The interesting LOT “regional” order

The news reports state that LOT is looking for 84 regional aircraft.  It helps to know what LOT is operating now.

The table lists 71 aircraft, so 84 means significant growth.  However, if the focus is only on regional jets, as reported, this is far more substantial news.  Bear in mind that LOT has 13 737 MAX on order.

LOTs of questions

1. What is priority #1?  Delivery speed or economics?  LOT is state-owned, so politics must be added to the trade-off mix. Moreover, the mood in Europe is unsettled because of Russia and the US.
2. The deal focuses on regional aircraft, but neither E2 nor A220 are regional aircraft. What does the airline need? Regional needs to be better understood. Across the airline market, regional is understood in terms of the US’ view on regional airlines and aircraft.  However, in this case, we need to stretch that definition.  France, for example, because of HOP, treats up to 100 seats as regional.
   1. The news states the order size is 84. This is about the equivalent of the airline’s entire single-aisle fleet. From what we hear, the deal will have two phases: a firm order and a large number of growth options.
   2. LOT has 47 E-Jets in commercial service—43% are E170/5. The proposed deal will cover all of LOT’s E-jet fleet. Indeed, the E175

      is not being considered. Therefore, not only will there be a larger fleet, but also substantial upsizing.

3. Airbus only offers the A220, which reaffirms our view on the E175. Aircraft mile costs are about the same, and Europe does care about emissions – something the US ignores.  So, if this comes down to E190-E2/E195-E2 versus A220-100/300, we see similar economics, with the Airbus offering slightly more seats than the Embraer models.  The question is, how many seats does LOT need?

Deliveries vs Economics

Both OEMs have relatively slow production rates. Reported delivery slots start in 2026 through 2030, and here’s the data to prove that.