American Airlines will buy 460 narrow-body aircraft — 200 from its long-time supplier Boeing and 260 from competitor Airbus — as part of its giant fleet overhaul. The order is somewhat of a shift for American, which hasn’t ordered planes from Airbus in a few decades.
Orders of historic proportion, these planes will be delivered from 2013 to 2022 and represent a push for fuel efficiency and modernization.
Under the purchase agreements, American has the right to procure an additional 465 aircraft through 2025. The U.S. carrier will also benefit from roughly $13 billion of manufacturer-provided financing via lease transactions, which cover the first 230 deliveries.
In addition to being the largest order in aviation history, the fact that American partnered with European aircraft manufacturer Airbus is also historic. With 260 aircraft in the A320 family on order, American has the flexibility to obtain A319s, A320s and A321s, 130 of which feature the manufacturer’s New Engine Option (neo).
“The order by American represents a strong endorsement of our constantly improving, single-aisle product line,” Airbus President and CEO Tom Enders said in a statement. “All of us at Airbus look forward to seeing the American Airlines livery on A320 family aircraft — and we look forward to fulfilling our commitment to providing the people of American, as well as their passengers, with the highest level of support and service in the industry.”
American’s agreement with Boeing is also significant. Procuring 200 737s from the U.S. manufacturer, American has the flexibility to purchase 100 more of these aircraft in the coming years. What’s more, the U.S. carrier can adapt the new planes into 737-700s, 737-800s and 737-900ERs, according to a news release.
To Boeing Commercial Airplanes President and CEO Jim Albaugh, American’s fleet replacement strategy speaks volumes about the carrier’s commitment to modernization. “This agreement will provide American Airlines with the most capable airplanes in the narrow-body marketplace and continue to deliver industry-leading economics,” he said in a statement.
It’s the latter merit that American Airlines particularly anticipates. In fact, AMR and American Airlines Chairman and CEO Gerard Arpey said his company anticipates having the most modern and fuel-efficient fleet among U.S. airlines in the next five years.
“This new fleet will dramatically improve our fuel and operating costs, while enhancing our financial flexibility,” he said in a statement. “More than that, with the power of our network and partnerships and the dedication of our people, we will be an even stronger competitor.”
Everything isn’t coming up rosy for the U.S. carrier, however. On the same day the news broke about the historic purchase order, AMR announced that it experienced a net loss of $286 million during the second quarter of 2011. Compared to its $11 million net loss for the second quarter of 2010, these numbers are staggering.
Arpey contributes these losses to sky-high fuel prices and an abundance of natural disasters in April and May. “This past quarter was challenging in many respects,” he said in a statement. “We remain acutely focused on taking the necessary steps to manage through our near-term challenges while continuing to lay the foundation for long-term success.”
No doubt American’s procurement of 460 planes is an integral part of its plan.