American Airlines orders 460(!!!) new narrowbodies

[Erik H. Bakke]

Split between 200 Boeing 737/737RE and 260 A320/A320NEO

http://www.flightglobal.com/articles/2011/07/20/359710/american-splits-record-narrowbody-order-between-airbus-and.html

And a very large number of options and purchase rights, as well.

[Mike W]

What's the go with Boeing? Is there a more ponderous, more bureaucratic organisation than this? (outside of governments of course). This was their order to lose and they lost more than half of it. I hear whispers that they still struggle internally with the intergration of former McD execs and if that former culture is entrenched, then they are doomed.

This (AA) former exclusive Boeing customer and one from within their own country to boot. They mucked about for eons trying to decide what to do with the new engine or new plane decision on the 737 until Airbus cut their grass pretty much everywhere. What's next? Delta, US Air, good grief probably even Qantas and Virgin Australia. Southwest? Or will the other narrow body manufacturers steal that customer?

AA say that one manufacturer wouldn't be able to satisfy their requirements alone. Is tis due to availability? Airbus are already committed to hundreds of 320NEO's ordered barely over the past couple of months. Next thing there will be an Airbus facility in the US (paid for by Southern State's governments) and the slippery slide for Boeing will be all but complete.

I haven't even begun to rant about the 787 and Boeing's disasterous attempt to mitigate risk only for it to bite them worse than anything they could have/should have done in-house.

Yes, I, disppointed in and for Boeing.

[Kent Broadhead]

No, not good for Boeing, given that the A300 is AAs only Airbus product to date. It's fleet is mainly Boeing, but with significant McD (MD-8X - pre-Boeing takeover, of course) and A300 subfleets. Continuing to spread the risk across multiple suppliers with such a a large fleet seems sensible.

[Mike W]

The Airbus 300's are gone. They didn't hang around long after the tail fell off one and it crashed near NYC (I think).

Airbus blamed AA and AA blamed Airbus. I though that would have burnt bridges but obviously not. It turned out the NTSB blamed the pilot (or first officer) for "excessive rudder imput"

http://en.wikipedia.org/wiki/American_Airlines_Flight_587

There we go... from wiki

[Kent Broadhead]

They actually have more MD-8X than 737s, so moving to the 737 for narrowbodies (excluding 757 :) ) was a big thing. The A300s were in the fleet for over 20 years, and only retired in 2009. And I'd also forgotten about the F100 subfleet they had until 2004.

[Andrew M]

Now Airbus has the foot in the door, it's open slather for them with AA. I wasn't expecting this order for a few more months.

Boeing has really lost the plot!

787 - debacle
747-8 - failure
737 - Wait and see approach.

Reading http://aa.mediaroom.com/index.php?s=43&item=3286
100 x 737 - Current modesl
100 x 737NG - Whatever that is....

&

130 - Current A320
130 - A320 Neo

365 Options and purchase rights - This will mean good-bye Boeing 737's!

How many orders does the A320NEO have now ?

[Lukas M]

Would be close to 1300 NEO's ordered now.

[Sarah C]

I would love to see how AA are going to pay those huge bills!

[Grant Smith]

"American also will benefit from approximately $13 billion of committed financing provided by the manufacturers through lease transactions that will help maximize balance sheet flexibility and reduce risk. The financing fully covers the first 230 deliveries"

Guess you skipped over that part of the article?

[Andrew M]

Reading the whole article... Appears that Boeing have Options as well

"options and purchase rights for additional aircraft from both manufacturers through 2025"

Sarah - Yes I agree!!! Given they are making loss after loss... but see the post above mine

[Ash W]

That is a serious number of aircraft. Good to see in some ways that the order is more or less a 50/50 split. Clearly hedging their bets.

Also amazing at how well the A320 NEO has sold, especially with all the doom and gloom coming from the leasing companies in particular. Guess the airlines are voting with their order books.

[Greg McDonald]

Standard American practice......"we're losing $h1tloads of money and the company's (and the country) going broke fast......lets fix it by spending even more money that we haven't got!!"

[Mike W]

Ah, here's reference to my earlier piece about McD's negative influence on Boeing. (I guess you can say the same about Douglas Aircraft... and where are they now?)

