Bloomberg News

Embraer Is in Talks With American for 76-Seat Jet Order (1)

July 05, 2013

Embraer SA (EMBR3), Brazil’s biggest planemaker, is in talks with AMR Corp. (AAMRQ:US)’s American Airlines for an order of 76-seat jets.

An Embraer official confirmed the discussions in a telephone interview today and declined to specify which plane model or how many jets are being discussed.

U.S. carriers are buying more of the 76-seat E-175 jets while phasing out the fuel-inefficient 37- and 50-seaters. Embraer announced orders for 119 E-Jets and 365 firm orders and commitments for its second generation E2 planes at the Paris Air Show last month, where Chief Executive Officer Frederico Curado said he saw “strong demand” from U.S. carriers.

Shares of Sao Jose dos Campos, Brazil-based Embraer rose 0.3 percent to 20.28 reais at 3:05 p.m. in Sao Paulo, paring an earlier decline of as much as 2.1 percent.

On July 3, online trade publication Flightglobal reported that American was close to selecting either the Embraer 175 or Bombardier Inc. (BBD/B)’s CRJ900.

Michael Trevino, a spokesman for Fort Worth, Texas-based American Airlines, declined to comment in an e-mail on talks with Embraer or Bombardier.

“It is known in the industry that they are shopping for new regional jets,” said Marc Duchesne, a spokesman for Montreal-based Bombardier, in a telephone interview. He declined to provide any further information. “American Airlines knows that we have the best regional jets on the market.”

American is nearing emergence from Chapter 11 bankruptcy proceedings. The carrier’s partner Republic Airways Holdings Inc. (RJET:US) ordered 47 E-175 jets this year, with an option for another 47.

A pilot union contract agreement at American and US Airways Group Inc. (LCC:US), which are expecting to close their merger in the third quarter, allows lower-paying commuter partners to fly larger planes. Such outsourcing had been limited to smaller models, which are now out of favor with jet-fuel prices up almost sevenfold in the past 15 years.

To contact the reporter on this story: Christiana Sciaudone in Sao Paulo at csciaudone@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net


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