=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SF Gate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2004/02/09/i= nternational1520EST0669.DTL ---------------------------------------------------------------------- Monday, February 9, 2004 (AP) Brazil's Embraer launches new mid-size jet for carriers struggling to cut c= osts TOM MURPHY, Associated Press Writer (02-09) 12:20 PST SAO JOSE DOS CAMPOS, Brazil (AP) -- Betting that airlines will continue their aggressive cost-cutting drive, Embraer SA inaugurated a new mid-sized jet Monday aimed at grabbing a market share now served by larger planes that frequently cost carriers more money to fly. The 100-seat Embraer 190, designed and developed by the world's fourth-largest jetmaker for $850 million at its massive Sao Jose dos Campos complex, was towed from a hanger and doused with champagne by President Luiz Inacio Lula da Silva while an orchestra played. The first delivery of the $30 million jet is scheduled to go next year to wildly successful low-cost carrier JetBlue Airways Corp., which has ordered 100 of the planes to help it expand its U.S. presence in the Midwestern and the mid-Atlantic states. Silva said the jet, rolled out less than three years after Embraer unveiled a new 70-seat jet, shows Brazil "is not just an exporter of agricultural commodities and raw materials, but also manufactured products of high aggregate value." "We believe we can manufacture airplanes as well as anybody in the world= ," said Silva, a former lathe operator and radical union leader who became Brazil's first working class president in 2002. Embraer has another order for the 10 of the jets, though the company won= 't reveal the buyer. JetBlue has an option to buy an additional 100 Embraer 190s, and Air Canada is in talks to buy 45. Airlines like the Embraer 190 because passengers can fly in comfort on a plane that is more than 10 percent cheaper to operate than larger jets made by Boeing and Airbus. Embraer's main competitor is Canada's Bombardier, the third-largest jet manufacturer, but analysts predict the new Embraer model could give the Brazilian company an edge over its rival. "One of the biggest advantages Embraer has is cabin size compared to Bombardier," said aviation analyst Richard Aboulafia of the Washington, D.C.-based Teal Group. Bombardier's mid-sized jets "feel like flying in a pencil, but they offer a nice cost advantage because they have thinner fuselages, so it's cheaper to push the planes through the air," he said. The Embraer 190 can be manufactured with 108 passenger seats in a plan t= he company calls a "higher density configuration," but JetBlue chief executive David Neeleman said his company won't have more than 100 seats on its planes because passengers would feel too cramped. "Comfort is very important for the American market," said Neeleman, who attended Monday's ceremony. Most of Embraer's sales for the new jet will probably be in the U.S., but many large U.S. airlines that would seriously consider buying it must first convince union pilots to scrap contract language guaranteeing they will fly larger planes, Aboulafia said. Pilots are "concerned about replacing a $120,000 a year DC-9 job with a $60,000 job flying Embraer jets," he said. But with JetBlue becoming an airline industry leader, many analysts predict carriers still hurting from the Sept. 11 travel drop-off will come to terms with their unions and open up the door for carriers to buy the smaller jets. The benefits for Embraer and South America's largest economy are obvious if that happens, Aboulafia said. Associated Press Writer Alan Clendenning contributed to this report from Sao Paulo, Brazil ---------------------------------------------------------------------- Copyright 2004 AP