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.
Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Embraer. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
More from The Motley Fool
Embraer, S.A. Had a Solid End to 2017
Embraer nailed down a slew of orders for its E175 regional jet in the last few months of 2017, bolstering its production outlook for the next two years.
Embraer Deal Could Put Boeing Back in the Fighter Business
There's more to fighters than just jet engines. Turboprops could power Boeing's defense profits going forward.
Boeing Kicks the Tires at Embraer
Boeing has held talks with Embraer about potentially acquiring its smaller rival, even though the Brazilian government would probably block such a deal.