United Airlines (UAL) is in talks with Embraer SA and Bombardier Inc. to buy new narrow-body planes as part of an effort to reduce reliance on unprofitable regional jets, people familiar with the matter said.
The discussions involve the largest models in Embraer’s updated E-Jets family and Bombardier’s smallest CSeries, said the people, who asked not to be identified because the details are private. An order isn’t imminent, the people said. United said it wouldn’t discuss its fleet strategy.
An Embraer or Bombardier purchase would be a departure for Chicago-based United, whose pilots only fly Boeing Co. (BA) and Airbus Group NV (AIR) aircraft on its main jet routes. The planes under consideration would fill a gap between United’s narrow-bodies, most of which seat more than 150 people, and commuter planes carrying a maximum of 76 passengers.
Choosing one of the new planemakers also would let United place a separate order at the Express regional unit to replace its inefficient 50-seaters. United’s pilot contract lets it take more commuter aircraft, starting in 2016, as long as larger Embraer or Bombardier jets are added to the main fleet.
For regional-jet pioneers Embraer and Bombardier, a deal with United would boost their quest to weaken Boeing and Airbus’s dominance of sales to major U.S. airlines. Embraer’s two largest E2 planes will have about 140 seats, while the CS100 from Montreal-based Bombardier will carry 108 to 125 people.
Order Split?
While Embraer’s E190-E2 and E195-E2 are re-engined updates of existing models, Bombardier’s CSeries is an all-new aircraft. The planemaker has struggled to find buyers for the CSeries, whose commercial debut is now set for 2015’s second half after missing a planned 2013 target.
United’s results have been hurt by its dependence on 50-seat jets flown under contract by regional affiliates. Even with fuel prices retreating this year, a gallon of jet kerosene still costs about 50 percent more than a decade ago, eroding the economics that once made the small planes attractive.
United can start adding bigger regional jets with 76 seats in 2016, on condition that it takes Embraer or Bombardier planes in the 100-seats-and-up category, according to the airline’s pilot contract.
That agreement set a formula that lets United buy four 76-seaters -- such as Embraer E-175s -- for every five larger mainline planes it acquires, up to a total of 223 regional aircraft. United’s Express unit, which subcontracts flying to commuter carriers, can operate jets that seat as many as 76 passengers.
United has been replacing its 50-seaters with newer, more-efficient E-175s. McCarthy, the spokeswoman, said recent orders have pushed United’s tally to 153 of those planes, the maximum number allowed under the pilot contract.
Each time United replaces a 50-seat jet with an E-175, the airline generates “over $1 million of annual improved profitability,” Chief Revenue Officer Jim Compton said on the earnings call
(source bloomberg.com)
The discussions involve the largest models in Embraer’s updated E-Jets family and Bombardier’s smallest CSeries, said the people, who asked not to be identified because the details are private. An order isn’t imminent, the people said. United said it wouldn’t discuss its fleet strategy.
An Embraer or Bombardier purchase would be a departure for Chicago-based United, whose pilots only fly Boeing Co. (BA) and Airbus Group NV (AIR) aircraft on its main jet routes. The planes under consideration would fill a gap between United’s narrow-bodies, most of which seat more than 150 people, and commuter planes carrying a maximum of 76 passengers.
Choosing one of the new planemakers also would let United place a separate order at the Express regional unit to replace its inefficient 50-seaters. United’s pilot contract lets it take more commuter aircraft, starting in 2016, as long as larger Embraer or Bombardier jets are added to the main fleet.
For regional-jet pioneers Embraer and Bombardier, a deal with United would boost their quest to weaken Boeing and Airbus’s dominance of sales to major U.S. airlines. Embraer’s two largest E2 planes will have about 140 seats, while the CS100 from Montreal-based Bombardier will carry 108 to 125 people.
Order Split?
While Embraer’s E190-E2 and E195-E2 are re-engined updates of existing models, Bombardier’s CSeries is an all-new aircraft. The planemaker has struggled to find buyers for the CSeries, whose commercial debut is now set for 2015’s second half after missing a planned 2013 target.
United’s results have been hurt by its dependence on 50-seat jets flown under contract by regional affiliates. Even with fuel prices retreating this year, a gallon of jet kerosene still costs about 50 percent more than a decade ago, eroding the economics that once made the small planes attractive.
United can start adding bigger regional jets with 76 seats in 2016, on condition that it takes Embraer or Bombardier planes in the 100-seats-and-up category, according to the airline’s pilot contract.
That agreement set a formula that lets United buy four 76-seaters -- such as Embraer E-175s -- for every five larger mainline planes it acquires, up to a total of 223 regional aircraft. United’s Express unit, which subcontracts flying to commuter carriers, can operate jets that seat as many as 76 passengers.
United has been replacing its 50-seaters with newer, more-efficient E-175s. McCarthy, the spokeswoman, said recent orders have pushed United’s tally to 153 of those planes, the maximum number allowed under the pilot contract.
Each time United replaces a 50-seat jet with an E-175, the airline generates “over $1 million of annual improved profitability,” Chief Revenue Officer Jim Compton said on the earnings call
(source bloomberg.com)