Brazilian jet maker, Embraer SA (ERJ) received a firm order from SkyWest Inc. (SKYW), the holding company of SkyWest Airlines and ExpressJet Airlines, for Embraer’s E175 jets.
SkyWest has booked a total of 7 E175 jets, which will be operated by SkyWest Airlines under a capacity purchase agreement (“CPA”) with Alaska Airlines, a subsidiary of Alaska Air Group, Inc. (ALK).
The order is valued at $301 million at list prices and deliveries are slated to begin in the second half of 2015.
This order brings Embraer’s firm order count from SkyWest to a total of 47 E175 jets. SkyWest had earlier placed an order for 100 E175 current generation E-jets in May 2013, out of which only 40 were firm orders.
The $301 million order will be included in the fourth-quarter 2014 backlog of Embraer.
SkyWest already has 15 E175s in its fleet. In fact, it was the launch customer for Embraer’s E175-E2 aircraft in 2013.
E-jets enhance efficiency levels by reducing operating costs. The company has witnessed over 1500 firm orders for the E-jets since their introduction in 2004. Till date, Embraer has delivered over 1000 E-jets to about 65 airline companies.
Recently, the company won a firm order for 50 of its next-generation E175 aircraft from Indianapolis-based Republic Airways Holdings Inc., confirming the popularity of the E-jets (Read more: Embraer E-175 Jet Wins 50 Republic Airways Orders, Loses 20). Embraer thus continues to make significant investments in the E-jets family.
Embraer is the world's third-largest commercial aircraft manufacturer after The Boeing Co. (BA) and Airbus. The company designs, manufactures and sells aircraft and systems under both commercial and executive aviation, and defense and security segments.
Embraer reported a record order backlog of $22.1 billion as of Sep 30, 2014. The company recorded a firm order backlog of $18.1 billion in Jun 2014 alone. The backlog surged its highest in the history of the company primarily due to the KC-390 contract and a firm order of 50 E175 by Republic Airways Holdings Inc.
Despite a growing order book, we remain concerned about the highly competitive industry. The possibility of order cancellations and a drop in demand for business jets add to the worries.
Embraer currently has a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment