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Monday, November 22, 2004

Supply Side

  • In what may strike many as a surprise decision, Air Canada [ACE] is buying its next 73-seat RJ from Brazil's Embraer [ERJ], not Canada's Bombardier [BBD]. An Air Canada spokesman declined to go into details on the decision. With its firm order for 15 Embraer 175s, Air Canada is the launch customer for what is the third plane in the Embraer 170/190 family. The deal also includes options for 15 additional planes. The firm order is valued at $420 million. The first plane is to be delivered in July 2005. It is expected to be certified late this year. The Embraer 175 will be configured into a two-class cabin for Air Canada. The carrier will be flying the Embraer 175, and the 90-passenger Embraer 190s it had ordered earlier, on its mainline routes. Its regional unit, Jazz, will be flying new 70-seat CRJ 700s.
  • Tame, Ecuador's state run airline,signed a letter of intent to buy two Embraer 170LRs, configured for 70 passengers, and one Embraer 190, for 98 passengers. The deal includes options to buy four other planes.
  • The Chinese government has guaranteed the purchase of at least 10 Embraer 145s in 2005. The planes will be built by China Aviation Industry Corp., a joint venture partner with Embraer. The government has not indicated which state-run airline will fly the new planes.
  • Hawker Pacific has signed a five-year deal with Embraer to acquire all the spare parts for the EMB 110 and EMB 120 currently housed in Melbourne, Australia. Under the pact, Hawker will be responsible for maintaining the spares for the turboprops, and inventory control in Australia and the Pacific Rim.
  • Air Canada Jazz has extended the lease on a Bombardier Dash 8-300 for another 29 months. Wells Fargo Bank Northwest owns the plane. Sigma Aircraft Management handled the lease extension.
  • American Utiliticraft Corp. [AMUC] signed a $1.2 billion deal to sell 100 FF-1080/300s to Global Air Group, of Brisbane, Australia. Production of the prototype of the FF-1080 freight feeder aircraft will begin this month. The 300 series is 10 feet longer than the FF-1080/200 series, which was delayed and never developed after the 2001 industry downturn. American Utiliticraft will only seek certification for the 300 series. Global Air plans to deploy the new plane to feed its jumbo jet operations in Africa and Europe. It will also have exclusive distribution rights to the new plane in those two areas.
  • Independence Air [Flyi] has obtained an extension from Airbus on the delivery of 10 new A319s. Instead of taking delivery on the planes next year, Airbus will deliver the planes in 2007. By delaying the delivery, Independence reached new terms on its payment schedule. The carrier made its delayed payment to Airbus and it is now current. Independence continues to negotiate with the leaseholder of its fleet of CRJ200s to try to reduce the $83 million lump sum payment due in January.
  • Chromalloy Gas Turbine Corp., a unit of Sequa Corp. [SQAA], signed a 10-year contract with Independence Air to service the 187 GE CF-34 engines on its CRJ 200 fleet. Under the "power by the hour" contract, Chromalloy has the exclusive responsibility to maintain and overhaul the engines.
  • SkyWest [SKYW] signed a 16-year contract with Standard Aero to maintain the GE CF34-8 engines on its growing fleet of CRJ 700s. The carrier currently has 10 and will have another 20 CRJ 700s by next May. Under the agreement, SkyWest will pay a fixed hourly fee based on the number of hours each engine is flown in a month. Standard Aero already services other engines in the SkyWest fleet.
  • The Federal Aviation Administration (FAA) has awarded a five-year contract to Airservice Australia to operate four air traffic control towers in Hawaii, one in Guam and one in Saipan. Airservice, a unit of the Australian government, operates that nation's air traffic control system.
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