) entered into a contract with
Republic Airways Holdings Inc.
) involving the sale of 47 EMBRAER 175 jets. The jets will be
used by Republic Airlines, a subsidiary of Republic Airways,
operated under the American Eagle brand. The deal includes an
option of additional 47 jets, subsequent to which the contract
will be valued at $4 billion. The first jet is scheduled to be
delivered by mid 2013.
The company is the leader in 70-120 seat jets segment and has
60 airlines in 40 countries as its customers. With a target to
expand further, Embraer has included many new features to its
existing E-Jets like addition of new wingtips and increase of
fuel efficiency to the tune of 5%.
Republic will be the first to receive the enhanced E175, with
an existing Embraer fleet of 132 E-Jets, which will grow further
to 179 with this contract.
The deal is expected to revive earnings expectations for the
company, which came down after the company lost a major contract
from Delta Airlines to its rival, Bombardier Inc., a Canadian
company. The stock price grew by a whopping 9.1% after the
announcement of the contract, trading at $31.16 per share. The
contract is subject to regulatory approvals, which are to be
granted in the first quarter of 2013.
Embraer is expected to release its fourth quarter 2012 results
on Mar 18, 2013. With a Zacks Rank #5 (Strong Sell) and a
Zacks Earnings ESP
of -9.8%, it is most likely that the company will miss its Zacks
Consensus Estimate of 82 cents for the quarter.
Other stocks to watch out for in the industry are
Erickson Air-Crane Inc.
Huntington Ingalls Industries Inc.
). These companies hold a Zacks Rank #1 (Strong Buy) and Zacks
Rank #2 (Buy), respectively.
ERICKSON AIR-CR (EAC): Free Stock Analysis
EMBRAER AIR-ADR (ERJ): Free Stock Analysis
HUNTINGTON INGL (HII): Free Stock Analysis
REPUBLIC AIRWAY (RJET): Free Stock Analysis
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