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June 18, 1997

Continental Exercises Embraer Options

Another day, another Embraer order. Mauricio Bothelo, president and CEO of Embraer, was all smiles again as he revealed that Continental has exercised options for an additional 25 EMB-145s. The new fleet will add to the original order of 25 announced during last year's Farnborough show, bringing the total number of aircraft scheduled to be delivered to Continental to 50. The deal is estimated to be worth $750 million.

With 150 remaining options, Continental Express President David Siegel remained optimistic that his airline will be able to exercise most if not all of those options in the future. Siegel told the press they should "prepare for this to be a regular event."

Throughout the conference, Siegel had nothing but praise for the 50-seat aircraft and the company that builds them. From customers to crews, Siegel said, "I can't tell you how overwhelmingly positive the reaction to the aircraft has been."

As with the American Eagle contract announcement, Continental Express also emphasized the overall quality of the plane as a key factor in their decision. Continental pointed to the rigorous comparison tests performed by American Eagle as proof of the EMB-145's superiority. While Continental acknowledges, "We didn't have a chance to compare the CRJ to the 145," Embraer officials still contend it isn't a coincidence that two of the largest regional airlines chose Embraer.

Embraer plans to simply tack the 25 additional aircraft onto the current delivery schedule for it's launch customer, avoiding any interruptions in the rate of delivery. However, Bothelo also announced plans to increase production to accommodate all the new orders, going from the company's present rate of 3 aircraft per month and gradually increasing to 6 per month by May of 1998.

The converted options are for Embraer's new EMB-145 long range version which incorporates the more powerful Rolls Royce Allison AE3007A1 engine. Siegel noted the new engines, which provide increased performance for hot climates and high altitudes, will "open up some new markets for Continental Express." After the long range batch is delivered, Siegel says the airline plans to evaluate the mixture to determine which version will be included in additionally exercised options.

Continental Express also asserted that the new planes were for growth purposes, but the company may consider replacement orders for turboprops at a later date. Siegel mentioned Continental's continued interest in the EMB-135, and said his airline is "encouraging Embraer to put together a firm proposal." Continental is presently in talks with Fairchild Dornier as well about supplying the airline with a 37-seat model. The airline said they anticipate a decision on the smaller planes by the end of this year.


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