Regional jet manufacturers Bombardier and Embraer canceled huge orders that US Airways placed last year, a carrier spokesman confirmed today. The orders were placed in May 2003 and were to represent a cornerstone of US Airways' restructuring plan. Without an infusion of smaller jets, the carrier acknowledged it would be forced to curtail growth plans. US Airways this month again filed for Chapter 11 and though it plans to maintain normal operations
(BTN, Sept. 20), it cannot accept delivery of new aircraft unless it re-emerges from bankruptcy protection and reworks financing terms.
US Airways' regional jet purchase had included 170 firm orders and 380 options, of which a little more than 100 remain undelivered. At the time of the order, the total list price of the aircraft was around $4.3 billion. Then-CEO David Siegel last spring told
BTN that US Airways had "lots of catching up to do against the rest of the industry" in regard to regional jet deployment
(BTN, April 28, 2003). The carrier already has taken delivery of 35 CRJ-200s and five CRJ-700s from Bombardier Aerospace and 22 EMB-170s from Embraer.
"Embraer and Bombardier have been great business partners, and we will continue to work with them," US Airways said in a statement. "Their decision is one of many reasons why we advised our labor leaders that it would be much worse for employees in a Chapter 11 situation. We will adjust our business plan accordingly, but our ability to grow is going to be limited."
A spokesman at Bombardier stopped short of calling his company's decision an outright cancellation. "As soon as US Airways were to return from bankruptcy, financing discussions would resume," he said. "It is a natural outcome of a company going into bankruptcy and nothing out of the ordinary."
US Airways' transformation plan called for regional jet deployment on short- and medium-haul routes, including feeder service to its primary hubs in Charlotte, Philadelphia and Pittsburgh, and point-to-point traffic from such cities as Boston, New York and Washington. The stated goals were to generate incremental revenue and compete more vigorously in RJ markets.
These latest developments obviously further cloud US Airways' future and leave travel managers questioning the carrier's viability. Tina Itschner, travel manager at HNTB Corp. in Kansas City, is concerned about ramifications to her company's travel program and to larger competitive dynamics around the industry. "We do quite a lot of business in US Airways markets, particularly in the Northeast," she said, "so we will be affected."