American Airlines has agreed to buy 47 Boeing 737-800 jets for delivery from 2009 in a move that highlights how the re-emergence of orders from leading US carriers could significantly pressurize manufacturers to increase production rates. American Airlines’ efforts to secure new aircrafts draw attention to the balancing act airlines face as the aerospace industry rushes to ease growing appetite for jetliners. The recent orders were given with a view to replace its fleet of more than 300 operational MD-80s, which are on average 17 years-old and consume 25 per cent more fuel than the 737s already in its fleet.
The company has said that it will accelerate the delivery of 47 new 737-800 single-aisle jetliners from Boeing Co. so it can begin replacing 300 MD-80s. Under the arrangements of the deal American will receive the first three planes in early 2009, seven years ahead of schedule; the remaining consignment is expected to be delivered in 2009-2012 instead of 2013-2016. The jetliners carry an average list price of about $71 million each, though big customers like American get some undisclosed discounts. The financial terms of the deal have not been revealed yet.
On the other hand, Boeing has recently said that its 737 order book was full until early 2011. Boeing is also cautious about increasing production across its product range to avoid any manufacturing problems that plagued the group in the late 1990s. Earlier delivery positions had been reserved for American in case they were needed, Boeing said in its statement.
AMR Chairman and CEO Gerard Arpey speaking over the issue said, ‘we believe that beginning to replace some of our MD-80s in a measured way makes economic sense and represents prudent and strategic reinvestment in our business that will bring long-term benefits to shareholders, customers and employees. Our existing agreement with Boeing gives us ample flexibility for our long-term fleet plan.’
American, the biggest carrier by passenger traffic in the US, joins other major airlines in placing plane orders after industry losses of more than $40 billion from 2001 through 2005. Almost every airlines this time around either already placed orders for new planes or contemplating to place orders for more planes. However, these developments are not only signaling towards a revival but a briskly growing business as well.
