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...

 

[MedFlyer]

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.

You're right (DL may sell some of them), but they'd better do it soon. While the foreign market might still have room, it won't be long before it's saturated with 50 seaters. However, if DL intends to spin-off Comair/ASA, they can't shrink them too heavily. Who wants to buy shares in a company that is being dismantled?

I agree with FDJ2 that ASA will probably get some additional CRJ700's (but no more than 15-20). How many will be used as replacements and how many are growth is anyones guess.

Here's my mathematical guess on the 70 seater distribution:

Comair/ASA 58 (as of Dec 31, 2004)
ASA picks up 17 more CRJ700's

ASA/Comair total of 75 CRJ700's

CHQ (Republic) has 16 on firm order
CHQ converts the 34 options to orders

CHQ has a total of 50 EMB170

This brings the connection carriers right up to the 125 limit set by DALPA. Of course, more may come if mainline grows.

 

[Propsync]

Point to ponder

Quick question for those more intelligent than me: Do you think Boeing was shortsighted killing the 717? I realize you can get an E-190 for less, and have less operating costs, but I would imagine the 717 would last three times as long. Plus, it's a much nicer cabin. What do you all think, big RJ's or small mainline?

 

[Chip]

The 717 might last 3 times as long as the EMB, so lets just say 40 years total. How big of an oil crunch will the world be in 40 years down the road. Im guessing so big that planes other than the 717 will have to be developed anyways. In todays world, and more so the future world, who really cares if an aircraft last a tremendous period of time. Theres only a limited supply of oil and it cant be re-made.

 

[Double Shot]

I think the EMBs are a pile of Sh1t...

 

[lowecur]

Quick question for those more intelligent OK than me: Do you think Boeing was shortsighted killing the 717? No. I realize you can get an E-190 for less, (not much) and have less operating costs,True but I would imagine the 717 would last three times as long. Don't know for sure, it's a totally new airframe. Plus, it's a much nicer cabin. Bigger? - A little, but 2X2 seating is much nicer than 2X3 What do you all think, big RJ's or small mainline? Small Mainline

The 717 is strictly a one dimensional orphaned a/c for short haul. The 190 is a short/medium range with other family members a/c, that can make the turn in ATL to the West Coast. Look for the range to improve by 200-300nm with GE engine improvments in the next 24 months.

 

[Cadillac]

hey double shot

you be sure to let us know as soon as someone calls you to fly something else.

 

[lowecur]

You're right (DL may sell some of them), but they'd better do it soon. While the foreign market might still have room, it won't be long before it's saturated with 50 seaters.

There will always be a market in Eastern Europe and China as they expand their economies. 106 CRJ100/200 are owned by DL. These can be sold at a loss for .50 on a dollar, as that's what they will bring in those markets. Another write off for DL.

 

[FDJ2]

Here's my mathematical guess on the 70 seater distribution:

Comair/ASA 58 (as of Dec 31, 2004)
ASA picks up 17 more CRJ700's

ASA/Comair total of 75 CRJ700's

CHQ (Republic) has 16 on firm order
CHQ converts the 34 options to orders

CHQ has a total of 50 EMB170

This brings the connection carriers right up to the 125 limit set by DALPA. Of course, more may come if mainline grows.

Math in public can be dangerous, but I think you've nailed it. As for the 125 limit, I think that was DAL's number to begin with and in keeping with the current business plan. The additional growth ratio for mainline/DCI is probably intended to meet any additional growth in the next few years if one of our competitors goes "tango uniform". The negotiated ratio for additional RJs would allow DAL to move quickly into the void without having to renegotiate the DAL PWA.

 

[HawkDrvr]

I think the EMBs are a pile of Sh1t...

I agree, but remember that it doesn't matter what you and I think of it. When the passengers are crammed in that 2 by 2 arrangement in the back of the CRJ they think the CRJ is the pile of dung. Being 6'3" tall I can tell you that anyone over 6' tall in a window seat of any CRJ is going to have serious pain after about 40 minutes in the thing. I've been in the back of both and tell you that the EMB-170 kicks the crap out of the CRJ in terms of passenger comfort.

Sorry

 

[HowlinMadMurdoc]

Lowecur,

Midwest has their 717's configured in 2x2 for their Signature Service. Whether or not we make money on those planes is a different story.

HMM

 

[lowecur]

Lowecur,

Midwest has their 717's configured in 2x2 for their Signature Service. Whether or not we make money on those planes is a different story.

HMM

Good point.

 

[brew3departure]

True...

With the signature service/seating arrangement though, you don't get the same number of seats that an Airtran 717 has (correct me if I'm wrong).

As far as it being a pile of *rap or not -- I'll say the same thing that people have said about the 328 Jet for such a long time - people cuss and swear that it's the velcro jet, doorknob, dorkjet, slower than molasses, etc etc etc...of all the regional jets, though, it's probably the most comfortable one to ride in back. And that, my friend, is what the people care about.

