Embraer Lands Potential $8.2 Billion SkyWest Contract

More and more often, when a U.S. airline buys a new airplane, it's Brazil that gets the money.

On Tuesday, this happened again, when Brazilian planemaker Embraer (NYSE: ERJ  ) announced that it has received a firm order from United Continental (NYSE: UAL  ) feeder airline SkyWest (NASDAQ: SKYW  ) for the purchase of E175 aircraft.

Embraer notes that SkyWest may buy a further 60 planes, conditioned on SkyWest's securing "capacity purchase agreements," such as the one it has with United, with other major U.S. airlines. Finally -- and increasing the total potential size of this contract to a level five times the original announcement -- Embraer says SkyWest has optioned a further 100 E175s.

For now, Embraer is putting only the first 40 planes in its backlog. But if all goes well, this contract could be worth $4.1 billion (at list prices) for the first 100 planes, and an additional $4.1 billion for the next 100.

Embraer's E175 jet is a dual-class, 76-seat regional airplane. With more than 150 planes in service already, it is flown by 60 airlines based in 40 countries around the globe.


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