Embraer E2 Finally Breaks Into The U.S. Market Following 50 Firm Orders +50 Purchase Rights from ULCC Avelo Airlines

By Chris Sloan

Sept. 10, 2025, © Leeham News: Embraer announced today that Embraer’s E2 will finally break into the U.S. market with a firm order from ULCC Avelo for 50 E2-E195s and 50 purchase rights, becoming E2’s 22nd customer. The E2 will enter service with Avelo in mid-2027, with deliveries rolling until 2032. The list-price value of the order is US$4.4 billion, excluding purchase rights.The E2 will be the current 737 NG operator’s first new equipment in the fleet.

The aircraft will pioneer the E2 E2TS (Enhanced Takeoff System) with an increased range benefit with up to 400 additional nmi of range for runways under 5,000 feet, such as Key West, Florida, where Avelo begins service in November. This is an essential factor in new markets, though he didn’t disclose specific routes. “It will get into airports that no one else can,” he adds.

Avelo CEO Andrew Levy said the smaller E2 will be a potent weapon to establish service in new markets that are too large for the 737-700s and 800s. The E2 will enable the airline to expand its existing operations and enter new markets. The company has been looking at the aircraft for two years, which marks the first new aircraft in the airline’s four-year history. “This aircraft will open up opportunities for us that no other aircraft can do. It fits our strategy perfectly,” said Levy.

The CEO promoted the idea for an elevated passenger experience of 2-2 seating and seat power, though a premium cabin is not in the offing.  The E2’s maximum LOPA is 146, though Levy contends they are looking at a slightly less dense LOPA of 140 passengers with an extra-legroom section like the carrier currently employs on its 737s.

As far as ownership versus leasing, “The preference is to own assets, but initially they will be leased. We have time to figure it out,” said Levy, who didn’t disclose lessees. Avelo’s CEO seemed unfazed by tariffs of 10%, believing it could change over time before delivery. “Any tariff is distorting the market and the costs will flow back to the passenger,” said Embraer’s CEO, who says U.S. content of the E2 is 40%. The E2 is powered by the Pratt & Whitney PW1900G GTF engine which is U.S.-made.

Trip costs become more important than seat costs particularly for year-round service, which was a deciding factor according to Levy. He praised the 737-800 “when you can use the seats”. Levy says the legacies have changed the industry substantially since the airline’s launch in 2021. He believes that “to succeed in this oligopoly that you have to do something different and develop a parallel transportation system.”

Arjan Meijer, President and CEO Embraer Commercial Aviation said “This order is very important for us to get a launch customer in the U.S. We are bringing our best aircraft into the U.S to show the broader market how capable this is. We hope we can bring other customers into the market as well.”

Andrew Levy says the E2 won’t “represent any shift in its strategy, but having a smaller aircraft is better for us.”  The E2 will allow more frequency in their schedule, but allows them to be to target new opportunities noting the short-field performance. “It’s a perfect complement to the 737-800s,” he said which will remain in the fleet. “We believe we can run twin fleets well, though it does add complexity,” admits Levy.

Current Fleet

Avelo’s current fleet of 737-800s, which will operate in parallel with the E2, consists of 14 Boeing 737-800s and eight 737-700s, all leased from Genesis Aircraft Services, AerCap, and Aero Capital. The average age of the -800s is 15.6 years and the -700s, 19.3 years, according to Cirium Fleet Analyzer. The 737-700s will eventually leave the fleet as the E2 enters. Avelo will add 6-8 new 737-800s however over time.

The 737-700s are configured with 149 seats, including 44 extra-legroom seats, while the 737-800s have 189 seats, including 47 extra-legroom seats with 32–36 inches of pitch. Standard seats are 29 inches. Operating only large 737 aircraft, the airline has acknowledged that the larger scale aircraft, though with low seat mile and acquisition costs, are too big for some of its secondary markets, which Avelo’s load factors of 71.7% in 1Q2025 bear out. Available seat capacity in 3Q is down 4.5% year-on-year, Cirium Diio Mi Data shows. “We’re not CASM focused but profit focused,” said Levy speaking to lower trip cost, but higher capital cost for the new E2 versus a lease, used 737 NG.

Levy looked at the Airbus A220. The extended range wasn’t applicable to the ULCC in their evaluation. Avelo needed “a new version of the MD-80 that can fly 4-5 hours, and 2X2 seating over 3X2.” He says other issues with the A220 being a program Airbus purchased from Bombardier also played into the decision.

