KLM signs preliminary deal for 15 planes from Embraer

Brazilian planemaker Embraer landed the first major European customer for its newly certified E195-E2 passenger jet as Dutch KLM signed a letter of intent for 15 of the upgraded aircraft and options for another 20.

A shake-up among regional jet makers vied for attention at the Paris Airshow as Embraer lined up against the Canadian A220, recently absorbed by Europe’s Airbus, and Japan’s Mitsubishi sought to make a splash with its own rebranded Spacejet.

Embraer, whose commercial aircraft business is in the process of being acquired by Boeing, said first deliveries of the E195-E2 jets to KLM would begin in 2021.

KLM plans to use them at its Cityhopper unit following the deal, worth $2.5 billion at list prices.

The 120-146 seat plane has more capacity and newer engines than its predecessor model, but has been outsold by the A220-300 which notched up further orders at the air show. KLM said it would use a layout of 132-136 seats.

Boeing and Embraer are not yet able to co-operate in the market as their tie-up awaits final approval, but Boeing is expected to offer package deals of E2 and its 737 MAX just as Airbus is now able to group together the A220 and its own A320.

“The Boeing commercial joint venture will unquestionably have an impact on our ability to sell that aircraft around the world,” John Slattery, CEO of the Boeing joint venture in Brazil, told Reuters in a recent interview.

Despite speculation the E2’s name could change, that has not been decided, Slattery said. “The analogue of success is what helps us sell more airplanes and that  means more jobs.”

KLM Cityhopper said the jets could allow it to offer more connections to southern Europe.

Mitsubishi Aircraft Corp said earlier on Wednesday it had signed a preliminary deal to sell 15 newly redesigned Spacejet M100 aircraft to an unnamed North American airline.

The Spacejet M100 is a new and rebranded version of the delayed MRJ70, designed to carry 65 to 88 people and to be more competitive in the dominant U.S. market for regional jets.

Meanwhile, Airbus called on Thursday for a chance to compete for a blockbuster plane order by British Airways owner IAG, which stunned industry executives at this week’s Paris airshow by ordering 200 of Boeing’s grounded 737 MAX.

Airbus announced a new version of its best-selling A321 with close to 240 orders and commitments in Paris, only to see its grip on IAG’s European short-haul networks damaged by the Boeing deal which analysts said shores up the embattled 737 MAX.

Boeing’s top-selling aircraft has been taken out of service worldwide since an Ethiopian Airlines 737 MAX crashed in March, five months after a Lion Air 737 MAX plunged into the sea off Indonesia. A total of 346 people died in the two disasters.

Tuesday’s blockbuster order, worth more than $24 billion at list prices, was partly seen as an effort to preserve competition between planemakers, damaged by the three-month-old grounding crisis. But it jolted Airbus which was caught unawares after signing a smaller order for A321XLRs with IAG.

Wrapping up the world’s largest air show on Thursday, Airbus publicly voiced its frustration over the deal and urged IAG to run a competition for the planes, which would be deployed at Vueling, Iberia, Aer Lingus, Level and part of BA.

“We would like a chance to compete for that business,” Chief Commercial Officer Christian Scherer told reporters, adding that IAG had not issued a formal tender for the narrow-body order.

IAG was not immediately available for comment, but said earlier in the week that it did not comment on negotiations. Boeing declined comment.

The shock announcement of a tentative order for 200 737 MAX jets from IAG stunned the industry and frayed an unusual PR truce between the world’s largest planemakers after Airbus had publicly supported Boeing over the grounding.

Commercial rivalry remains fierce, with Airbus launching its A321XLR - a longer-range version of its A321 - to try to reduce the space left for Boeing as it draws up designs for a new 220-270-seater in the so-called middle of the jet market.

Airbus reported 383 orders and commitments including 239 for the A321XLR. Boeing’s firm and tentative orders came to 247. Both are suffering from slower in demand after a long upswing.

Shares in both companies rose less than 1 per cent.

Airbus announced a last-minute order for 13 of the XLR jets from U.S. budget carrier JetBlue Airways, which is expanding into the cut-throat transatlantic market, joining a varied list of backers including American Airlines.

Airbus hopes to derail Boeing’s plans for a mid-market jet in a gap between traditional narrow-body and wide-body jets by dominating the lower end, where its A321 outsells Boeing.

Reuters