American and Republic cut agreement to 47 E175s

Washington DC
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American Airlines and Republic Airways have cut six Embraer 175s from their planned agreement covering 53 of the type.

The removal of the six used aircraft was in response to objections from labour groups and the unsecured creditors committee, says Bryan Bedford, chairman, president and chief executive of Republic, during an earnings call on 28 February.

American and Republic announced the 12-year capacity purchase agreement for 53 76-seat E175s, which is split between 47 new aircraft and six used, in January. The airframer will deliver the new aircraft from the middle of 2013 through 2015.

Tim Dooley, chief financial officer of Indianapolis-based Republic, says that the airline hopes that they agreement will be approved by the bankruptcy court on 12 March, during the call.

He says that the airline will update its revenue and capacity guidance with the E175s once the contract is approved.

Debt financing for the E175s is arranged and will close when the agreement is finalised, says Bedford. The terms are "consistent with current export credit agency of rules and regulations", he says.

The carrier did not comment directly on the impact of the proposed merger between American and US Airways on its operations. In addition to the American agreement, Republic flies 58 E170s and E175s for US Airways.

"In general, just about anything that helps our partners achieve stability and sustained profitability is in our own best interests," says Bedford. "The downside of course is we will have one fewer customer to serve. Having said that, the most recent changes in mainline pilots scope provisions should open up new marketing opportunities to fly larger regional jets."