UPDATE 2-Embraer books 'milestone' SkyWest deal worth up to $8.3 bln

Tue May 21, 2013 10:37am EDT
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* SkyWest to fly first 40 E175 jets for United Airlines

* Deal includes 60 more conditional orders, 100 options

* Embraer shares jump to highest in more than five years

By Brad Haynes

SAO PAULO, May 21 (Reuters) - SkyWest Inc, 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 companies.

The first 40 E175s, which SkyWest will fly for United Airlines, enter directly into Embraer's order backlog, while orders for another 60 planes depend on the operator's upcoming 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.

Embraer shares jumped as much as much as 4.8 percent in early Sao Paulo trading to their highest in over five years.   Continued...