More Small Narrow Body talk
11-13-2015, 08:33 AM
#1
Gets Weekends Off
Thread Starter
Joined APC: Mar 2012
Position: 777
Posts: 2,158
More Small Narrow Body talk
For what it is worth. Seems the author assumes that the new planes would be flown by Express rather than mainline:
Embraer Could Be on the Verge of a Major Coup in the U.S.
United Airlines could be close to placing a big order for Embraer jets.
Adam Levine-Weinberg
(TMFGemHunter)
Nov 13, 2015 at 10:25AM
Brazilian aircraft manufacturer Embraer (NYSE:ERJ) has had great success in the U.S. market lately. As the regional airline industry has migrated toward 76-seat jets, it has captured a slew of orders for its E175 jet from legacy carriers like American Airlines (NASDAQ:AAL) and United Continental (NYSE:UAL) and their regional airline partners. For the past few years, more than half of Embraer's commercial aircraft deliveries have gone to the U.S.
Embraer now has its eyes on an even bigger prize in its top market. The company believes it could soon land orders for its larger -- and more profitable -- E190 and E195 jets in the U.S.
Filling the void
For the past 10-20 years, U.S. network carriers like United and American have mainly operated planes with 120-130 or more seats, while contracting out with regional airlines to fly numerous planes with 76 or fewer seats. This has left a big void in the 100-seat range.
This is a legacy of the wide gap in pilot pay between mainline carriers and regional airlines. It was more economical to contract out to a regional airline for a 70- to 76-seat jet (or even a 50-seat jet) than to pay mainline wages for a somewhat larger plane. However, the growing regional airline pilot shortage is raising the cost of regional airline capacity and limiting its availability.
In this context, 100-seat planes are starting to look more attractive. Additionally, most legacy carrier pilot contracts cap the number of 76-seat jets that can be flown by regional airlines, but allow this cap to rise if the airline also adds 100-seat jets.
Delta Air Lines was farsighted about these trends, and made plans in 2012 to add 88 used 110-seat Boeing 717s to its mainline fleet. By contrast, while American Airlines has 20 99-seat Embraer E190s, that represents just 2% of its mainline fleet. United doesn't have any planes in the 100-seat segment today.
There's definitely interest
United Continental has already publicly stated that it is interested in adding smaller jets like the E190 and E195 to its fleet. Under United's pilot contract, for every five jets in that size class that it flies with mainline pilots, it can add four 76-seat jets to its regional fleet -- up to a maximum of 70 additional regional jets.
American Airlines hasn't said whether it is considering expanding its 100-seat jet fleet. At the moment, it has hundreds of larger aircraft on order and is working through a major merger integration process. But if United makes a big move toward using small mainline planes, it would increase the likelihood of American Airlines eventually growing its 100-seat jet fleet.
Embraer is the likely winner
The head of Embraer's commercial airplanes unit stated last week that he thinks his company could get an initial deal within the next six months -- presumably from United.
His confidence probably stems from the fact that Embraer doesn't face much competition in this segment. Bombardier's CS100 is the main alternative, but it is significantly more expensive than any of Embraer's products. Airlines may also be worried about Bombardier's long-term health, as massive cost overruns for CSeries development have severely damaged its financial position.
The big choice for United is between buying the current-generation E190 or E195 from Embraer, buying used E190s (which are quite cheap right now), or waiting a few years for the next-generation E190-E2 and E195-E2. Those planes will enter service in 2018 and 2019, respectively.
Former United Continental CFO John Rainey said back in June that the company was evaluating the E2-series jets. However, United probably doesn't want to wait until 2018 or later to start adding planes in the 100-seat range.
Thus, Embraer's best strategy might be to offer 20-30 current-generation E-Jets at a big discount for delivery between late 2016 and 2018, followed by early deliveries of E2-series jets beginning in 2018.
It's quite possible that United Continental will instead buy some used E190s -- it has shown growing interest in mid-aged used planes in the past year or two. However, even if it buys used planes to meet its near-term needs, United may also order some E2 jets for delivery a few years from now. And in 10-15 years, it would probably replace the used E190s with new E2-series jets.
