By now, you've probably seen that JetBlue plans to cut back on expansion to boost earnings after a . You may not have noticed that the cutbacks could include ridding its fleet of Embraer regional jets.
Actually, there's no telling exactly what will occur.
JetBlue said it might take delivery of all 30 jets it has on order for next year, and sell or lease older models. Would any of them be Embraer jets? It's possible; JetBlue has taken delivery of 21 of the company's aircraft, mostly new E190 regional jets.
The newness of the E190 should prevent it from being a part of any planned cutback. History, too, favors the Embraer aircraft: JetBlue was the to employ the E190 for low-cost regional transportation.
Still, anything is possible, including delays or cancellations in existing orders.
Remember: JetBlue CEO David Neeleman in January told a crowd of analysts that the E190 was experiencing operational issues, and that the plane "certainly hasn't been up to what we thought we could do."
So is a paring-back of the JetBlue order book -- which includes an 80-plane backlog as of this writing -- likely? And, if so, how badly would that hurt earnings?
I'm unconvinced the company will turn its back on Embraer. But if it did, the cutbacks probably wouldn't be huge (JetBlue has to grow, after all), leading to only a temporary blip in earnings.
Moreover, Embraer is becoming increasingly diversified, with a global client list and a .
China's HNA Group has , while U.S. Airways has 57 in the queue.
Both rival JetBlue in their commitments to the Brazilian jet maker. Meanwhile, mainliner UAL , parent of United Airlines, has successfully rolled out upscale regional service using Embraer aircraft.
Perhaps that's why investors bid up the firm's shares by another 3% on Wednesday.
Or maybe it's that, as bad as it would be to see Embraer lose orders from JetBlue, the jet maker's backlog has grown from $10.2 billion in June to $13.3 billion today.
Little, if any, of that gain in orders is attributable to JetBlue.
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