EMBRAER HAS secured what could prove to be the largest order in the history of regional jets, following a decision by Continental Express to purchase 25 EMB-145s and take 175 options.
The firm portion of the deal has been valued at $375 million by the Brazilian company. In total, the sale could be worth over $2.6 billion at today's prices if the options are exercised over the projected ten-year period following delivery of the aircraft on firm order.
Continental Express spent over 12 months evaluating rival 50-seaters. The airline has become Embraer's launch customer, as buyers in Australia and Europe have put back their delivery dates. Continental expects to receive the first two aircraft in early December following certification scheduled for October.
Two aircraft are due for delivery this year, 12 in 1997 and the remainder by late 1998. The sale brings the EMB-145 firm order book to 63, with 217 options.
David Segal, Continental Express chief executive, listed customer appeal, operating economics and Embraer's product support for the smaller EMB-120 Brasilia as some of the reasons for the selection of the EMB-145. Aircraft, which were rejected, include the Canadair Regional Jet and the Saab 2000 turboprop.
Embraer president Mauricio Botelho says that the order was "very significant in providing ballast for the programme". He is also confident that the larger number of options would be exercised saying, "-an operator who has no intention to grow with the programme would not take the options in the first place".
The deal puts Embraer well on the way to achieving its 200 sales breakeven point and the 400 plus total sales Botelho thinks can be achieved for the EMB-145.
The first 25 Continental Express aircraft, at least, will be used for growth at the airline's Cleveland, Houston and Newark hubs, but eventually the EMB-145 is expected to replace at least some of the airline's all-turboprop fleet of AI(R) ATR 42/72s, Beech 1900Ds and Brasilias.
Embraer, with the huge psychological boost of the Continental order under its belt, is now turning its immediate attention to other potentially large US orders and the European leg of a world sales tour using the aircraft now on show at Farnborough.
The aircraft builder has already announced the firming up of two options held by Regional Airlines of France, bringing its firm position with the carrier to five aircraft.
By the end of the European tour in early October, Embraer will hope to have overcome a last-minute improvement in terms offered by Saab Aircraft with the rival Saab 2000, and added Manx Airlines, which is ordering up to five aircraft, to its customer list.
A decision from Manx is expected after a board meeting, which has been scheduled for the end of the month.
Overall, while Embraer expects to secure around $1 billion in Brazilian military business and is upbeat about the rising Brasilia order book, Botelho sees the EMB-145 as the "lever to the future".
With the success of the aircraft seemingly assured, Botelho says that the company is already looking at market opportunities in categories either side of the 50-seat regional jet.
Source: Flight International