A big deal could move the needle
Embraer is a relatively small aircraft manufacturer. This year, it expects to build about 100 commercial jets. Thus, a single big order can have a significant impact on Embraer's finances.
If United opts to buy 88 new Embraer planes -- which would unlock the ability to add 70 large regional jets under its pilot contract -- it would boost Embraer's backlog by nearly a year. If American Airlines eventually followed suit, that would magnify the impact.
Furthermore, the E190 and E195 planes are more profitable for Embraer than the smaller E175. The E2-series E-Jets will be even more profitable -- since they incorporate newer technology, they can command higher prices. That makes these potential orders even more valuable than the big E175 orders Embraer has bagged in recent years.
Obviously, there's no guarantee that a deal will materialize (or that it will come in the expected six-month timeframe). However, this is a huge opportunity for Embraer to gain a bigger foothold in a lucrative piece of the U.S. aircraft market where it has previously been marginalized.
Embraer Could Be on the Verge of a Major Coup in the U.S.
United Airlines could be close to placing a big order for Embraer jets.
Adam Levine-Weinberg
(TMFGemHunter)
Nov 13, 2015 at 10:25AM
Brazilian aircraft manufacturer Embraer (NYSE:ERJ) has had great success in the U.S. market lately. As the regional airline industry has migrated toward 76-seat jets, it has captured a slew of orders for its E175 jet from legacy carriers like American Airlines (NASDAQ:AAL) and United Continental (NYSE:UAL) and their regional airline partners. For the past few years, more than half of Embraer's commercial aircraft deliveries have gone to the U.S.
Embraer now has its eyes on an even bigger prize in its top market. The company believes it could soon land orders for its larger -- and more profitable -- E190 and E195 jets in the U.S.
Filling the void
For the past 10-20 years, U.S. network carriers like United and American have mainly operated planes with 120-130 or more seats, while contracting out with regional airlines to fly numerous planes with 76 or fewer seats. This has left a big void in the 100-seat range.
This is a legacy of the wide gap in pilot pay between mainline carriers and regional airlines. It was more economical to contract out to a regional airline for a 70- to 76-seat jet (or even a 50-seat jet) than to pay mainline wages for a somewhat larger plane. However, the growing regional airline pilot shortage is raising the cost of regional airline capacity and limiting its availability.
In this context, 100-seat planes are starting to look more attractive. Additionally, most legacy carrier pilot contracts cap the number of 76-seat jets that can be flown by regional airlines, but allow this cap to rise if the airline also adds 100-seat jets.
Delta Air Lines was farsighted about these trends, and made plans in 2012 to add 88 used 110-seat Boeing 717s to its mainline fleet. By contrast, while American Airlines has 20 99-seat Embraer E190s, that represents just 2% of its mainline fleet. United doesn't have any planes in the 100-seat segment today.
There's definitely interest
United Continental has already publicly stated that it is interested in adding smaller jets like the E190 and E195 to its fleet. Under United's pilot contract, for every five jets in that size class that it flies with mainline pilots, it can add four 76-seat jets to its regional fleet -- up to a maximum of 70 additional regional jets.
American Airlines hasn't said whether it is considering expanding its 100-seat jet fleet. At the moment, it has hundreds of larger aircraft on order and is working through a major merger integration process. But if United makes a big move toward using small mainline planes, it would increase the likelihood of American Airlines eventually growing its 100-seat jet fleet.
Embraer is the likely winner
The head of Embraer's commercial airplanes unit stated last week that he thinks his company could get an initial deal within the next six months -- presumably from United.
His confidence probably stems from the fact that Embraer doesn't face much competition in this segment. Bombardier's CS100 is the main alternative, but it is significantly more expensive than any of Embraer's products. Airlines may also be worried about Bombardier's long-term health, as massive cost overruns for CSeries development have severely damaged its financial position.
