German carrier Eurowings Luftverkehrs has extended the leases on five BAE Systems [PNK: BAESY] BAe 146s. Eurowings has operated the BAe 146 passenger jets for nearly 10 years on a range of international and domestic routes. The airline is now part of the new Lufthansa Regional concept in Europe and Eurowings will continue to fly the BAe 146s. The lease extension covers four BAe 146 Series 300 and one Series 200 aircraft.

In addition to Eurowings, Lufthansa Regional includes regional partners Air Dolomiti, Augsburg Airways, Contact Air and Lufthansa CityLine. Under the new umbrella group, Lufthansa Regional promises passengers a comprehensive program of direct flights and transfer connections.

"As we assimilate our operations into that of Lufthansa Regional, we find that the BAe 146 is the right size aircraft with good economics for our operations," said Peter Kranich, senior vice president of Eurowings. "We like its flexibility and its reliability and our passengers love the wide, comfortable cabin."

BAE Systems Regional Aircraft reported that transactions on 76 aircraft took place during 2003. Most of these transactions were for new leases and lease extensions and covered 42 BAe 146/Avro RJs, six ATPs and 28 Jetstream 31/32s, with a transaction value of more than $150 million.

"Despite a difficult market in the regional sector there were some major positives for us," said Paul Stirling, BAE's senior vice president of asset management. "The retention by Lufthansa of the RJ85 fleet coupled with the Eurowings lease extensions [are] further evidence that in the intensely competitive 70-100 seat market, a clear option for many carriers is to stay with the product they know."

Stirling added that BAE believes that its aircraft compete well with the new generation of regional jets, such as the Embraer [NYSE: ERJ] 170/190 and Bombardier [Toronto: BBDb] CRJ-700/900, in terms of performance, comfort and amenity, and that the reported lower operating costs of the new jets will be offset by the higher purchase and lease prices.

Under its new regional concept, German airline Deutsche Lufthansa [OTC: DLAKY] is rebranding the five regional European airlines under the name Lufthansa Regional. The airlines' aircraft will be repainted with a blue Lufthansa Regional logo on a white background, and the airlines will work more closely together.

"Regional traffic is a substantial part of our worldwide offer," said Wolfgang Mayrhuber, chairman of the board of Lufthansa. "For our customers in the regions and thus, for the regions themselves, direct flights and a good connection with the Lufthansa hubs in Frankfurt and Munich are of the highest economic importance. Transfer passengers, who travel with Lufthansa's regional partners, in numerical terms already fill the equivalent of 19 jumbo jets a day. Via the transfer connections with Lufthansa and its partners in the Star Alliance, passengers from Bremen to Friedrichshafen can travel smoothly to more than 700 destinations in 128 countries."

The Star Alliance, established in 1997, is a network of 15 major international carriers that have coordinated route and scheduling services to streamline passenger travel.

>>Contact: David Dorman, BAE Systems, 44 (0)1582 488336, email: david.dorman@baesystems.com.<<