Avelo’s Network

Avelo operates as a low-cost carrier with a network strategy focused on point-to-point flying and under-served airports. By 4Q 2025, the airline will serve 39 airports with north of 80% of its routes exclusive. Its systemwide network includes 43 domestic markets, three international destinations, and Puerto Rico, for a total of 47.

Avelo has developed a strong presence at secondary airports such as Tweed New Haven (HVN) in Connecticut, where it plans to offer 29 routes and more than 200,000 seats by mid-2025. However, the carrier has also announced the closure of its original base at Hollywood-Burbank, reducing operations there to one aircraft until December 2025. Competition with fellow new LCC incumbent Breeze Airways at HVN and Hartford Bradley is a current stress as both battle for relevance in Connecticut and Southern New England.

Cash Injection and Finance Picture Brightens

Avelo’s finances have been under pressure, raising repeated questions about its long-term viability. In an April 3, 2025, memo, CEO Andrew Levy acknowledged that 1Q2025 would be the airline’s worst quarter since 2023, breaking a string of gradual improvements. Revenue slipped to $76.3m, down 4.4% from 4Q2024, while results swung from a near break-even –$0.6m operating loss in 4Q to a –$13.7m loss in 1Q2025. That equates to an operating margin of –18%, compared with –0.8% in 4Q2024. 2Q results are expected later this month for the privately held carrier.

Levy admitted that Avelo “spends more money to deliver our product than we earn from Customers,” necessitating repeated capital raises. He cited Tweed New Haven (HVN) as the largest drag on performance, blaming Breeze Airways’ entry into six overlapping markets, competitive pressure from JetBlue, Frontier, Spirit, and others at nearby airports, as well as Avports’ overscheduling at HVN, which he said hurt the customer experience and revenues.

“We had a tough first quarter because of New Haven. We have earned a profit for 4 out of 5 months. We broke even on $311m of revenue for a full year in 2024. We made an adjustment to our business in after a tough first few months of the year,” said Levy

At the same time, Avelo points to signs of progress. The airline recently closed the books on July, claiming its fourth fully allocated profit in the past five months, following approximately breakeven operating income in 2024 with no special items or sale-leaseback proceeds. Management said core margins and cash position are improving organically, driven by revenue diversification initiatives and the maturation of its scheduled service markets.

Despite its uneven performance, Avelo appears to have gained a lifeline. Just two days before announcing its Embraer order, the airline disclosed that it had secured a new round of growth capital, the largest investment since its Series A. The funds, from a new investor, will support expansion across the US and Caribbean, technology investments, and customer service enhancements. Levy said the financing “strengthens our liquidity position” and allows Avelo to continue providing affordable service in markets priced out by higher-fare carriers. The company says this financing round represents the single largest investment in it since its initial Series A funding prior to launch in 2021. The carrier boasts that the E2 order send a clear message that Avelo is here for the long haul. With the announcement, all U.S. majors and national carriers will operate new jet equipment with the exception of Sun Country.

E2 Momentum

The Embraer E195-E2 can accommodate up to 146 passengers in a single-class, all-economy layout with 28-inch pitch, or 132 seats with 31-inch pitch. The larger gauge E195-E2 has emerged as the sweet spot of the market, with 330 total orders, 140 delivered, and 190 in firm backlog. With Avelo’s 50-aircraft order, totals rise to 380 orders and 240 in the backlog.

By contrast, the smaller E190-E2 has 67 orders, 28 delivered, and 39 in backlog. Altogether, E2 program deliveries stand at 168, with the E195-E2 operated by 12 airlines and the E190-E2 by seven.

Major operators include Porter Airlines (75 E195-E2s orders and deliveries), Azul (51), SAS (45), and KLM Cityhopper (23), accounting for a large share of Embraer’s commitments.

Among recent sales campaigns, ANA became the first Japanese carrier to order the E2, securing 15 E190-E2s with options for five more at the 2025 Paris Air Show, with deliveries beginning in 2028.

SAS followed with its largest aircraft order in nearly three decades, signing for 45 firm E195-E2s plus 10 options in mid-2025. Embraer, however, suffered a setback when LOT Polish Airlines, who was an original Embraer E1-E190 launch customer, awarded a major regional jet contract to Airbus, selecting the A220. Polish national security concerns led to placing an order with the French Airbus, according to a person familiar with the situation.

The E195-E2 entered commercial service in September 2019 with launch customer Azul Linhas Aéreas, following its first flight in March 2017 and certification in April 2019.

