By Sneha Shankar - Embraer SA (NYSE: ERJ), the world’s largest regional aircraft maker, signed a deal worth $2.9 billion for 50 jets with Indian startup airline, Air Costa, at the ongoing Singapore air show.
The 50-airplane order includes a mix of 25 E190-E2 jets and 25 E195-E2 jets, Embraer said in a statement on Thursday. The company also acquired an additional purchase-rights order for 50 of these jets from Air Costa, taking the total potential order to 100 aircraft. If the additional orders are signed, the deal will be valued at about $5.88 billion.
“The E2s will give us right-sized seat capacity to cater to the future target markets and unit costs that are competitive with larger re-engined single aisle aircraft," Ramesh Lingamaneni, Air Costa's chairman, said in the statement, adding that the airline has already received a positive response from its customers for the E2 jets.
Air Costa, which is based out of the southeastern state of Andhra Pradesh, currently operates a fleet of four E-170 and E-190 Embraer jets to connect big cities such as Bangalore, Chennai and Hyderabad to smaller towns such as Jaipur in the north and Ahmedabad in the western state of Gujarat. The airline, which currently fills up 74 percent of its capacity, has become the first customer for E2 jets in the Indian market, and will take delivery of the E190-E2 jets in 2018.
Embraer launched its E2 jets in June 2013 and has received 200 firm orders and 200 purchase-rights orders so far. The E190-E2 has a capacity of 98 seats while the E195-E2 can seat 118 people with 12 seats in first class. The Air Costa deal allows the Brazilian plane maker to expand its reach in emerging markets.
"E-Jets have proven their ability to stimulate traffic and sustain airline profitability while providing affordable and comfortable air travel to people in emerging markets like Brazil and China. I see the domestic Indian market developing in a similar way," Paulo Cesar Silva, President and CEO of Embraer Commercial Aviation, said in the statement.
According Bloomberg, Embraer is also investing aboutt $1.7 billion to modify and refresh its E-Jet product, which competes with Mitsubishi Aircraft Corp. and Bombardier Inc.(TSE:BBD.B).