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American Airlines Places $3.92 Bln Regional Jet Order With Bombardier, Embraer

American Airlines Group, Inc. (AAL: Quote) Thursday said it has signed deals with Canadian aerospace and transportation company Bombardier Inc. (BBD_A.TO,BBD_B.TO: Quote) as well as Brazilian aircraft maker Embraer S.A. (ERJ: Quote) to buy a total of 90 new 76-seat regional jets. The world's largest airline has also taken options on additional 130 of these aircraft. The firm orders of both the contracts are together valued at about $3.92 billion.

American Airlines noted that these regional jets will provide much improved economics for the airline as they will replace smaller, less efficient 50-seat regional aircraft scheduled for retirement. Both the CRJ900 and the E175 are powered by General Electric CF34-8 engines and will fly in the American Eagle livery.

American Airlines, which recently emerged from bankruptcy, closed its $11 billion merger with US Airways Group Inc. on Monday to form the world's biggest airline under the moniker American Airlines Group, Inc.

In a separate statement, Bombardier said American Airlines has signed a firm purchase agreement to buy 30 CR1900 NextGen aircraft and taken options on an additional 40 aircraft. Based on the list price for the CRJ900 NextGen aircraft, the firm order contract is valued at about $1.42 billion that could increase to about $3.38 billion if the 40 options are converted into firm orders.

Bombardier noted that with this order, American Airlines becomes the first customer to benefit from the latest enhancements to the CRJ900 NextGen regional jet.

According to the company, the enhancements represent a 5.5 percent fuel burn reduction over the earlier generation CRJ900 aircraft, and up to 5 per cent lower fuel burn compared to announced competitive, in-production jets in the same seat class.

Including the American Airlines order announced today, Bombardier said it has recorded firm orders for 1,812 CRJ Series aircraft, including 339 CRJ900 and CRJ900 NextGen aircraft.

Worldwide, CRJ Series aircraft are in service with more than 60 airlines and more than 30 customers operate corporate variants of the aircraft. The aircraft are operating in over 50 countries on six continents.

Meanwhile, Embraer said that American Airlines' firm order for 60 E175 jets and options for another 90 of these aircraft takes the total order potential up to 150 aircraft. The company added that the firm orders, which have a value of $2.5 billion at list price, will be included in its fiscal 2013 fourth-quarter backlog.

Including this order from American Airlines, Embraer has received firm orders and options for more than 700 E-Jets from U.S. airlines during 2013, for both current-generation and the E-Jets E2s. The E-Jets family is flown by some 65 airlines from 45 countries.

American Airlines noted that the CRJ900s will have 12 First Class, 32 Main Cabin Extra and 32 Main Cabin seats. The firm order of CRJ900 aircraft will be operated on behalf of the company by PSA Airlines, Inc., a wholly owned subsidiary of US Airways. American Airlines expects to begin taking delivery of the CRJ900s in the second quarter of 2014.

The Embraer E175 type aircraft will feature 12 First Class, 20 Main Cabin Extra and 44 Main Cabin seats, and American Airlines expects to begin taking delivery in the first quarter of 2015. American Airlines said it will determine which regional carrier will fly the E175s at a later date.

Kenji Hashimoto, American Airlines' Senior Vice President - Regional Carriers, said, "Now that we've closed our merger with US Airways, we can deliver a top-tier regional product that offers a First Class cabin, Main Cabin Extra and in-flight Wi-Fi - important elements of an improved flying experience for our customers. These new regional jets are also a big win for our employees at our regional subsidiary, and will greatly improve economic efficiencies by lowering operating costs."

AAL closed Wednesday's trading at $25.99. In Thursday's pre-market, the stock is up $0.21 or 0.81 percent to $26.20.

ERJ closed Wednesday's trading at $30.18. In Thursday's pre-market, the stock is adding $1.50 or 4.97 percent to $31.68.

On the Toronto Stock Exchange, Bombardier closed Wednesday's trading at C$4.50, down C$0.13 or 2.81 percent on a volume of 3.94 million shares.

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by RTT Staff Writer

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