Brazil Embraer gets big order from Republic Airways

[asacap]

I guess ASA won't be converting any of those 50 seaters this year.






SAO PAULO, Brazil, Jan 19 (Reuters) - Brazil's jet maker Embraer (EMBR4.SA: Quote, Profile, Research) (ERJ.N: Quote, Profile, Research) said on Wednesday it received 16 new firm orders and 34 optional orders for its Embraer 170 regional jets from Republic Airways Holdings Inc. (RJET.O: Quote, Profile, Research) .

Embraer, the world's No. 4 aircraft manufacturer, said in a statement the firm orders alone from the U.S. company were worth $400 million, while the total value of the deal including the options could reach $1.5 billion.

It said the new deal raised the total number of firm Republic Airways orders to 39, while options now stood at 61.

On Monday, Embraer said it delivered 148 of its small and medium-sized jets in 2004, three more than its downwardly revised target of 145 deliveries. Embraer, which delivered 101 jets in 2003, maintained its target to deliver 145 jets in both 2005 and 2006. The company said it ended 2004 with $10.1 billion of firm orders for its planes, compared with $10.6 billion of orders a year ago.

 

[lowecur]

DL agreement

This is the order from the new agreement with DL for 16 170's. The option for 34 more is the surprise. WO DCI can't be happy. Deliveries will begin in mid 2005, and be completed in mid 2006.

 

[MedFlyer]

Unfortunately for both CMR and ASA, growth will be tough to come by and it has NOTHING to do with pilot pay (either at ASA, CMR or CHQ).

Here's why:

The 50 seat (and less) market is largely dead. DL has plenty of 50 seaters and has even let 30 FRJ's go to waste because of the poor economics of small RJ's.

The 70 seat market has growth potential, but the CRJ700 is not a competitive aircraft. In order to get CRJ700's for ASA/CMR, DL will have to take on more debt. DL can't afford to do this. The EMB170 is a superior plane for passengers, but once again, DL can't afford to take on the debt. Plus, the EMB170 would be a new fleet type for ASA/CMR which means higher costs. CHQ/Republic can finance EMB170's (no debt for DL), plus they already have EMB170 experience, so they get the planes regardless of pay. Even if CHQ pilots were paid equal to CMR, they'd still get the growth.

In not too long, the 90-100 seat market will also boom. But ASA/CMR will get none of that since it belongs to mainline....unless mainline decides to sell that off too (you never know what DALPA will do these days).

All these factors combined mean growth for CMR/ASA will be limited for many years to come. UNLESS, CMR/ASA are allowed to grow beyond the DL program. But for now, pilots at CMR/ASA should get the best pay they can because that's all there will be.

 

[Chip]

medflyer, i agree

 

[lowecur]

They may just sell off the CRJ's as the 170's come on line, and eventually close WO down. There is an overseas market for them, as was proven with the recent sale of 9 at FLYi.

 

[asacap]

Medflyer,


I agree with you 100%

 

[On Your Six]

Pray for a spinoff...

 

[FDJ2]

I think Medflyer is right in his analysis, with the one caviat that I do believe more CRJ70s are coming, but it's hard to tell if they will be growth aircraft, replacement aircraft for aging CRJ50s, or a combination of the two. I believe the latter. I do not think CHQ will get all the new 70 seat flying, but they probably will get the E170 flying.

There will most likely be a spinoff of ASA or CMR, or possibly both. My bet is CMR will be spun off first, paving the way for future CMR growth offering small jet lift to other network carriers if it can be competitive in future RFP bids. Without growth CMR will be less and less competitive as its labor costs increase with a combination of both better then average wages/benefits and longevity issues.

 

[captain evil]

Maybe Shuttle America will get some of those brand new airplanes.

 

[HawkDrvr]

Unfortunately for both CMR and ASA, growth will be tough to come by and it has NOTHING to do with pilot pay (either at ASA, CMR or CHQ).

Here's why:

The 50 seat (and less) market is largely dead. DL has plenty of 50 seaters and has even let 30 FRJ's go to waste because of the poor economics of small RJ's.

The 70 seat market has growth potential, but the CRJ700 is not a competitive aircraft. In order to get CRJ700's for ASA/CMR, DL will have to take on more debt. DL can't afford to do this. The EMB170 is a superior plane for passengers, but once again, DL can't afford to take on the debt. Plus, the EMB170 would be a new fleet type for ASA/CMR which means higher costs. CHQ/Republic can finance EMB170's (no debt for DL), plus they already have EMB170 experience, so they get the planes regardless of pay. Even if CHQ pilots were paid equal to CMR, they'd still get the growth.

In not too long, the 90-100 seat market will also boom. But ASA/CMR will get none of that since it belongs to mainline....unless mainline decides to sell that off too (you never know what DALPA will do these days).

All these factors combined mean growth for CMR/ASA will be limited for many years to come. UNLESS, CMR/ASA are allowed to grow beyond the DL program. But for now, pilots at CMR/ASA should get the best pay they can because that's all there will be.

Holy crap, someone actually figured this out without resorting to the old, "Bottom Feeders, etc..." line of garbage.

There is indeed a lot more that goes in to the equation than pilot pay scales. I just think Delta is figuring out the economics of wholly owned regionals (i.e. USAirways) and the Comair pilot's strike. The 50 seat market is saturated folks and Bombardier just does not have the superior product in the 70 seat arena. From a passenger standpoint there's only 4 decent seats on ANY CRJ and those are the emergency exit row seats.

The biggest mistake made by ANY pilot group was letting the 70 seat aircraft be flown by anyone other the mainliners. All of the other discussion is just useless chest thumping...