American orders 460 new planes from Boeing, Airbus

Posted July 20, 2011, at 6:20 p.m.

FORT WORTH, Texas — American Airlines is buying at least 460 new planes over the next five years from Airbus and Boeing in a record order that breaks Boeing’s exclusive grip on American’s fleet.

American said Wednesday it will buy 260 planes from Airbus, 200 from rival Boeing Co., and take options to buy hundreds more. It expects the new jets to provide much-needed savings in fuel costs. American’s fleet is among the least fuel-efficient in the industry.

The deal is a major boost for Airbus, which hadn’t won an order from American since the 1980s. Boeing did salvage one of its biggest sales ever — a huge consolation considering that it was in danger of losing the whole order to its European rival.

The jets carry a sticker price of more than $38 billion, although big airlines regularly get discounts and routinely play one aircraft maker off the other to get better deals.

Analysts said American’s bold strike would put more pressure on other airlines with aging fleets to buy new planes too.

Gerard Arpey, chairman and CEO of American’s parent, AMR Corp., sat between the leaders of Airbus and Boeing as he discussed the unusual deal at an airport news conference. He called it “a watershed event certainly for our company and indeed for the airline industry.”

American’s order covers models in the Airbus A320 family, which seat from 100 to 185 or more passengers, and Boeing’s workhorse 737 jet. American’s current 737s have 148 or 160 seats. Both planes are twin-engine models with a single aisle in the cabin, and are used heavily on routes within the U.S.

AMR also announced that it plans to spin off regional carrier American Eagle as a separate company in another cost-cutting move.

The twin announcements overshadowed the news that AMR lost $286 million in the second quarter as rising fuel prices wiped out an increase in revenue. The loss equaled 85 cents per share. Wall Street was expecting a loss of 77 cents, according to FactSet. Still, AMR shares rose 9 cents to $5.01 in afternoon trading.

American expects to have the youngest fleet among similar U.S. airlines within five years, although Delta Air Lines Inc. also is considering a large order to update its domestic fleet. The new planes also will have a quieter ride, better lighting, more overhead space and new entertainment systems. Arpey said that will add up to a more pleasant experience that will attract business travelers.

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