Bloomberg — Embraer SA (ERJ) is in talks with Singapore Airlines Ltd. to supply its Scoot unit with regional jets, giving the low-cost subsidiary a smaller aircraft capable of serving more destinations in the region.
The airline is considering the Brazilian planemaker’s E-jets, which typically seat 80 to 146 passengers, on services within Southeast Asia, according to people familiar with the talks. Any potential order could eventually swell to as many as 50 aircraft over time, two of the people said. Talks are still ongoing and an agreement isn’t certain, said the people, asking not to be identified as the discussions are confidential.
The market value of 50 Embraer 190-E2 jets was about US$1.61 billion in 2021, based on prices provided by aircraft appraiser Avitas Inc., though customers typically negotiate steep discounts on orders.
A spokesperson for Embraer declined to comment, while a Scoot representative said the company does not “comment on any confidential discussions that we may or may not have with our partners and suppliers.”
Agreeing to a deal with the Brazilian planemaker will add a third aircraft manufacturer to Singapore Airlines, diversifying a fleet currently built around Boeing Co. and Airbus SE aircraft. Singapore Airlines Group, which consists of its main flagship namesake carrier and its low-cost cousin, has never operated such a small plane in its recent history.
Embraer has struggled to win buyers for its re-engined E2 model, of which it has delivered 56 aircraft, with a backlog of 191 jets. Its predecessor still has 106 orders to fulfill and has clocked more than 1,700 purchases since the late 1990s.
The carrier is seeking a deal for more nimble jets than the Airbus A320neo and Boeing 737 Max to cater to markets like Indonesia, a fast-growing but vast archipelago formed of thousands of islands that make up its burgeoning population of 277 million people.
With planemakers’ long lead times for deliveries, airlines are rapidly replenishing their fleets with more readily available, fuel-efficient and lower carbon emitting planes.
Airlines have been ramping up their fleets as travel demand rebounds from the Covid-19 pandemic. Asia, which has been the slowest to ease travel curbs, is now reopening. Singapore Airlines plans to add flights to East and Southeast Asia from early next year as it looks to reach or exceed pre-Covid levels in several destinations in the region by March 2024.
--With assistance from Anurag Kotoky
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