The E190-E2 debuted in April 2018 with Widerøe Airlines. More recently, Mexicana introduced the E195-E2 in July 2025 on the Mexico City–Acapulco route, while Virgin Australia is set to begin E190-E2 service in October 2025, following delivery of its first aircraft in September.

Embraer’s commercial backlog now stands at a record $13.1bn.

Embraer Maxes Out Boeing’s MAX

Avelo’s replacement of its aging 737-700 fleet highlights the shift toward more right-sized aircraft. The 737-700 was the original Next Generation (NG) design, optimized for its size and missions when it entered service with Southwest Airlines in December 1997. The platform was based on the size dimensions of the second generation 737-300.

By contrast, the competing 737 MAX 7 is a shrink of the larger MAX 8, which makes it inherently less efficient than if it had been designed from scratch for its role.

The E195-E2 is a purpose-built, optimized design. Configured with similar comfort standards, it is about 10 seats smaller than the 737-7, yet delivers about 10% lower fuel burn on a typical 500nm mission, according to the Leeham Consulting’s Aircraft Performance and Cost Model (APCM). On a per-seat-mile basis, the 737-7 is 20% more efficient than the 737-700, and the E2 adds another 10% advantage.

Given Avelo’s declining load factors—71.7% in 1Q2025 compared with 75.3% in 4Q2024 —the smaller-gauge E2 is expected to be a better fit than the airline’s current 737-700s and 737-800s.

Cost advantages extend beyond fuel. The E2’s cash operating costs are roughly 14% lower than the 737-7, largely due to engine maintenance. Embraer’s aircraft are powered by Pratt & Whitney GTF engines under Power by the Hour (PBH) contracts, while the CFM LEAP-1B engines for the 737-7 must be maintained at MRO market rates, as CFM does not offer PBH arrangements.

In performance terms, the E195-E2 has a maximum range of about 2,600 nm miles, with field requirements of 5,000 ft for takeoff and 4,700 ft for landing—figures that better suit Avelo’s operational profile.

By contrast, the 737 MAX 7 reaches 3,800 nm, but Avelo’s longest sector, Hartford (BDL)–Punta Cana (PUJ), is just 1,643 statute miles, well within the E2’s capabilities. The E2 is also 10% better in takeoff field length performance than the 737-700, compared with a 5% gain for the 737-7. This margin is critical at Tweed New Haven (HVN), Avelo’s largest base, where the current 5,600-ft runway is being extended to 6,635 ft. The ETS enhancement only augments the capabilities.

Production capacity and availability also factored into Avelo’s decision. Embraer is producing the E195-E2 at a rate of 40 per year in 2024, while the 737-7 has yet to be certified, with only three announced customers: Southwest, Luxair, and Allegiant. Boeing’s 737 production is largely sold out to 2030.

Levy looked at the Airbus A220. The extended range wasn’t a selling point. Avelo needs “a new version of the MD-80 that can fly 4-5 hours, and 2X2 seating over 3 X 2,” He remarked adding that other issues with the A220 being a program Airbus purchased from Bombardier, versus being all new that also played into the decision.

The E2 is exclusively powered by the Pratt & Whitney PW1000G Geared Turbofan engine. The lesser thrust requirements of the GTF on the PW1000G haven’t caused nearly the AOG problems that have plagued higher thrust versions on the A320neo and Airbus A220 family.

Embraer E175: When Old Is Still New

The E175 remains the backbone of U.S. regional flying. Despite its 25-year-old technology, it continues to sell strongly and has a monopoly thanks to US pilot Scope Clause restrictions. All of its remaining orders are from US carriers, as the type is the only Embraer regional jet that complies with the Scope Clause weight cap of 86,000 lbs and 76 seats. The heavier, geared-turbofan–powered E175-E2 exceeds the weight limit by several thousand pounds, effectively barring it from US operation.

The E175-E2, originally slated to enter service around 2020, has been suspended since 2022 and is unlikely to re-emerge until 2031 or 2032, with Embraer planning a potential restart of development in 2029 depending on Scope Clause changes. SkyWest once placed a conditional order for 100 E175-E2s, contingent on union agreement to raise the weight cap—a condition that was never met.

E175-E1 Continues On

Meanwhile, the current-generation E175 (E1) continues to secure major commitments. To date, Embraer has 792 deliveries and 208 firm backlog orders. Recent highlights include a March 2024 order from American Airlines for 90 E175s, with purchase rights for 43 more, potentially totaling 133.

In June 2025, American allocated 78 of those aircraft to its regional affiliates: 45 to Piedmont Airlines and 33 to Envoy Air. Envoy confirmed the additions will bring its combined E175/E170 fleet to 214 aircraft. Piedmont is set to receive its first E175 in 1Q2028, with deliveries continuing at one to two aircraft per month over roughly three years.

