This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx /-------------------- advertisement -----------------------\ Explore more of Starbucks at Starbucks.com. http://www.starbucks.com/default.asp?ci=1015 \----------------------------------------------------------/ JetBlue Buying 100 Regional Jets June 11, 2003 By EDWARD WONG The JetBlue Airways Corporation said yesterday that it was ordering 100 regional jets for $3 billion from Embraer, the Brazilian aircraft maker, in order to give its fleet more flexibility in adding routes. The order was an unexpected move by JetBlue, the low-cost carrier based in Queens, because the company had always espoused the efficiencies of operating only one type of plane, the A320 from Airbus. That one-aircraft business model was started by Southwest Airlines in the 1970's and has contributed to the profitability of many low-cost carriers around the world, including JetBlue. The airline said that it would take delivery of the first 7 Embraer 190's in 2005 and would add about 18 a year to its fleet until 2011. JetBlue also has the option of ordering 100 more planes. It has arranged lease financing for the first 30 planes, the company said. The Embraer 190 has 100 seats and is Embraer's newest model. It has a range of 2,300 miles, allowing it to fly almost across the United States, and it could actually be a misnomer to call it a regional jet. JetBlue said it intended to use the planes to add more flights to routes that already exist or to go to new markets that would be unprofitable with the A320's. The company currently serves 21 cities. "There are so many market opportunities," David Neeleman, chief executive of JetBlue, said at a news conference yesterday. He added that JetBlue could potentially start flights to Canada, Mexico and the Caribbean. In an interview, Mr. Neeleman declined to name any specific routes or flights that the company would add, but said any option that would make money was being considered. He indicated that the company would definitely add Embraer jets to Kennedy International Airport, the home base of the company. He also said that long-haul routes would be an option with these planes - JetBlue has expanded more quickly into those distances than any other low-cost carrier. The order gave a big lift to Embraer, which competes with Bombardier Aerospace in Canada for dominance of the regional jet market. In May, US Airways ordered 85 Embraer 170's for $2.1 billion. As airlines try to cut capacity during the current travel slump, they are increasingly turning to regional jets to serve small or midsize markets more profitably. Shares of JetBlue fell $1.63 yesterday, to $32.98, while Embraer rose $2.70, to $19.45. Some experts and analysts had mixed feelings about JetBlue's order. They said that the airline's operating costs would probably go up, but that JetBlue would now be able to move into smaller markets where the big carriers have traditionally charged relatively high fares. "It'll all depend on how it's implemented," said Robert W. Mann, an airline consultant in Port Washington, N.Y. He pointed out that some low-cost carriers, like People's Express, grew too rapidly and failed. Raymond E. Neidl, an analyst at Blaylock & Partners, was positive about the Embraer order in a note to investors. "The new aircraft should allow service to midsized and smaller cities, creating additional growth opportunities limited by the larger A320's," he wrote. "The increase in cost with more than one equipment type should be more than offset by the higher growth rates going out to 2011. With the current A320 fleet type, we expected the high growth rate to taper off over the next three-to-four years." In April, JetBlue announced an order for 65 more Airbus A320's, to increase its current fleet of 41. It has an order backlog of 111 Airbus planes. Mr. Neeleman said he planned to minimize the additional costs of operating two plane types by having separate pools of pilots flying each craft. A pilot flying an Embraer jet would stay attached to that type of jet until he or she had enough seniority to become an A320 captain, he said. An Embraer pilot will not make as much money as an A320 captain, but will make more than a first officer on the A320, he added. Mr. Neeleman said that only pilots would be paid a different rate to work on Embraer jets. Other workers will get the same salary regardless of whether they work on the A320's or the Embraers, he said. Travelers generally find regional jets to be less comfortable than aircraft with larger bodies. Certain dimensions of the long-range Embraer jets will be similar to the Airbus A320's, though. The seat width of the Embraer will be 18.25 inches, a quarter-inch wider than seats in an A320. The distance between seats will be 32 inches, the same as an A320. The two types of planes will also fly at roughly the same altitude - up to 39,000 feet, Mr. Neeleman said. http://www.nytimes.com/2003/06/11/business/11JETS.html?ex=1056337879&ei=1&en=6ca76970725d7f21 --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! Leisurely catch up on events & expand your horizons. Enjoy now for 50% off Home Delivery! 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