The big choice for United is between buying the current-generation E190 or E195 from Embraer, buying used E190s (which are quite cheap right now), or waiting a few years for the next-generation E190-E2 and E195-E2. Those planes will enter service in 2018 and 2019, respectively.
Former United Continental CFO John Rainey said back in June that the company was evaluating the E2-series jets. However, United probably doesn't want to wait until 2018 or later to start adding planes in the 100-seat range.
Thus, Embraer's best strategy might be to offer 20-30 current-generation E-Jets at a big discount for delivery between late 2016 and 2018, followed by early deliveries of E2-series jets beginning in 2018.
It's quite possible that United Continental will instead buy some used E190s -- it has shown growing interest in mid-aged used planes in the past year or two. However, even if it buys used planes to meet its near-term needs, United may also order some E2 jets for delivery a few years from now. And in 10-15 years, it would probably replace the used E190s with new E2-series jets.
A big deal could move the needle
Embraer is a relatively small aircraft manufacturer. This year, it expects to build about 100 commercial jets. Thus, a single big order can have a significant impact on Embraer's finances.
If United opts to buy 88 new Embraer planes -- which would unlock the ability to add 70 large regional jets under its pilot contract -- it would boost Embraer's backlog by nearly a year. If American Airlines eventually followed suit, that would magnify the impact.
Furthermore, the E190 and E195 planes are more profitable for Embraer than the smaller E175. The E2-series E-Jets will be even more profitable -- since they incorporate newer technology, they can command higher prices. That makes these potential orders even more valuable than the big E175 orders Embraer has bagged in recent years.
Obviously, there's no guarantee that a deal will materialize (or that it will come in the expected six-month timeframe). However, this is a huge opportunity for Embraer to gain a bigger foothold in a lucrative piece of the U.S. aircraft market where it has previously been marginalized.
11-13-2015, 10:21 AM
#3
Gets Weekends Off
Joined APC: Feb 2014
Position: Left Seat
Posts: 149
Originally Posted by SpecialTracking
Only 7 more days. Will a backbone be displayed or not? Management thinks years if not decades ahead. I'm hoping we do the same.
11-13-2015, 10:45 AM
#5
Gets Weekends Off
Joined APC: Aug 2015
Position: Captain
Posts: 1,561
25 A319s from China
15 A319s from Spirit
18 more 737-700s from Copa and possible 10 more -800 those used from Copa as well
(See Copa finances , Brazilian market , Venezuelan Government not paying 425 million )
That's 68 frames
No need for the carrot however if they want to put an order they can.
No permission from ALPA need it!!!!
MEC and NC don't fall for it!!!!!!!
15 A319s from Spirit
18 more 737-700s from Copa and possible 10 more -800 those used from Copa as well
(See Copa finances , Brazilian market , Venezuelan Government not paying 425 million )
That's 68 frames
No need for the carrot however if they want to put an order they can.
No permission from ALPA need it!!!!
MEC and NC don't fall for it!!!!!!!
11-13-2015, 01:29 PM
#9
Gets Weekends Off
Joined APC: Jan 2008
Posts: 400
Originally Posted by WesternSkies
That author is a hack. He's been pumping RJET stock for years.
Here's a newsflash ya'll...the C Series tanked of course the orders will go to Embraer.
As usual Weinberg and the Fool articles are putting lipstick on the pig of common sense. Some of his "finance" analysis is day three Finance class copy from a book.
11-13-2015, 02:11 PM
#10
Gets Weekends Off
Joined APC: May 2009
Position: The GF of FUPM
Posts: 3,073
Andy 'Let's Decertify ALPA and organize Pearl' is our next Dubinsky?
I'm not sure that even Dubinsky himself could get this group of self servers to organize a brownie sale. I sincerely hope that you're right, and I'm willing to listen. But, I'm very skeptronic.
I'm not sure that even Dubinsky himself could get this group of self servers to organize a brownie sale. I sincerely hope that you're right, and I'm willing to listen. But, I'm very skeptronic.
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