AMR Corporation announces the largest aircraft order in history with Boeing and Airbus

AMR Corporation (Dallas/Fort Worth), the parent company of American Airlines and American Eagle, today announced landmark agreements with both Airbus and Boeing that will allow it to replace and transform American’s narrowbody fleet over five years and solidify its fleet plan into the next decade. These new aircraft will allow American to reduce its operating and fuel costs and deliver state-of-the-art amenities to customers, while maximizing financial flexibility for the Company.

Under the new agreements, American plans to acquire 460 narrowbody, single-aisle aircraft from the Boeing 737 and Airbus A320 families beginning in 2013 through 2022 – the largest aircraft order in aviation history. As part of these agreements, starting in 2017 American will become the first network U.S. airline to begin taking delivery of “next generation” narrowbody aircraft that will further accelerate fuel-efficiency gains.

American also will benefit from approximately $13 billion of committed financing provided by the manufacturers through lease transactions that will help maximize balance sheet flexibility and reduce risk. The financing fully covers the first 230 deliveries.

Under the agreement with Boeing, American plans to acquire a total of 200 additional aircraft from the 737 family, with options for another 100 737 family aircraft. American has the flexibility to convert the new deliveries into variants within the 737 family, including the 737-700, 737-800 and 737-900 ER.

As part of the Boeing agreement, American will take delivery of 100 aircraft from Boeing’s current 737NG family starting in 2013, including three 737-800 options that had been exercised as of July 1, 2011. American also intends to order 100 of Boeing’s expected new evolution of the 737NG, with a new engine that would offer even more significant fuel-efficiency gains over today’s models. American is pleased to be the first airline to commit to Boeing’s new 737 family offering, which is expected to provide a new level of economic efficiency and operational performance, pending final confirmation of the program by Boeing.  This airplane would be powered by CFM International’s LEAP-X engine.

American also will acquire a total of 260 Airbus aircraft from the A320 Family and will have 365 options and purchase rights for additional aircraft. American has the flexibility to convert its delivery positions into variants within the A320 Family, including the A319 and A321.

American will take delivery of 130 current-generation Airbus A320 Family aircraft beginning in 2013. Beginning in 2017 American will begin taking delivery of 130 aircraft from the A320neo (New Engine Option) Family featuring next-generation engine technology. The new aircraft are approximately 15 percent more fuel efficient than today’s models. American will be the first network airline in the U.S. to deploy this new-technology aircraft.

The 737 and A320 families offer significant cost reduction opportunities in replacing American’s older fleet. For example, Boeing and Airbus aircraft in the 737 and A320 families offer a 35 percent reduction in fuel cost per seat versus the MD-80 and a 12 percent and 15 percent fuel cost reduction per seat, respectively, versus the 757 and 767-200.

The agreements with Boeing and Airbus will continue American’s fleet simplification efforts, allowing American to transition four fleet types (MD-80, 737-800, 757 and 767-200) to two (the 737 and the A320 families, which offer significant commonality benefits within each family).

With a total of 465 options and purchase rights for additional aircraft from both manufacturers through 2025, these agreements give American the flexibility for replacement as well as growth opportunities under the right economic and financial conditions, with the ability to acquire up to 925 aircraft in total over 12 years.

Beyond today’s announcement, American continues to execute on other elements of a comprehensive fleet renewal plan that will deliver customer benefits in a range of aircraft types and sizes.

In 2009 and 2010, American took delivery of 76 737-800s. Separate from today’s announcement, American has taken or is scheduled to take delivery of a total of 54 737-800s from 2011 into 2013. American also has firm orders for eight Boeing 777-300ER widebody aircraft to be delivered in 2012-2013. American is the first U.S. airline to order the 777-300ER, which will offer many operational and customer benefits while serving as the flagship of American’s modernized fleet.

In addition, American has plans to acquire 42 state-of-the-art Boeing 787 Dreamliners, to be delivered starting in late 2014, with options for 58 additional 787s. American also has firm orders for seven 777-200 widebody aircraft scheduled for delivery in 2013 through 2016.

Is having two narrow body fleets from two manufacturers a good idea?

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Copyright Photo: Bruce Drum. Please click on the photo for the story of the A300s at American.