EMBR3 Embraer SA

By Andrew Tangel and Robert Wall 

JetBlue Airways Corp. on Tuesday said it would buy 60 CSeries jetliners from Airbus SE with options for more, as the European plane maker's rivalry with Boeing Co. extends into the market for smaller planes.

Airline executives said the new aircraft would expand the reach of the smaller aircraft in JetBlue's fleet, allowing them to take transcontinental U.S. flights while burning 40% less fuel per seat.

The JetBlue Airbus A220-300 planes would also offer wider seats and more capacity that could include the airline's premium seats, they said.

"It's truly the next generation of aircraft that customers will love," JetBlue Chief Financial Officer Steve Priest said in an interview. He added the new planes would also boost the airline's profit potential.

JetBlue is already a big Airbus customer. But the New York-based carrier also had considered upgrading or replacing its fleet of small jets made by Brazil's Embraer SA rather than purchasing the rebranded CSeries that Airbus took control of on July 1 in a partnership with Canada's Bombardier Inc. Mr. Priest said it was a "very, very difficult decision."

That decision will intensify the rivalry that drove Airbus and Boeing to seek partnerships with smaller plane makers. Airbus and Boeing are looking to their respective partners, Bombardier and Embraer, to yield cost savings by helping pressure suppliers to offer bigger volume discounts.

The deal could be worth around $5 billion before discounts standard to such contracts. JetBlue executives declined to say how much the airline will pay for the airplanes.

Mr. Priest said JetBlue expected to take delivery of the first five of the new planes in 2020, with the rest coming by 2025 as Airbus ramps up production. The carrier said it had options for 60 more of the planes.

Boeing said last week that it will take control of Embraer's jetliner business. The plan requires government approvals and isn't expected to close until late next year. Until then, Boeing is barred from marketing Embraer's planes.

A Boeing spokesman declined to comment on JetBlue's purchase from Airbus.

Bombardier had struggled to win big orders for the fuel-efficient CSeries outside of a 75-jet deal in 2016 with Delta Air Lines Inc. Bombardier lacked the sales heft of Airbus and Boeing to convince airlines to commit to a brand- new plane.

Airbus on Tuesday put its stamp on the program, renaming the jets the A220-100 for the 100-seater model and A220-300 for the 130-seater. It is dropping the earlier CSeries CS100 and CS300 designations. The JetBlue A220-300 planes will be assembled at Airbus's U.S. production site in Mobile, Ala., the airline said.

Airbus Chief Executive Tom Enders last week said the first results of the CSeries takeover would be visible soon. The Toulouse, France-based plane maker said it doesn't comment on discussions with potential customers.

The fortunes for the CSeries began to improve in 2016 when Delta agreed to buy 75 CSeries planes with options for 50 more. Boeing challenged the deal with U.S. regulators, accusing the Canadian rival of unfairly selling the plane below cost. A U.S. trade panel ruled against the Chicago-based manufacturer.

Bombardier is building an assembly plant in Alabama to build CSeries jets for the U.S. market.

JetBlue also said it would upgrade 25 orders for Airbus A320neo single-aisle planes to larger A321neo models. Mr. Priest said the changes wouldn't pave the way for potential flights to European destinations, as such routes would require additional upgrades.

Write to Andrew Tangel at Andrew.Tangel@wsj.com and Robert Wall at robert.wall@wsj.com

(END) Dow Jones Newswires

July 10, 2018 20:13 ET (00:13 GMT)

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