Topics: Northwest, Embraer, Honda Jet

Northwest Gets First ERJ 175
Embraer (ERJ) delivered the first ERJ 175 jet to Northwest Airlines (NWA). The airline’s firm order for 36 ERJ 175s will be operated by Compass, its soon-to-be launched regional airline. The delivery follows the delivery to Mesaba of the first CRJ900 NextGen aircraft last month. Related Story  Northwest’s new aircraft will be configured with 76 seats, 12 first-class and 64 coach.
Northwest recently told investors that the new regional jets offer a 16 percent improvement in margins compared to its DC-9s. They also allow the airline to maintain service on some routes that were once only seasonal, such as Minneapolis to Vancouver which was too far for 50-seat jets. The route is well within range of the ERJ 175.
The airline’s current order book is all it can take under the scope concessions it gained during bankruptcy unless it increases the size of its mainline fleet in which case it could add another 18 regional jets.
In comparison, Continental’s (CAL) agreement caps the regional jet size to 50-seats, unless the larger equipment is flown by mainline pilots. Instead, it is adding 74-seat Bombardier (BBD) Q-400s under its new Pinnacle/Colgan (PNCL) agreement. Related Story  While American (AMR) can fly 50 70-seat regional jets, it has only scheduled 25, with the balance of its fleet being turboprops such as the ATR-72.

Q2 Yields Record Backlog for Embraer
Embraer set a record when its firm order backlog reached $15.6 billion with the $600 million in commercial, executive and defense sales made in the second quarter. The company maintains its delivery projections for the year at between 165 and 170 aircraft after delivering 36 jets during the quarter for a total of 61 aircraft this year, including 47 commercial jets.
Deliveries were less than anticipated by Calyon Securities which projected the delivery of 40 jets. “With real orders from a growing and diversifying customer base and a backlog of over $15.6 billion in aircraft orders (close to three year's worth of revenue), we believe ERJ's valuation is attractive,” said Ray Niedl in his analysis. “The order backlog remains healthy. Meanwhile, in the near term, news about competition in the regional jet market is more of a headline risk. The competitive field grows as new players enter the regional aircraft market but we do not believe they will pose meaningful competition for several years. With real orders and a backlog of over $15.6 billion in aircraft orders (close to three year's worth of revenue), we believe Embraer has the competitive advantage with which to continue to grow customer share and gain traction.”

Honda to Produce Jet Engines in NC
Honda Aero, Inc. will establish its corporate headquarters and a state-of-the-art jet engine manufacturing plant in Burlington, N.C., adjacent to the Burlington-Alamance Regional Airport. The new facility will produce advanced jet engines developed and marketed by GE Honda Aero Engines, LLC. GE Honda Aero Engines is a joint venture between GE and Honda Aero, established in 2004 for the development, certification and commercialization of jet engines in the 1,000 to 3,500 pounds thrust class.
The 102,400-square-foot Honda Aero facility will consist of 36,000 square feet of office space, a 58,400-square foot production plant, and an 8,000-square foot engine test cell. Production at the new engine plant will begin in late 2010 with the manufacture of the advanced and efficient GE Honda HF120 turbofan engine in the 2,000-pound thrust class.
Honda Aero will employ approximately 70 associates when the plant reaches its initial production plan of 200 engines per year within about one year of production startup. The company will invest approximately $27 million for construction of the headquarters and manufacturing facility, including equipment.
With a higher thrust-to-weight ratio, higher fuel efficiency, low emissions and the quietest operation in its thrust class, the GE Honda HF120 has been chosen to Spectrum Aeronautical's Freedom and HondaJet, to be produced by the Honda Aircraft Company, Inc., a separate Honda company.