Embraer Gets 5 More E-175 Orders from Republic Airways - Analyst Blog

A generic image of a stock chart Credit: Shutterstock photo

The Brazilian jet maker Embraer SAERJ received a firm order for five more of its next-generation E-175 aircraft from Indianapolis-based Republic Airways Holdings Inc. RJET , a U.S. regional operator. The order is valued at $222 million at list prices.

The deal will be included in Embraer's order book for the first quarter of 2015 while deliveries are slated to be made by mid 2016.

The latest contract is an add-on to two contracts signed between 2013 and 2014 under which Republic Airways placed orders 97 E175s. In September last year, Embraer secured a firm order for 50 next-generation E-175 aircraft from Republic Airways under a $2.1 billion deal at list prices. In Jan 2013, Republic Airways ordered 47 E-175 aircraft. Barring the latest deal, Embraer also has an option of selling an additional 32 jets of the same model to Republic Airways.

Embraer is the world's third largest commercial aircraft manufacturer after The Boeing Co. BA and Airbus. The company designs, manufactures and sells aircraft and systems under both commercial and executive aviation, and defense and security segments.

Embraer's 76-seater E-175 model has dominated the commercial aviation market with around 80% of orders.

Republic Airways − the largest E-Jet fleet operator in the world − controls Chautauqua Airlines, Republic Airlines and Shuttle America. It offers nearly 1,300 flights to 110 cities in the U.S, Canada and the Caribbean.

E-Jets are currently used by 65 airlines from 45 countries and have a 62% market share, based on deliveries, in the up to 130 seat jet capacity category. The popularity is largely due to their improved efficiency and lower costs.

Embraer expects to deliver between 95 and 100 commercial aviation jets in 2015. Revenues are expected to be between $6.1 billion and $6.6 billion for the year. At 2014 end, the company had an order backlog of $20.9 billion, up 14.8% year over year.

However, Embraer failed to meet the Street expectations for fourth-quarter earnings by 33%. The reported figure also plunged 65.4% year over year. Embraer delivered 82 jets in the fourth quarter 2014, down 3.5% from 85 deliveries in the year-ago quarter.

Embraer currently has a Zacks Rank #5 (Strong Sell). Better-ranked stock in the same space include Northrop Grumman Corp. NOC with a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

NORTHROP GRUMMN (NOC): Free Stock Analysis Report

EMBRAER AIR-ADR (ERJ): Free Stock Analysis Report

BOEING CO (BA): Free Stock Analysis Report

REPUBLIC AIRWAY (RJET): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.