McBoeing, 787′s insidious impact overwhelm product strategy

http://leehamnews.wordpress.com/2011/07/21/mcboeing-787s-insidious-impact-overwhelm-product-strategy/

McBoeing is alive and well in Seattle.

“McBoeing” is the derisive moniker given the combined Boeing-McDonnell Douglas merger of 1997 in which legacy Boeing personnel say MDC bought Boeing with Boeing’s money. Key positions in Boeing’s C-level suite were assumed by McDonnell Douglas officers despite the weak market position MDC had reached–just 7% of the commercial airplane business and a declining defense side.

In what turned out to be the most notorious placements, MDC’s CEO Harry Stonecipher became Boeing’s COO and widely was perceived to overwhelm a weak Phil Condit, Boeing’s CEO. Mike Sears, later of KC-767-Darleen Drunyan tanker infamy, moved from MDC to become Boeing’s CFO.

John McDonnell and Stonecipher, the largest shareholders in Boeing after the merger, went on the Board of Directors and formed a powerhouse team. They and directors allied with them dominated the Board.


It was this MDC-dominated leadership and Board that sent Boeing into a downward spiral. MDC starved Douglas Aircraft for R&D money and relied on derivatives. During the period 1998-2003, Boeing’s R&D fell precipitously, drawing scathing criticism from the normally pro-Boeing consultant, Richard Aboulafia of The Teal Group. Boeing offered derivatives of in the form of the 737-900 (not today’s more successful ER), 757-300 and 767-400, all sales duds. Boeing talked and talked and talked about new airplanes but had no action. It talked about three different derivatives of the 747 and the fanciful Sonic Cruiser. ... continues

[Adam J]

I actually like the proactive move by the management of AA. This could be an absolute game changer for AA. They are expecting far greater efficiencies from the newer metal, selling all the old frames and the fact that both manufacturers have provided (or guaranteed)lease finance is a huge plus.

Debt funding is bloody hard to get and to score a facility on such a large scale is outstanding. It will be interesting to see whether the same finance package is offered to other airlines.

A mate of mine who I went to college with in the states with is an FO at AA and despite some tough industrial times with the pilots,engineers and FA's in the recent past with heaps still furloughed and closure of maintenance he is of the opinion (and hope) that this move will be positive for everyone at AA. They have been expanding routes and really taking the other carriers head on.

I emailed him about this and he tells me the pilot group is very happy with the order but there is still some residual angst re pay and conditions.

Certainly will be very interesting to watch.

PS Just as a side note the pilot group have heard of the Qantas Pilots industrial dispute and watching from afar with great interest. I guess Airline flying is a small world and employees worldwide all seem to be facing the same problem.

[Andrew M]

Low cost carriers are changing the airline game, no doubt about it.

[Grant Smith]

Standard American practice......"we're losing $h1tloads of money and the company's (and the country) going broke fast......lets fix it by spending even more money that we haven't got!!"

I'm sorry, but what does this have to do with anything?

AA have done the sums, finance has been covered by both Airbus and Boeing...

[D Chan]

I'm sorry, but what does this have to do with anything?

have you forgotten about Chapter 11? and the numerous large legacy carriers in the states that have gone in and out of Chapter 11 in the last 25 years? Continental, Eastern, Delta, United, Northwest, US Airways, TWA...

yes, AA is the only major that has not gone through Chapter 11 bankruptcy but imagine if it had to - what would happen to this massive order, especially if the US hits severe economic recession. Fleet renewal doesn't come cheap and they'll be paying the billions for decades to come.

Having said that they will be paying anyway if they didn't have a fleet renewal given the aging fleet. They must have secured a very lucrative deal that they simply could not resist

[Andrew M]

Thinking more about this order, given the time-frames they want the aircraft in, one manufacturer simply wouldn't be able to meet the deadlines.

I think this will have Boeing very worried though... AA has huge "options" with Airbus for more A320's. So if the "new 737" whatever that is, is not up to the A320 it's bye bye to Boeing here.

[Ash W]

Maybe it is AA way of getting Boeing off their bum and start doing a new 737.

[Grant Smith]

D Chan,

You've made an excellent point about a hypothetical scenario, well played...

The point I was trying to make referring to Greg McDonalds claim about spending money that they don't have or "american practice" was moot considering that the initial 230 birds are already secured - financially speaking - by the aircraft manufacturer...