Used jets glut tests Aerolineas' ability to get new ones

Aerolineas Argentinas is looking to replace its 26 Embraer E190s with larger planes. Problem is, they need to unload the old fleet and there’s little demand out there for used regional jets. Embraer is preparing to start production of upgraded versions of its best-selling planes at the same time rivals from Canada to Japan are ramping up their own offerings of 90- to 100-seaters. “This space is getting very crowded,” said George Ferguson, an analyst at Bloomberg Intelligence, citing the new options from Bombardier, Mitsubishi Aircraft and Sukhoi Civil Aircraft. “The problem you get when you are crowded from a new product standpoint is everybody starts discounting a new product and that means all the used products get beaten down too.” Aerolineas is shopping around for new aircraft at several planemakers including Embraer, Airbus and Boeing, betting that demand will rise as the Argentine economy inches toward recovery and air travel increases. "In a growing market like ours, everything indicates the E190 isn’t the right plane," Aerolineas Argentinas CFO Abbott Reynal said. "If you have a market that consumes more, it doesn’t make sense to fly with a small plane and the same number of pilots, mechanics and so on." That said, if Aerolineas can’t get a good price for its Embraers, the fleet update could be in jeopardy, he said. Out of the 26 E190 they operate, 22 belong to the airline and four are leased. Aerolineas’ best route could be to sell back to Embraer and trade up for newer models, BI’s Ferguson said. The E195-E2 -- with a maximum of almost 150 seats -- is expected to start flying commercially in 2019.<br/>