Embraer Lands New 170 Commitment

 - May 6, 2008, 6:48 AM

Brazil’s Embraer said it expects to complete negotiations on a firm order for six of its 70-seat 170 jets “in the coming weeks” with Italian flag carrier Alitalia. According to Embraer, Alitalia has accepted a commercial proposal that includes the conversion of six options on 48-seat ERJ-145s and new options for six 170s and/or 108-seat 190s. The $250 million deal could increase to $400 million if the airline chooses to exercise all options.

Now flying 14 ERJ-145s under its Alitalia Express banner, the airline plans to add three more of the 48-seat jets by the end of the year and the final three next year. It expects to take delivery of its first 170 late next year, as it executes a plan to replace its 89 McDonnell Douglas MD-80s. The airline plans to base its first 170s in Milan and Rome, from where it flies to both domestic and European destinations. Alitalia has also decided to add three more ATR 72-500s to its current fleet of seven.

In late June Alitalia gained approval from the European Commission to proceed with a project to increase the company’s capital base by some $1.4 billion with a stock offering underwritten by the government of Italy. The airline plans to use the money for a two-year fleet modernization and restructuring likely to result in the loss of 2,500 jobs and early retirement for another 900 employees.