from new challengers such as Japan's Mitsubishi Regional Jet.
    The new E-190 will enter service in the first half of 2018,
followed by upgraded versions of the E-195 in 2019 and E-175 in
2020.
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