* Republic Airways orders planes for American regional fleet
* Deal for up to 94 E-175s pending bankruptcy court approval
* Embraer shares post biggest jump in nearly four years
(Adds comment from Embraer executive)
By Brad Haynes
SAO PAULO, Jan 24 Brazil's Embraer SA
on Thursday clinched a deal worth up to $4 billion to supply
larger regional jets for American Airlines' regional network,
sending shares soaring on hopes for stable production this year.
Embraer and Republic Airways Holdings Inc signed a
contract for 47 E-175 jets, with an option to acquire an
additional 47 aircraft. The new aircraft will be operated by
Republic under AMR Corp's American Eagle brand.
The contract provides welcome relief for the order-starved
Brazilian planemaker after it lost the first major U.S. order
for regional jets under labor deals allowing regional affiliates
to fly larger planes. In December, Canadian rival Bombardier Inc
booked a Delta Air Lines deal for up to $3.29
And the battle for pent-up demand in the U.S. is just
getting started, according to Paulo Cesar de Souza e Silva, the
head of Embraer's commercial aviation unit.
"American is still going to buy more of that size plane,"
Silva said in a telephone interview, laying out the sales
campaigns ahead. "We've got American, United, US Airways
and regional operators too. In the next 18 months those
campaigns will determine orders for about 250 to 400 planes."
Shares of Embraer jumped over 11 percent in early Sao Paulo
trading, their biggest one-day rise in almost four years, before
paring their gains to be up 9 percent.
Embraer's new contract is subject to court approval due to
bankruptcy proceedings at American Airlines -- approval that the
planemaker said it expects by the end of March.
Delivery of the dual-class 76-seat jets would then begin in
the middle of 2013, with two or three jets arriving per month,
according to American Airlines. American agreed to have Republic
acquire and operate the planes under a 12-year contract.
Silva said the Republic contract did not involve resale of
any used planes, which was a part of Bombardier's Delta deal.
Embraer's output this year has hinged on securing demand for
open production slots after a scarcity of big orders bled its
order backlog, a pipeline of future revenue, to a six-year low.
Some analysts had already cut their 2013 and 2014 output
forecasts amid the drought of new orders.
"We are very confident that we're going to maintain
production levels this year," said Silva.
The new planes flying in the American Airlines network will
be the first to feature a series of mid-generation upgrades,
including new wingtips and other aerodynamic changes to boost
fuel efficiency by 5 percent.
Part of an industry push for more efficient aircraft, the
upgrades are aimed at holding on to customers impatient for an
overhauled lineup of Embraer's regional E-Jets with Pratt &
Whitney's geared turbo fan, which aren't due for delivery until
(Reporting by Brad Haynes; Editing by Chizu Nomiyama and Tim