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Adam Levine-Weinberg a senior Industrial and consumer goods specialist at the Motely Fool released an article on April 16th, 2016 discussing about how Embraer, a Brazilian jet maker, is making changes to its next generation of models. Levine-Weinberg is watches the stock market heavily.
On Tuesday, aerospace company Alaska Air placed an order with Embraer for 30 of their E175 regional jets. These jets will be delivered sometime between the year of 2017 and the year of 2019. This big order has been much anticipated at Alaska has mentioned its intention of order 30 of the regional jets sometime back in January. Alaska Air has also mentioned during that time period that Embraer was in the lead for earning its business. Because of this news, it is no surprise that Alaska Air did decide to go along with Embraer to order the 30 regional jets.
With this deal closed, this puts Embraer in good momentum as it will transition into its next generation of E2 aircraft models.
It seems as in Alaska has two different purposes for ordering the new regional jets. One being that Alaska Air’s lease for the Bombardier Q400 turboprops are expiring in 2018. This will account for 15 of the Q400 Bombardier turboprops Alaska Air has. The other being that Alaska Air foresees a lot of opportunities for growth where the new E175 and be utilized.
Here’s what Levine-Weinberg has to say about this.
“Embraer's E-Jets are known for being extremely comfortable, especially by comparison to the relatively cramped Q400 turboprop. With competition from Delta Air Lines mounting in Seattle, Alaska doesn't want to offer an inferior passenger experience. Thus, rather than extending the 15 expiring Q400 leases, those planes will be replaced with E175s.”
There is also a very high chance that there will be more opportunities for Embraer to have more sales in the future. This is because Alaska Air recently bought Virgin America. As of now, Virgin America serves a little bit over 20 airports today in comparison to the over 100 that Alaska Air serves.
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