Embraer could keep dominating regional aircraft market, says Bloomberg Intelligence report

Embraer could keep dominating the regional aircraft market with its ERJ 175 aircraft, said Bloomberg Intelligence in a report. Analysts George Ferguson and Melissa Balzano said: ""Embraer jets will likely remain the largest fleet of operated regional aircraft, given its ERJ 175 is the only plane in production that can fly under US scope clauses, which could promote new orders."" US pilot unions had signed a contract restricting the size of aircraft that can be flown by a non-mainline pilot. The US scope clause has a 76 seat or 86,000 pound limit on operating regional aircraft. The analysts said that restriction ""doesn't appear to have changed in negotiations"". The scope clause has weakened the attractiveness of the next-generation E2 aircraft, however. The jet exceeds the 86,000 pound limit - even if it were below 76 seats. The only letter of intent for the aircraft was from SkyWest - a contract-based regional carrier for airlines such as American, Delta, and United - for 200 aircraft placed in 2019. However, unless the scope clauses are lifted, the airline is unlikely to move forward with the order. ""The E175-E2's entry into service has been pushed to 2027 and potentially indefinitely,"" Bloomberg Intelligence added. ""Without a scope-clause change, this plane's development won't be completed, as sales would be too few."" Embraer's E170/175 makes up around half of the active regional fleet, with the rest comprised of smaller Embraer aircraft or Bombardiers that are no longer being manufactured. The report added that while 30% of the entire regional fleet is parked, only 2% of the E175 fleet is parked. Though, if the weight and seat limit were heightened, the A220-100 could be prove a worthy competitor against Embraer. ""Its clean-sheet design makes it more efficient, but it's also pricier,"" the analysts commented. ""We put the average Airbus A220 at $37 million versus $25 million for Embraer's E175."" With the limits in place, the A220 rivals the E190/E195 for less in-demand routes in smaller markets flown by mainline pilots. Furthermore, with CRJ production axed in 2020 after Bombardier sold the unit and the buyer of the unit, Mitsubishi, shut down the programme: Embraer could pick up some replacements. Over the next decade, regional replacements will be required and the E175 as the only scope-compliant aircraft in production, this puts Embraer in a beneficial position. In the second quarter of the year, Embraer said it delivered eight E175 aircraft, down slightly from the 10 E175s it delivered in the same period a year prior. As of the quarter's end, it had a firm order backlog of 179 E175s - 96 of which comprised of an order from American Airlines.