In June 2025, SkyWest placed a firm order for 60 E175s with options for 50 more, further underscoring the type’s dominance in the U.S. regional market.


Related Story

Bjorn Fehrm contributed to this story.

 

54 Comments on “Embraer E2 Finally Breaks Into The U.S. Market Following 50 Firm Orders +50 Purchase Rights from ULCC Avelo Airlines

  1. Good job from Embraer with their E2, and the Enhanced Takeoff
    System sounds interesting- whatever it’s composed of.

  2. CFM does offer cost per hour programs. From the CFM website:
    “Rate-per Flight-Hour (RPFH) programs are available to provide long-term support with cost per shop visit and time-on-wing risk transfer. Under the terms of these exclusive, comprehensive services and support agreements, CFM guarantees engine maintenance costs with dollar-per-engine-flight-hour pricing—along with flexible term, coverage, and payment options.”

    • @AG
      Nothing new.
      All the engine OEM’s offer cost per flight hour programs.
      P&W invented it called ‘Power by the hour’

      Boeing and Airbus offer complete comprehensive airframe cost per flight hour programs as well.

  3. Congratulations to Avelo and to Embraer!
    Great choice in the E2 E195, outstanding choice and I like how it provides competition to both Airbus A220 and Boeing 737-7 Max.

    The E2 195 is a true performer.

    Thanks for pointing out how Avelo CEO isn’t concerned about the tariff impacts contrary to what this blog has been touting.

  4. Hi, can you confirm whether it’s 400nmi or 4,000nmi? I believe it’s quite likely 400nmi.

    “increased range benefit with up to 4,000nmi of range”

      • @Björn Fehrm,
        Thanks for changing it. However the article can still be misunderstood.
        The E195-E2 does not provide 400 nm of total range from 5,000 ft runways. The E195-E2 provides 400 nm of ADDITIONAL range in comparison to the E195-E2 when taking of from a 5,000 ft runway. The reason is that its enhance take off system, allows it to use more of the runway length for safely taking of, thus permitting a higher take-off weight with more fuel, for a 400 nm longer range..
        This fact ist excactly specified by the second picture in your article.
        Best regards.

        • The Embraer enhanced takeoff feature sounds like the FLEX method on Airbus or the Assumed Temperature Reduced Thrust method on Boeing.

          • No. It works different form that.
            Here is a video explaining it.
            https://www.youtube.com/watch?v=WyqnvCmOFc0
            It basically optimizes the pitch angle at takeoff. The ETS can takeoff at a higher pitch angle without risking a tail strike, than a human pilot would feel comfortable with when flying manually.
            A human pilot, when flying manually, wants to have a large safety margin in order to make absolutely sure, a very long airplane doesn´t suffer a tail strike, when taking of. So the human pilot doesn´t pitch as high when taking off, to make sure he has sufficient safety margin, for avoiding a tail strike.
            The ETS however doesn´t need to maintain such a high safety margin, so it can pitch up more aggresively and pitch higher than it would be responsible for a manually flying pilot to do.
            The higher pitch angle during ETS takeoff, generates more lift, which allows for higher takeoff weights and shorter take-off runways.
            The higher takeoff weights enable the plane to have more fuel onboard, thus the additional 400 nm of range, from a 5,000 feet long take-off runway.

            However this function will be very important to future boeing and airbus single-aisle airplanes as well, because they will stretch their fuselages longer and longer in relation to their fuselage height above the ground (fuselage ground clearence) This will be specially important on their future ever-further stretched single-aisles. And Embraer is showing them the way with their ETS.

          • Thanks Thomas, for the clarification and the detailed description. It does sound like something Boeing and Airbus might want to adopt.

          • Boeing 787 has automatic tail strike protection under its FBW laws

  5. @Chris Loan, you have a significant error in your article.
    The E195-E2 ETS doesn´t have a 4,000 nm range. It has a much smaller or about 3,000 nm with a full passenger loadout, when taking off from a 6,000+ ft long runway.
    The E195-E2 DOES have 400 nm ADDITIONAL range in comparison, to the regular E195-E2, when taking off from the Key West International Airport, due to its enhance take off system, that allows it to use more of the runway length for safely taking of, thus permitting a higher take-off weight with more fuel, for a 400 nm longer range..
    This fact ist excactly specified by the second picture in your article.
    Best regards.
    Thomas

  6. The other one I picked up on is the All New vs a used A220 program.

    Really? I get if you don’t need the range, but dissing the A220 which is equally as new as the E2, hmmmm.

