American Airlines Places Order for 460 Narrowbody Planes from Boeing & Airbus
Jul 20, 2011, 7:06 am
#46
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Airbus has cracked into AA. Boeing will have to fight harder in the years ahead, no less so if AA marries another industry player.
Jul 20, 2011, 7:11 am
#47
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Interestingly, Thomas Horton was on CNBC today and was pressed by the announcers about complicating the fleet with Airbus planes (from a pilot standpoint). He provided a rather weak answer saying they are "simplifying the fleet" because now they operate 4 different planes domestically...757,737,MD80,762. With the Airbus & 737 replacement they will only have 2 bases of planes and will help simplify the training.
When pressed further and asked is there really a 737 that can accommodate passengers the way the 762 does for transcons he was jammed up with no real answer and proceeded to say sure - we can configure some variants of the 737 with 3 cabins for our transcons.
That'll be an interesting layout...glad I fly DL now.
When pressed further and asked is there really a 737 that can accommodate passengers the way the 762 does for transcons he was jammed up with no real answer and proceeded to say sure - we can configure some variants of the 737 with 3 cabins for our transcons.
That'll be an interesting layout...glad I fly DL now.
Jul 20, 2011, 7:12 am
#48
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They could, but it depends on what AA wants to entertain in terms of paying and how AA wants it to be paid.
AA seems intent on better in-flight in-seat entertainment and wi-fi availability on the planes in this order, so I'd expect it will continue to stay on the radar as already agreed.
AA seems intent on better in-flight in-seat entertainment and wi-fi availability on the planes in this order, so I'd expect it will continue to stay on the radar as already agreed.
Jul 20, 2011, 7:14 am
#49
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I think the 737s are the only option for the transcons in the next two years. However as the 767300s age in the next two years, I can't see how AA will begin to replace them for the Europe and South America routes. Sure, the 777s can cover the larger cities and there are increasing numbers of them arriving. Does this mean that the 757 fleet will be called on to pick up many of the overwater routes? The implication of this order is that AA widebodies will disappear on the transcon routes as the 767 223s and 323s are taken out of service. A good number of the 323s have flown more than any of the 223s.
The question is when can AA expect those 787's to be delivered? The program is already running about 3 years behind schedule.
Jul 20, 2011, 7:17 am
#50
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I think AA had to do this for two reasons.
First of all they knew Airbus would bend over backwards and make sure they got low interest rates and credit. Looking at AA credit and interest rates are a huge factor for its long term survivial. It also made Boeing do the same so they didn't loose the whole order.
Second they want to replace the MD-80s and 767-200s as quickly as possible. They had to split the order up its so massive. I bet we see AA order 319s that is the size they really need.
First of all they knew Airbus would bend over backwards and make sure they got low interest rates and credit. Looking at AA credit and interest rates are a huge factor for its long term survivial. It also made Boeing do the same so they didn't loose the whole order.
Second they want to replace the MD-80s and 767-200s as quickly as possible. They had to split the order up its so massive. I bet we see AA order 319s that is the size they really need.
Jul 20, 2011, 7:19 am
#51
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I bet if you had taken a poll of your elites and asked "why did you first choose aa as as your preferred airline," the fact that the fleet was American would be high on the list. To give up this kind of automatic product differentiation between you and the rest of the industry is just foolish.
Cheers.
Jul 20, 2011, 7:25 am
#52
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It's to take 5 years until AA is scheduled to have the youngest fleet amongst the US majors.
Given high fuel costs, relatively poor fuel consumption of a somewhat older fleet and a labor-related cost situation relatively disadvantageous compared to other US carriers (which took more recent advantage of bankruptcy protection restructuring), five year's may end up being a lot of years for AA to survive and deal with bankruptcy risks if fuel prices remain high.
Most ticket-buying customers pay no attention to the manufacturing location of the plane scheduled to operate their flight, so the petty, pseudo-patriotism on display in relation to Boeing losing out a bit to Airbus doesn't really change much of anything for most customers.
