Story first appeared on USA Today
American Airlines customers flying regional routes will soon be able to fly on bigger regional jets that include first-class cabins.
To do so, AA has reached a deal with regional affiliate Republic Airways to fly 76-seat Embraer E175 jets under for AA under the American Eagle brand.
It's the latest change for the nation's No. 3 airline, which last week captured the aviation industry's attention by announcing a new logo and paint job for its planes.
As for today's (Jan. 24) news, American's deal with regional carrier Republic Airways calls for Republic subsidiary Republic Airlines to fly 53 Embraer E175s painted in colors of American Eagle.
The jets will go into operation for AA at a rate of two or three aircraft per month starting in mid-2013, according to American. All of the 53 jets in covered in the 12-year pact are expected to be flying by early 2015.
The deal with Republic -- which must still be approved by American's federal bankruptcy court judge -- wouldn't have been possible under the unit's previous contract with pilots. American credited its new contract with pilots -- ratified in December -- for paving the way for the pact with Republic.
The Dallas Morning News explains:
"Prior to the pilots' ratification of a new contract in December, American was limited to only 47 regional jets of more than 50 seats to be operated by commuter partners, and the airplanes could have a maximum of 70 seats.
"The new deal raises the maximum seats to 76 airplanes. In addition, the number of such airplanes can be as high as 65% of American's own mainline fleet of single-aisle airplanes."
The Morning News says AA had 487 single-aisle aircraft in its mainline fleet as of Dec. 31.
As for AA, it says the deal to fly the 76-seat Embraers will help it match the right size plane to market demand on certain routes and diversify its roster of regional carriers.
The move also will allow AA to offer first-class services on the Republic-operated American Eagle flights. Republic's American Eagle-branded Embraers will be configured with 12 first class seats and 64 in coach.
"This is a significant milestone in our company's history," Chuck Schubert, AA's Vice President – Network Planning, says in a release. "Establishing a large regional jet fleet has long been part of our business plan and this agreement is another example of how we are executing on that plan in a way that benefits our business and our customers. We will offer more flights at the right intervals throughout the day in key markets while providing more opportunities for customers to travel in the First Class cabin to key business markets."
American did not immediately say where it intended to deploy the 76-seat E175s, though a pilots union official is quoted by the Morning News as saying he expects them to be "largely deployed" at AA's hub at Chicago O'Hare.
Travel Weekly notes "Republic's Chautauqua Airlines subsidiary currently operates regional jet service for American from Chicago O'Hare with 15 Embraer E-140s, planes that seat 44 passengers."
Evolving role of American Eagle:
The move also continues an evolution of how the American Eagle unit meshes with its with mainline partner American. Both carriers are units of parent company AMR.
For many years, AMR put only the flights of its American Eagle unit under its American Eagle brand. Flights operated by other, non-owned partners had been dubbed AmericanConnection flights.
Now, however, AMR is branding all of the regional flying within American's route network as American Eagle. That includes flights operated by existing regional partners such SkyWest and Chatauqua as well as the flights soon to be operated by Republic.
Bloomberg News writes it's "part of American's efforts to diversify suppliers of commuter flights beyond its American Eagle unit and to add larger regional jets that are more economical to operate at higher fuel prices. American ... was exploring a spinoff of Eagle when it filed for bankruptcy in November 2011."
Still, AA and parent AMR appeared to have tabled that move as the economy soured in recent years. It's unclear if or when the company might try to resume that effort.
Boon for jet-maker Embraer:
The American-Republic deal also has significant implications to jet-makers.
News of Republic's tie-up with American came with another announcement that Republic will buy 47 new E175s from Embraer -- to be used for the AA regional flights -- as well as an option for 47 more. The total value of the deal could be as much as $4 billion at list prices, according to The Associated Press.
CNBC/Reuters writes "the contract is the latest major order for bigger jets in U.S. regional fleets under renegotiated labor deals. In December, Canadian rival Bombardier booked a deal for up to $3.29 billion in new regional jets for Delta Air Lines."
But Reuters writes the new Republic order "provides welcome relief for the order-starved Brazilian planemaker" Embraer.
Against that backdrop, Reuters writes "the battle for pent-up demand in the U.S. is just getting started, according to Paulo Cesar de Souza e Silva, the head of Embraer's commercial aviation unit."
"American is still going to buy more of that size plane," Silva told Reuters in a telephone interview.
He also indicated efforts to win sales from several other big U.S. airlines.
"We've got American, United, US Airways and regional operators too. In the next 18 months those campaigns will determine orders for about 250 to 400 planes."
Embraer's shares jumped on the news while Bombardier's fell.
