An Embraer SA E190-E2 passenger aircraft stands on display on day two of the Farnborough International Airshow (FIA) 2018 in Farnborough, U.K., on Tuesday, July 17, 2018. 

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Brazilian airplane maker Embraer has landed its first U.S. sale of its efficient but slow-selling E2 jets with a 50-plane deal from startup carrier Avelo Airlines.

Avelo first started flying in April 2021 with used Boeing 737s but has struggled and recently exited a host of cities on the West Coast. It has also turned to flying deportees for U.S. Immigration and Customs Enforcement, which has sparked protests, demonstrations and backlash from some politicians.

The low-cost airline focuses on smaller cities, with a large operation out of Connecticut. On Monday, without providing a figure or an investor, Avelo announced it won the “single largest investment” since the carrier launched and said the money will be used to grow and improve customer experience. The new Embraer jets, scheduled to start arriving in the first half of 2027, represent big growth for Avelo, which has just 22 Boeing planes now, according to its website.

Avelo said the order for 50 E195-E2 planes, with options for 50 more, will help it modernize its fleet. The airline is betting that the planes’ two-by-two seating configuration and quieter cabins compared with older jets will be a hit with customers.

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While dwarfed by major U.S. plane maker Boeing and rival Airbus, Embraer is known for building regional jets that airlines rely on for thousands of flights a day for shorter routes or to smaller cities. It has also been solidly profitable for two years, while Boeing, which terminated a more than $4 billion tie-up with Embraer as it dealt with several crises, has struggled.

Despite its solid footing, Embaer’s newer, more fuel-efficient E2 jets have been outsold by similarly sized aircraft like the Airbus A220 family.

The E195-E2, the largest in that family, can seat 132 people in a single-class cabin with 31-inch seat pitch (a measure of the distance from one seat to the one behind it) or 120 people in a three-class cabin.

“The aircraft’s exceptional performance, size, and efficiency make it the perfect choice for the future growth of our scheduled service network,” said Avelo CEO Andrew Levy, former United Airlines CFO, in a news release.

The airline’s used Boeings can seat up to 189 passengers, but too much capacity can drive down fares. Struggling budget carrier Spirit Airlines, for example, lists Airbus A321Neos, with 229 seats.

One challenge with smaller jets for bigger airlines has been that the “majors regard them as a fleet complication,” said Richard Aboulafia, managing director at AeroDynamic Advisory, an industry consulting firm, since they would have to train pilots, acquire simulators and put up other costs to add to their lineups.

“The E2 has terrific economics but airlines have an irrational obsession for range they don’t need,” Aboulafia said.

Avelo’s order is worth $4.4 billion at list prices, the airline said, but that is before usual discounts. Slower-selling planes or big orders often come with significant price cuts.

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Embraer CEO Francisco Gomes Neto speaks during the Embraer Media Day 2022 at the aircraft factory in Sao Jose dos Campos, Brazil, May 30, 2022. 

Carla Carniel | Reuters

Brazilian plane maker Embraer is studying the market and new technology that could warrant it building an all-new jet, CEO Francisco Gomes Neto told CNBC.

A new airplane could help the airplane manufacturer compete with much larger rivals Airbus and Boeing, which deliver hundreds of jets a year compared with Embraer’s dozens of aircraft.

But Gomes Neto noted that no decisions have been made yet.

“At this point in time, we don’t have concrete plans to go to a big narrow body,” he said, adding that the studies for new engine technologies, avionics and potential demand are “to be prepared.”

In the meantime, Gomes Neto said Embraer is focused on improving results and selling its regional planes, which won orders earlier this year from American Airlines, manufacturing its E2 jet, and “delivering what we promise” customers.

Embraer said Friday that it delivered 16 commercial jets in the third quarter, up more than 5% from a year earlier. Including its defense and business jets, the company handed over 57 jets in the period, a third more than last year.

An Embraer E195E2 aircraft

Frederic Stevens | Getty Images

The Federal Aviation Administration approved a freighter version of its E190 passenger-to-freighter converted jet earlier this month, helping clear the way for its commercial introduction.

“This is maybe the advantage we have: We have a great product [that’s] available,” Gomes Neto said.

Both Airbus and Boeing are struggling to ramp up production and deliver aircraft on time in the wake of the pandemic. Boeing has the added challenges of a safety crisis and a machinist strike.

Boeing once had plans to take control of Embraer’s commercial jet business but ended those discussions in early 2020. Last month, Embraer said Boeing would pay it $150 million over the scuttled plan.

Like its competitors, Embraer is facing supply chain strains coming out of the pandemic, and the company is taking a more in-depth look at delivery capabilities.

Engines, hydraulic valves, cabin interiors and components for them are some of the areas where it has been difficult to ramp up production from suppliers, Gomes Neto said. He added that he expects supply chain problems will likely ease in 2026.

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