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Bombardier, rival Embraer sign duelling American Airlines jet deals

A Bombardier employee carries out a tail check of a CRJ900 in this file photo.

Christinne Muschi/THE GLOBE AND MAIL

Bombardier Inc. has won a firm order from American Airlines Group Inc. for 30 of its CRJ900 regional jets valued at about $1.42-billion (U.S.).

But the win is a qualified one because American is ordering an even greater number of regional jets from Bombardier's arch-rival Embraer SA: 60 new E175 planes in a deal valued at about $2.5-billion.

The Embraer order could rise to more than $6-billion if Fort Worth, Texas-based American exercises options on another 90 E175s.

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The value of the Bombardier order could rise to about $3.38-billion if American converts options on an additional 40 of the planes.

"Embraer appears to have received the better end of American's RJ split order in terms of the number of aircraft and dollar value. This order still leaves the door open for the CSeries (110-160 seats) and we note American's appetite for multiple aircraft manufacturers," Stonecap Securities analyst Scott Rattee said in a research note Thursday.

The much-anticipated deal nonetheless provides a boost to Montreal-based Bombardier's efforts to bulk up its regional-jet order backlog.

It comes just after the closing of the merger between American's parent AMR Corp. with US Airways Group Inc. and American's emergence from bankruptcy protection.

The regional-jet orders were held up earlier this year when U.S. antitrust authorities sued to prevent the tie-up between the two major airlines.

Bombardier is in fierce competition with Embraer in the contest to win orders for their latest regional-jet models.

"We congratulate American Airlines and US Airways on their merger and are delighted that the merger airline will use Bombardier aircraft for its present and future fleet requirements," said Bombardier Commercial Aircraft president Mike Arcamone.

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"It's been an exciting week for American Airlines. We've closed our merger with US Airways Group, Inc. and as we begin the work to harmonize the American and US Airways operations, an agreement like this with Bombardier will greatly improve our ability to optimize our flying with the right aircraft to meet customer demand. This order will allow American to lower costs by replacing older aircraft."

Bombardier's 76-seat CRJ900 NextGen aircraft will be part of US Airways' commuter unit, PSA Airlines.

PSA currently operates a fleet of 35 50-seat CRJ200s, said Mr. Rattee.

American said it has still not decided which of its regional partner carriers will operate the Embraer planes.

"We expect that all options for Bombardier and Embraer will ultimately be exercised based on our estimate that there are 328 RJs in the combined fleet that are due for retirement and/or where a higher seat capacity could be implemented," said Mr. Rattee.

The values of the new planes being ordered by American are based on current list prices. Customers routinely get discounts off the list price from aerospace manufacturers.

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