    Misstating engine costs, also a hmmm.

    While this may be good news for Embraer (I hope so) its also iffy with the financial status of Avelo to consider.

  7. Gentlemen.
    Is this perhaps the first brick removed in the scope clause problem for the 195?
    I thought it was overweight.

      • Allowing the E2-175 would be a feather in Union cap as they can say they are all for Green and Emissions lowering.

        Really seems like there is room for discussion with the pilots not giving up anything, just allow a 1-1 replacement.

        Let Embraer work on the weight and or a fuselage reduction.

    • Scope doesnt cover the over 100 seat class

      E2-175 is heavier engines AND a small stretch to allow for economy plus pitch without increasing the total seats

      The scope clause could change overnight according to pilots to allow E2-175 if the airlines agreed to just a weight change.
      The airlines wont as they wont as they want more concessions from pilots mainly over a higher number of ‘scope jets’ allowed – which is taking away from the routes that are non-scope

      • In the US, mainline pilot union’s scope clause restricts the size, weight, and number of aircraft a major airline can operate through regional subsidiaries or third-party carriers, with common limits including 76 passengers and 86,000 pounds of maximum takeoff weight (MTOW).

  8. I wonder whether some of this order has more to do with availability of slots. The E2 is not nearly as backed up as Airbus or Boeing options.

    • “Avelo Airlines (XP, Burbank) announced it had closed a new round for an undisclosed amount of capital, which will be used to support its “continued expansion” across the United States and the Caribbean.

      In a statement, the airline said that this financing round from a new partner represents the largest single investment since its initial Series A funding.”

      Its a mystery! Just 4-5 days ago .

      Its the CAAC model for foreign customers for C909

  9. It would be nothing new: The Import-Export Bank has provided
    Boeing customers- not necessarily creditworthy ones!- with favorable financing for many years.

      • -1000 to exponent of 10.

        Unless your aircraft is in Russia, worst case you get it back and sell it again or lease it again.

        Yep, some losses, but not a total loss.

        Not a relevant factor regardless.

        • Avelo seems to have a new unknown partner who put capital into business – just days ago

          Boeing and Airbus have previously provided customer finance more directly than their own countries finance operations equivalent to EXIM
          The name that pops up is Crédit Agricole Corporate and Investment Bank

    • Vincent.
      Despite the varying creditworthiness of the customers. EXIM bank always has produced a positive return on funds loaned
      In fact, after all is said and done, there has never been an EXIM bank loan that has lost any of the principal amount loaned. This is actually better than the industry average. So yes, the EXIM bank is used by Boeing to move product, but as designed the potential risk has not landed on the American public.

      • Thanks for that additional information, PNW. My primary point is that lending on favorable terms by larger, interested entities is not new, or unique to the Avelo / Embraer situation.

  10. ‘Mentour Pilot’ was recently bought out by PE.
    The changes are not hard to see.

  11. The old boys’ club
    > That relationship was strengthened when Alaska had to borrow $2 billion to close the acquisition of Virgin America in 2016. JetBlue, an all-Airbus airline, was the rival bidder for Virgin.

    Conner said it wasn’t a hard decision to support Alaska. *Boeing provided a $400 million loan*, secured by Alaska’s existing commitments to purchase the 737 MAX.

    > Ray Conner, the former CEO of Boeing Commercial Airplanes who is now on Alaska’s board

  12. Ahem…
    > Embraer is now facing limited supply of the GE Aerospace CF34 turbofans that power its E175 regional jets… Fuselage-component shortages have also emerged as a pinch point

    • @Pedro

      This is a hazard of thin volume production…and one that will still be present if they go to the E2 configuration.

  13. Interesting thought: perhaps Avelo’s “secret admirer” is Embraer itself who is trying to get the E195-E2 in the US market.

    United and American together have about 250 A319/737-700’s that aren’t getting any younger. UA has said that in the future they will have fewer flights with bigger planes and to that end has already taken delivery of its last MAX 8, leaving only MAX 9’s, 10’s and A321’s yet to be delivered.

    Still, if they hold to that assertion, they will have a substantial reset as their A319/737-700’s age out. That will leave them with nothing between 76-seat E175-E1’s and 166-seat 737-800/MAX 8’s.

    For an industry that considers 12 seats enough to have separate fleet types, that seems like an awfully big gap.

    With the kind of CASM the E195-E2 is said to provide, perhaps UA. and AA, will revisit their concern that the trip costs are too high.

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