The $3 billion, 100-aircraft deal between Embraer and JetBlue prompted conflicting reactions from stock markets. For Embraer, its share price rose 7% on the back of the news which followed an earlier $2.1 billion deal with US Airways.
However, the markets took less kindly to the purchase by JetBlue. Its share price dropped as some industry observers wondered whether the addition of a second aircraft type to the low-cost airline's fleet would adversely impact its low cost base.
Against a background of a typical low-cost carrier reliance on one aircraft type, JetBlue's share price dropped 5% after the deal. JetBlue chief executive David Neeleman conceded that adding a new type to the fleet would increase maintenance and pilot-training costs.
The strategy marks a departure for Jetblue in two areas. It is ending its reliance on a single aircraft, the Airbus A320. It also signals that it is about to take on established major US airlines on short-haul journeys. Neeleman said the deal made the airline "well-positioned to offer a better product to markets of all sizes across the US".
Award-winningThe JFK, New York-based carrier has mostly offered cheap, mid-range services to larger markets (generally with at minimum of 600 passengers a day in each direction). That offered around 300 possible cities to serve.
Neeleman said the planned deployment of Embraer 190 aircraft would enable it to tackle smaller markets (200-500 passengers a day) and thus give it an additional 900 cities to choose from.
He said: "Through this new agreement with Embraer, JetBlue will bring its superior product and award-winning customer service to the many mid-sized markets desperately in need of low fares and high quality service."
He insisted JetBlue's low-cost strategy remained in place and it would offer seats for $60 for flights of less than 300 miles - half the price the major carriers charge.
AmbitionJetBlue's fleet is currently made up of 42 Airbus A320s. It also has another 65 aircraft on order from Airbus, plus 50 options. The fleet could grow to 290 by 2011. The Embraer aircraft will offer the satellite TV service DirecTV, a feature included on the airline's A320s.
JetBlue maintains the breathless ambition which dates back to its launch in 2000. It has said it expects to grow by 55-60% this year and another 30-40% next year. It currently flies to 22 cities in the US and Puerto Rico. It currently has 41 aircraft in service and a staff of about 5,000.
For Embraer, the deal has prompted the company to speed up deliveries of the Embraer 190, part of the family of airliners offering 70-110 seats.
The family consists of the Embraer 170, 175, 190 and 195 aircraft. The Embraer 170 is now completing its flight test programme and will be delivered to its first customer, Alitalia, this year.
The Embraer 190 will now be available ahead of the Embraer 195 as a result of growing market interest in the type, said Luis Carlos Affonso, Embraer 170/190 programme director.
According to the revised schedule, the first of the 98-106 passenger aircraft will be certificated and delivered in the third quarter of 2005. Certification of the Embraer 195 is scheduled for the second quarter of 2006.
Source: Flight Daily News
