American Splits $1.4 Billion Jet Buy Between Bombardier, Embraer

(Bloomberg) -- American Airlines Group Inc. split a $1.4 billion order of regional jets between Bombardier Inc. and Embraer SA, extending a push to update its short-range fleet.

The world’s largest carrier is buying 15 Bombardier CRJ900 planes and 15 Embraer E175 jets, according to a regulatory filing Thursday. American also took options from each manufacturer for 15 more of the 76-seat aircraft.

The purchase boosts American’s shift to bigger regional jets with room for two passenger classes, which better match the offerings of the airline’s larger single-aisle planes. American has also reduced the number of aircraft in the fleet that are smaller than the new ones it’s buying from Bombardier and Embraer.

“Any airline that can add 76 seaters will,” said Savanthi Syth, a Raymond James Financial Inc. analyst. “They are really great aircraft, with dual class and Wi-Fi.”

Regional Flights

The planes will be flown at two of American’s wholly owned regional units, with the CRJ900s going to PSA Airlines and the Embraer E175 jets to Envoy Air. Deliveries of both aircraft types will begin next year, and will be used to replace single-class planes, said Josh Freed, an American spokesman.

American has added about 200 dual-class regional jets over the past four years. At the end of last year, the Fort Worth, Texas-based carrier had 118 of Bombardier’s CRJ900 aircraft operated by PSA and Mesa airlines. It had 148 of Embraer’s E175 planes in operation at Republic, Envoy and Compass.

American will retire a still undetermined number of 50-seat CRJ200 aircraft at PSA to help make room for the new planes, Dion Flannery, president of the regional unit, said in a letter to employees.

Bombardier and Embraer are pushing replacements for the aging regional jets in U.S. fleets. According to a market forecast released last year by Montreal-based Bombardier, North American airlines will need to retire about 2,100 aircraft of 150 seats or fewer by 2036. Forty percent of the current fleet is at least 15 years old, Bombardier said.

The order is an “incremental positive as Bombardier looks to rebuild its backlog for its legacy aircraft, and specifically for the CRJ family,” Kevin Chiang, a CIBC World Markets analyst, said in a note.

The CRJ900 order has a list value of about $719 million before customary discounts, Bombardier said in a statement. The E175 deal is valued at about $705 million based on list prices, Sao Jose dos Campos, Brazil-based Embraer said.

--With assistance from Frederic Tomesco

To contact the reporters on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net, Fabiola Moura in Sao Paulo at fdemoura@bloomberg.net.

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Tony Robinson

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