Now, if you're going to knock the 170 on reliability/dispatch issues, that's an entirely different story!

Take care,
-brew3

 

[ShadowFlight]

With the signature service/seating arrangement though, you don't get the same number of seats that an Airtran 717 has (correct me if I'm wrong).

As far as it being a pile of *rap or not -- I'll say the same thing that people have said about the 328 Jet for such a long time - people cuss and swear that it's the velcro jet, doorknob, dorkjet, slower than molasses, etc etc etc...of all the regional jets, though, it's probably the most comfortable one to ride in back. And that, my friend, is what the people care about.

Now, if you're going to knock the 170 on reliability/dispatch issues, that's an entirely different story!

Take care,
-brew3

I don't know for sure but I believe Airtran's 717's are configured for 120 or so. So, yes, Midwest's 2x2 seating means we have to charge a higher fare than Airtran to generate the same revenue. However, Midwest is taking a huge chance that not everyone wants to fly in a cramped 717 even if it means paying more for 2x2 seating. In these airline economic times, everyone is rushing to be an LCC which has it's benefits. I guess Midwest is going to stick with their niche belief of being different. Time will tell if their plan is going to be successful.

We interrupt this broadcast with a thread hijack...

True the DoJet may be a flying speedbump but guess what? Because it doesn't fly above .66M, we get the same amount of daily flight timeas the CRJ/ERJ pilots but flying less legs. For me, I'd rather fly slower and do 4-5 legs a day than to fly through the sky at.999999M and do 8-9. Of course, it helps that Midwest's scheduling department doesn't have our planes flying 12 hours a day. But that may change in the near future. The DoJet is easy to fly and, despite it's shortcomings, is a fun airplane to fly.

And, I'll second Brew3 about cabin comfort. The 328 is very comfortable in the back.

We return you to your normal thread programming...

Peace

SF

 

[JetPilot_Mike]

True the DoJet may be a flying speedbump but guess what? Because it doesn't fly above .66M, we get the same amount of daily flight timeas the CRJ/ERJ pilots but flying less legs. For me, I'd rather fly slower and do 4-5 legs a day than to fly through the sky at.999999M and do 8-9. Of course, it helps that Midwest's scheduling department doesn't have our planes flying 12 hours a day. But that may change in the near future. The DoJet is easy to fly and, despite it's shortcomings, is a fun airplane to fly.

SF

What CRJ/ERJ pilots fly 8-9 legs a day?? You must be kidding. The most we have at Comair is 6, and there aren't that many of those days. When ACA had all the short runs, they did the 7-8 leg days because their stage lenghts were so short. I don't think there has been a 8-9 leg day at Comair since they flew the Bandit.

 

[FL000]

The 717 might last 3 times as long as the EMB, so lets just say 40 years total. How big of an oil crunch will the world be in 40 years down the road. Im guessing so big that planes other than the 717 will have to be developed anyways. In todays world, and more so the future world, who really cares if an aircraft last a tremendous period of time. Theres only a limited supply of oil and it cant be re-made.

We're good to go on oil for the next 400-500 years. I'm admittedly not brilliant enough to come up with an alternate fuel source, but I'm sure someone in a white coat will do so by then.

 

[Dave Benjamin]

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.

I'm not sure about the overseas market you refer to but I know of 4 sold domestically went at "fire sale prices." Why would they sell any here in the states if overseas buyers were willing to pay more? Do you have any idea what was paid for those aircraft or are you just speculating? The market for 50 seat RJ's is pretty flat.

 

[lowecur]

I'm not sure about the overseas market you refer to but I know of 4 sold domestically went at "fire sale prices." Why would they sell any here in the states if overseas buyers were willing to pay more? Do you have any idea what was paid for those aircraft or are you just speculating? The market for 50 seat RJ's is pretty flat.

I assume you mean the 4 that went to Skywest. No, I don't have any idea what was paid.

The overseas market has always been a market of last resort, particulary in Europe. I'm speculating that with the economic expansion in China & India, these RJ's will always find a home. It may be .25-50 on the dollar, but there will always be an upstart or existing carrier that will buy them in the next few years.

 

[TWAER]

Now, if you're going to knock the 170 on reliability/dispatch issues, that's an entirely different story!

That's because it is a new aircraft. I remember when the 145 was new. It had a terrible reliability issue. They will work the bugs out, it will just take some time.

 

[-9Capt]

117 seats in FL's 717.

 

[AirBill]

...of all the regional jets, though, it's probably the most comfortable one to ride in back. And that, my friend, is what the people care about.

Don't know if it's a fair comparison, but I've ridden in the 328 and in Mesaba's Avro, and I think the Avro has it, hands down.

They're both slow as Mississippi, though.