AMR Corporation, the parent company of American Airlines and American Eagle, is ordering 260 Airbus A320-family jets and 200 Boeing 737-family aircraft to replace and transform American’s narrowbody fleet over five years.
The deals represent the largest commercial-aircraft order in history and include 130 Airbus A320-family aircraft, 130 A320neo-family jets, 100 Boeing 737NGs and 100 of a new re-engined 737 version of the 737.
American’s deals could also include up to 465 additional jets – 365 Airbus narrowbodies and 100 Boeing 737s – to raise the potential size of its total narrowbody order to 925 aircraft by 2025. American Airlines took options and acquired purchase rights on the 465 additional aircraft at the same time it negotiated its planned firm orders for 460 Airbus and Boeing jets.
The new Boeing 737 version to be ordered by American would be powered by CFM International LEAP-X engines and American is the first airline to commit to Boeing’s expected new 737-family offering. American’s order announcement for the re-engined 737 also marks the first time Boeing has confirmed that it does indeed intend to offer a re-engined 737 family to compete against the Airbus A320neo family.
American’s deal with Airbus allows it the flexibility to specify A319s, A320s and A321s and it will be the first network airline in the U.S. to deploy the A320neo-family aircraft, when it takes delivery of its first A320neo-family jets in 2017. (Airbus A320neo-family launch customer Virgin America will, however, be the first U.S. carrier to receive A320neo-family jets, in 2016.)
The carrier has not yet specified which engine types it will order for its 130 A320-family jets and its 130 A320neo-family aircraft, though the computer graphic image produced by Airbus of an A321 in American colors show the aircraft with CFM56-5B engines.
American Airlines has also optioned and acquired purchase rights for an additional 465 aircraft through 2025, including 40 737NGs, 60 re-engined 737s, and 365 Airbus A320-family and/or A320neo-family aircraft. Boeing says American’s commitment to up to 160 of the LEAP-X-powered version of the 737 “is the first of many anticipated for this variant”, but doesn’t indicate if American is expected to order more of the new version later.
Under the new agreements, American will take delivery of the 460 aircraft from 2013 through 2022. American Airlines says it expects the new deliveries to pave the way for it to have the youngest and most fuel-efficient fleet among its U.S. airline peers in approximately five years.
As part of the deals, American Airlines will receive approximately $13 billion of committed financing provided by the manufacturers through lease transactions that the carrier says will help maximize its balance-sheet flexibility and reduce financial risk. The financing fully covers the first 230 deliveries.
“We have a long track record of meeting our obligations to all of our stakeholders, including strategic partners, lenders, suppliers and investors. We believe this history continues to help us navigate today’s challenges while remaining focused on doing what’s necessary to position American Airlines for long-term success, and we look forward to working with Boeing and Airbus to achieve it,” said Gerard Arpey, chairman and CEO of AMR and American Airlines, in a statement.
“Today’s announcement paves the way for us to achieve important milestones in our company’s future, giving us the ability to replace our narrowbody fleet and finance it responsibly. This was an incredible opportunity for our company that presented itself from two great manufacturers,” Arpey added. “And, given our aggressive and ambitious fleet plans, we feel fortunate to have both Boeing and Airbus standing beside us to meet our needs.”
Arpey continued: “With today’s news, we expect to have the youngest and most fuel-efficient fleet among our peers in the U.S. industry within five years. This new fleet will dramatically improve our fuel and operating costs, while enhancing our financial flexibility. More than that, with the power of our network and partnerships and the dedication of our people, we will be an even stronger competitor.”
In the same American Airlines statement about the deal, Tom Horton, president of AMR and American Airlines, said: “Our efforts in recent years have transformed nearly every corner of our business. We’ve strengthened our liquidity, focused our network and alliance relationships on serving the world’s most important markets with the best partners, enhanced our products and services with industry-leading technology, and worked to improve the customer experience. Today’s announcement will accelerate this transformation, delivering important benefits to our shareholders, customers and employees.”