Embraer launches next E-Jets to strong demand, SkyWest orders up to $9.4 billion

Mon Jun 17, 2013 2:57pm EDT
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By Brad Haynes

PARIS (Reuters) - Brazilian planemaker Embraer SA (EMBR3.SA: Quote) 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 (SKYW.O: Quote), 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 (BBDb.TO: Quote) 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 EAD.PA and Boeing Co (BA.N: Quote) 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.   Continued...

Private jets are seen at the Embraer headquarters in Sao Jose dos Campos, 100 km (62 miles) from Sao Paulo May 14, 2013. REUTERS/Nacho Doce