Farnborough Air Show

E-Jet sales take off as Flybe places $5B order

 - July 20, 2010, 11:01 AM

Flybe yesterday placed what will likely be the biggest regional airliner deal of the Farnborough show week, committing to buy up to 140 Embraer 175 aircraft with a potential combined value of $5 billion. The contract signed here includes 35 firm orders (worth $1.3 billion), 65 options and 40 purchase rights.

The UK low-cost carrier will take its 175 jets configured in a single-class layout for up to 88 passengers with a 30-inch seat pitch. The first aircraft is scheduled for delivery in the second half of 2011. Flybe already operates 14 of the larger Embraer 195 aircraft.

Embraer’s crop of new business harvested yesterday also includes an agreement with new leasing group Air Lease Corp. The company, formed by former ILFC boss Steven Udvar-Hazy, has signed a letter of intent for 15 Embraer 190 orders, plus options for five more.

Meanwhile, Brazilian low-cost carrier Azul Linhas Aereas Brasileiras ordered five more Embraer 195 regional airliners for delivery this year in a deal valued at $211 million at list prices.

But Azul founder David Neeleman is almost certain to have received a price break given the circumstances of the deal. “We needed airplanes, and Embraer needed to sell a few airplanes by the end of this year, and so we were able to get something done that benefited both of us,” Neeleman said yesterday. “That’s how partnerships work. We help one another out.” Embraer did not reveal the circumstances that led to the five delivery spots becoming available.

Neeleman, who is also the founder and former CEO of JetBlue, warmly embraced Embraer president and CEO Frederico Curado before the low-key ceremony. “These are tough times,” he said afterward, “but we’re lucky in that we are in a growing market and we have the highest load factors in Brazil.”

Azul is succeeding with a unique strategy that includes matching some airfares to the prices of bus tickets for advance purchases and providing financing for passengers who can’t afford to pay for their tickets upfront.

The carrier operates 18 airplanes, including two ex-JetBlue Embraer 190s. The deal announced at Farnborough brings Azul’s firm order commitment to 41 Embraer airplanes plus options and purchase rights for an additional 40 E-Jets. The airline started flying in December 2008 from Viracopos Airport in Campinas to Porto Alegre and Salvador. Azul today serves 21 Brazilian cities and is the country’s fastest growing airline, carrying more than three million passengers in the last year and a half.

Embraer also has announced on Monday that Trip Linhas Aereas, South America’s largest regional airline, has ordered two 106-seat Embraer 190s in a deal worth $80 million.