The Embraer 190 will take to the skies next year

JetBlue is to buy 100 Embraer 190 jets, in one of the largest deals the Brazilian company has signed to date.

The no-frills US carrier has also taken out an option on a further 100 Embraer 190 planes, which could increase the eventual value of the deal to $6bn.

Embraer shares gained more than 7% on the news.

Big sale

Embraer is Brazil's second biggest exporter, with a total workforce of more than 12,000.

Oswaldo Telles, an analyst at the BBV brokerage in Sao Paulo, said the JetBlue deal showed it was on course to recover faster than the rest of the depressed airline sector.

He said Embraer shares were set to go "up, up, up".

The JetBlue deal is Embraer's second big sale in recent weeks.

In Early May, it signed a $2.1bn deal to sell 85 jets to US Airways.

JetBlue said it plans to take delivery of the first seven Embraer aircraft in 2005, with the remainder coming at a rate of about 18 a year until the end of 2011.

Investor doubts

Options would begin in 2011, by which time the current 42-strong JetBlue fleet of Airbus A320 jets may have grown to as many as 290 Airbus and Embraer aircraft, the company said.

JetBlue has grown quickly since its launch in February 2000, and currently flies to 22 cities in the US and Puerto Rico.

David Neeleman, JetBlue chief executive, said: "Through this new agreement with Embraer, JetBlue will bring its superior product and award-winning customer service to the many mid-sized markets desperately in need of low fares and high quality service."

But JetBlue investors were rattled by the deal, which adds to the diversity of the company's fleet and so, analysts said, potentially threatens its low cost structure.

Low cost airlines tend to stick to one manufacturer or type of aircraft to keep maintenence costs down.

JetBlue shares were down more than 5% on news of the deal.

JetBlue's order made it the launch customer for the Embraer 190, which is to be powered by twin, under-wing mounted General Electric engines.

The deal brings Embraer's order book for the Embraer 170/190 family to 234 firm orders and 289 options.

United shock

Meanwhile, shareholders in United Airlines have been told their investments are "highly likely" to be wiped out, once the world's second biggest airline emerges from bankruptcy.

The airline's parent company UAL said the shares would probably be cancelled under a bankruptcy reorganization plan.

The company is hoping to emerge from Chapter 11 bankruptcy protection in the fourth quarter of this year, or early 2004.

But its assets "will be insufficient to permit any meaningful distribution to its equity holders," United said.

The company is reportedly planning to launch a low cost airline as part of its relaunch plans.

UAL shares, which were recently delisted by the New York Stock Exchange, were down 58%, or $1.07, at 78 cents in late morning trade on Tuesday.

In the late 1990s, UAL shares traded at more than $100.