American Airlines has ordered four Embraer E175 planes to operate with its subsidiary Envoy Air. This marks America's second order this year for the regional jets. The previous deal, announced in June, was for seven E175s and demonstrated the recovery of the U.S. regional aviation market from the impact of the COVID-19 pandemic.
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The order news caused Embraer's shares to rise by up to 1.2%, and analysts view it as a sign of improving demand and stronger deliveries in the future. Santander analysts told their clients that the order "highlights that the company's efforts to increase its commercial backlog is bearing fruit and also indicates that demand for E1s in the U.S. could be picking up again," referring to the first generation of E-Jets which are still popular with U.S. regional carriers.
Embraer said in a statement that the order, valued at over $230 million at list price, will be added to its fourth-quarter backlog, with deliveries expected to take place in the fourth quarter of 2024. The order will increase Envoy Air's fleet of E-Jets to more than 150 aircraft by the end of next year, according to Embraer. The United States is the primary market for Embraer's first-generation E-Jets, which the company refers to as "the backbone" of the regional network in the country. "These new jets will allow us to continue growing with American Airlines ... as the U.S. domestic and regional markets recover from a very challenging few years," said Envoy Air Chief Executive Pedro Fabregas in a statement.
Last month, Embraer announced a firm order for five E175s from Nigeria's Air Peace. Luxembourg's Luxair and Aerolineas Argentinas also said they would add the next-generation E195-E2 to their fleets. According to JPMorgan analysts, Embraer's backlog "continues to grow and book-to-bill is approaching 1.0x," easing the commercial concerns on E2 and E175 demand. Embraer CEO Francisco Gomes Neto told Reuters earlier this month that the company is confident it will achieve its outlook for aircraft deliveries in 2023, with expectations of growth by around 25%, and that it hopes to maintain that pace next year.