Given high fuel costs, relatively poor fuel consumption of a somewhat older fleet and a labor-related cost situation relatively disadvantageous compared to other US carriers (which took more recent advantage of bankruptcy protection restructuring), five year's may end up being a lot of years for AA to survive and deal with bankruptcy risks if fuel prices remain high.
Most ticket-buying customers pay no attention to the manufacturing location of the plane scheduled to operate their flight, so the petty, pseudo-patriotism on display in relation to Boeing losing out a bit to Airbus doesn't really change much of anything for most customers.
Jul 20, 2011, 7:28 am
#53
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Semi-OT
A bit off-topic but I would have liked to watch the Press Conference Stream...
...Yeah, maybe not...
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Jul 20, 2011, 7:33 am
#54
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I bet if you had taken a poll of your elites and asked "why did you first choose aa as as your preferred airline," the fact that the fleet was American would be high on the list. To give up this kind of automatic product differentiation between you and the rest of the industry is just foolish.
Also, you do realize that even if the Airbus is non-American as you put it, there will still be a fairly large component of the aircraft that will be American right? I mean things like avionics, various structural components, engines.....etc. Also, if AA had chosen the Boeing's exclusively, then what proportion of those airplanes are built in the US. Is it 100%? If not, should AA not buy the Boeing's? Should AA accept a 100% US plane, even if it is inferior in regards to capability or price? Is this how a business should be run?
Don't get me wrong, I'm all for supporting local/national businesses, but they have to provide a competitive product. If not, you choose the product that best addresses the needs of the business/consumer.
CN.
Jul 20, 2011, 7:45 am
#56
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Definitely agree. It is no secret that PS has been wildly profitable for UA whereas AA's transcons are marginally profitable, breakeven, or lose boatloads depending on the sources you listen to. What has been proven is that UA's yield and margin is a lot higher than AA's so it wouldn't surprise me that they use this new order and fleet simplification as "rationale" for moving to a PS model with a low density narrowbody configuration. The 737-900ER is almost as long as the 757 (maybe 15 feet shorter) so it could probably handle a similar capacity.
Jul 20, 2011, 7:49 am
#57
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As far as the Airbus order is concerned, I'm okay with it but do think it's absolutely foolish of AA to take delivery of 130 old technology aircraft. I mean, they obviously got them for free, and free is good, but I suspect it's going to cost them big down the road in terms of fuel, not being able to interchange them with 737s and 320neos due to range constraints, etc.
Jul 20, 2011, 8:01 am
#58
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I bet if you had taken a poll of your elites and asked "why did you first choose aa as as your preferred airline," the fact that the fleet was American would be high on the list. To give up this kind of automatic product differentiation between you and the rest of the industry is just foolish.
Jul 20, 2011, 8:07 am
#59
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Interestingly, Thomas Horton was on CNBC today and was pressed by the announcers about complicating the fleet with Airbus planes (from a pilot standpoint). He provided a rather weak answer saying they are "simplifying the fleet" because now they operate 4 different planes domestically...757,737,MD80,762. With the Airbus & 737 replacement they will only have 2 bases of planes and will help simplify the training.
When pressed further and asked is there really a 737 that can accommodate passengers the way the 762 does for transcons he was jammed up with no real answer and proceeded to say sure - we can configure some variants of the 737 with 3 cabins for our transcons.
That'll be an interesting layout...glad I fly DL now.
When pressed further and asked is there really a 737 that can accommodate passengers the way the 762 does for transcons he was jammed up with no real answer and proceeded to say sure - we can configure some variants of the 737 with 3 cabins for our transcons.
That'll be an interesting layout...glad I fly DL now.
Regarding the 762: Likely the A321 or A321NEO will be used to perform many 762 missions, especially transcons. Not quite as comfortable, but CASM is far superior.
I think this is a good deal for AA, A, and B. B will have to work hard over the coming years with its 737RE and 797 prototypes. Bombardier is probably disappointed about the C series, but we'll see what DL does.
Jul 20, 2011, 8:07 am
#60
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I'd submit it's likely to create some jobs. These planes have to be supported, and AA is known as a company that sets up a nice maintenance facility that is used by other airlines. I'm just guessing, but it's likely going to result in upskilling and new hires to maintain a completely new product mix.