AA signs for 460 new jets

AMERICAN Airlines has announced a record order for 460 single-aisle planes from Airbus and Boeing in a deal worth more than $38 billion.

The order breaks the long-standing monopoly that Boeing has had with the airline and forced a significant shift in the company’s strategy.

American, based in Fort Worth, Texas, said it planned to acquire 260 of the Airbus A320 aircraft and 200 Boeing 737s – half of which will be equipped with a new, more fuel-efficient engine.
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The move is a clear commitment by Boeing to revamp its best-selling 737 with new engines rather than develop an all-new version of the plane – a strategy that until now it had said most of its customers preferred.

The deal, which American described as the largest commercial aircraft deal in history, includes options and purchase rights for as many as 465 extra planes up to 2025.

The airline said Airbus and Boeing had provided a combined $13 billion in financing through lease transactions, which it said would cover the cost of the first 230 deliveries, set to begin in 2013. American said it expected to begin receiving its first Airbus and Boeing planes equipped with the more advanced engines starting in 2017.

”Today’s announcement paves the way for us to achieve important milestones in our company’s future, giving us the ability to replace our narrow-body fleet and finance it responsibly,” said Gerard Arpey, the chairman and chief executive of American and its parent company, AMR. ”With today’s news, we expect to have the youngest and most fuel-efficient fleet among our peers in the US industry within five years.”

The order represents a coup for Boeing’s European rival, Airbus, which has not sold new planes to American in more than two decades. American retired its last Airbus jets – a handful of A300 widebodies – in 2009.

”Not only have they sold jets to American, but they have forced Boeing’s hand into pushing for a

re-engined 737,” said Saj Ahmad, an analyst at FBE Aerospace in London.

Of the 260 Airbus jets on order, 130 will be for the A320neo, an upgraded version of its A320, which Airbus expects to bring to market beginning in 2016. Airbus has been promising fuel savings with the A320neo of as much as 15 per cent over present engines. The new plane is also expected to run more quietly, cost less to operate and be able to fly further or carry heavier loads while emitting less greenhouse gases.

”This is significant for Airbus, but even more significant for Boeing,” said Howard Wheeldon, senior strategist at BGC Partners, a London brokerage. Boeing, he said, had been ”chastened” by the market response to the A320neo, ”which is making better headway than anyone had expected”.

Airbus has said it expects to spend about $1.5 billion on the enhancements.