flyingreasemnky

United to Buy $840 Million of Embraer Regional Jets - Bloomberg

United Continental Holdings Inc. (UAL) agreed to buy 30 Embraer SA (EMBR3) 76-seat regional jets valued at about $840 million under a new pilot contract allowing commuter partners to fly bigger planes.
Deliveries of E-175 jets from Sao Jose dos Campos, Brazil- based Embraer will begin in 2014, United said today in a statement. United, the world’s largest airline, is retiring smaller, less-efficient 50-seaters as part of the move.

United is taking advantage of changes in the so-called scope clause of the labor agreement reached with pilots in 2012. Those terms specify the maximum size of planes that can be flown by pilots at lower-paying regional airlines, which helps reduce labor costs at major carriers such as United.

The Chicago-based airline joins peers in getting rid of their smallest jets. Delta Air Lines Inc. (DAL) ordered 40 Bombardier Inc. (BBD/B) CRJ900 76-seaters in December as it retires 50-seaters, and AMR Corp. (AAMRQ)’s American Eagle reached a deal in January for Republic Airways Holdings Inc. (RJET) to operate 53 Embraer 76-seaters.

New Embraer 175s have an average book value of about $28 million apiece, according to Chantilly, Virginia-based consultant Avitas. Recent sales have averaged about $26 million, based on data compiled by Doug Rothacker, a Bloomberg Industries analyst in Skillman, New Jersey. United didn’t disclose a price.

Continental Airlines Inc., one of the carriers that formed the current United in a 2010 merger, had the most-restrictive scope clause among major U.S. carriers, with commuter affiliates limited to flying aircraft with 50 or fewer seats.

Plus, 40 options...

http://atwonline.com/airframes/unite...embraer-e-175s

JoeyMeatballs

I bet XJT gets em with their newly negotiated rate

flyingreasemnky

That's my guess because they have a lot of 50 seaters that United will want to trade them for.

CaptainCarl

United buys them... and then gives them to a regional... ???

JoeyMeatballs

No bank in the world is dumb enough to lend a regional $800,000,000.00,lol

oldcarpilot

ALL the majors do this. Contintal always owned all the ERJs. Delta owns all the 900s out there. Welcome to the airlines!

ohplease!

Because major airlines never go bankrupt and default on their loans our contacts......

Trip7

If United bought the planes doubtful it's coming to Skywest Inc. Financing the planes themselves is Inc's main advantage to counter higher crew costs. I'm guessing the planes split between TSA, Compass and RAH

rickair7777

Maybe. UAL might have preferred to own them to retain control...that way they can leverage for short-term contracts and switch operators as needed. INC would require a long-term contract if they were going to buy the planes.

INC probably still has economy of scale advantage over the likes of TSA and CZ. Plus INC has lots of 50's to trade in on a one-for-two deal...I doubt UA would even consider giving them to a carrier which doesn't have UAX 50's to trade.

3stripes

Owning the aircraft gives UAL the ultimate whipsawing advantage. They can move these planes around and use them as leverage.