AMR Corporation, the parent company of American Airlines and American Eagle, has announced a series of actions to position the company better to meet the air transport industry’s near-term economic challenges, while continuing to build on its strategy for long-term success.
Among the steps AMR has announced are a series of financial, fleet-related and route-network moves by the company and its two airlines. They include:
● A refocusing by American Airlines and American Eagle of their collective network strategy to eliminate unprofitable flying and to reallocate resources to hubs in Dallas/Fort Worth, Chicago, Miami and New York. These four cities, along with Los Angeles, already serve as the cornerstones of American’s network, says AMR. The company says the network changes will allow the airlines to build on previous investments, because they will position AMR’s combined network to benefit from important feed and global synergies from American’s planned joint venture with British Airways, Iberia, and other oneworld-alliance partners;
● Reducing of operations by American and its regional affiliates at St. Louis and Raleigh/Durham, with AMR’s St. Louis hub being particularly affected;
● Raising a total of $2.9 billion in additional liquidity and new aircraft financing. The $2.9 billion consists of $1.3 billion in new liquidity, including $1 billion in cash from the advance sale of AAdvantage frequent flyer miles to Citibank and $280 million in cash under a loan facility from GE Capital Aviation Services (GECAS) secured by owned aircraft; and $1.6 billion in sale-leaseback financing commitments from GECAS for Boeing 737s previously ordered by American. American plans to take delivery of 84 Boeing 737-800s during the 2009-2011 period, with 16 having already been delivered. The latest financing commitment from GECAS means American has the ability to finance all of its remaining 737 deliveries through 2011 with traditional financing sources other than its existing backstop financing agreement;
● Selection by American of GE’s GEnx-1B 74/75 engine for American’s future Boeing 787 deliveries. American previously announced plans to acquire 42 787-9s with the right to acquire 58 additional 787s, which Boeing estimates are 20 percent more fuel efficient than the Boeing 767-300ER widebodies they would replace; and
● Plans by American Eagle to add a First Class cabin to its fleet of 25 Bombardier CRJ700 regional jets; and also American Eagle’s signature of a letter of intent with Bombardier to exercise options for the purchase of 22 additional CRJ700s for delivery beginning in the middle of 2010.