American Airlines has signed a 12-year agreement for Republic Airways Holdings Inc. to operate 76-seat regional jets, the first such agreement in the AMR Corp. unit’s history.
Fifty-three Embraer SA E-175 jets operated by Indianapolis-based Republic will be phased into service at two to three planes a month beginning in mid-2013 through the first quarter of 2015, the airlines said Thursday.
Republic also said it agreed to purchase 47 new aircraft from Brazilian plane maker Embraer and lease a previously owned E-175. It also will acquire five E-175s from an unnamed third party. Embraer’s contract with Republic includes options for another 47 aircraft orders. If all 94 planes were delivered at list prices, the value of the contract could reach about $4 billion, Embraer said.
The accord is 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, based in Fort Worth, Texas, was exploring a spinoff of Eagle when it filed for bankruptcy in November 2011.
Eagle has been limited to operating 47 Bombardier CRJ-700 regional jets with 65 seats for American by the larger carrier’s contract with its pilots union. Concessions made as the labor agreement was renegotiated in bankruptcy allow for more of the bigger jets to be flown for American.