We’ve reported on dallasnews.com that American Airlines is expected to order more than 400 jets, with the announcement to come Wednesday. The order is to be split between Airbus and Boeing, with Boeing getting a larger share, according to our information.
Some thoughts, based on the limited information we have:
1. The size of the order may seem big, but it apparently goes into the next decade. As I told an analyst, I’ll make a million dollars as an airline reporter, but it’s spread out of a long time. A big airplane order looks less daunting when spread out over enough years.
2. American may very well have played the two companies off each other to get the best deal, and then took both deals.
3. If Airbus can sell narrow-body airplanes to American, it can sell wide-body airplanes as well. American is committed to Boeing 777-300ERs for its future long-haul international flights and the Boeing 787-9s for the shorter or thinner international routes. But it was committed to the Boeing 737-800s as well.
4. Airbus may not have been in the game if Boeing had committed to build a re-engined 737 when Airbus committed to the A320neo. With the airline industry’s push for fuel efficiency, Airbus seems to have made the smart choice.
5. The deal still leaves a big hole in American’s fleet — the 90-seat to 150-seat category. American could be ordering Boeing 737-600s or A318s or A319s, but that’s not the sweet spot for those aircraft families.
6. The decision to spin off American Eagle, also reported to be announced Wednesday to some degree, is tied up in the issue of the above point. American Eagle can operate only 47 airplanes with more than 50 and less than 70 seats. Its fleet is loaded with regional jets of 50 seats or less. American Eagle needs bigger airplanes. American needs smaller airplanes. Who gets them?
7. The above two points are tied up in the current negotiations with American’s pilot union, the Allied Pilots Association. The APA would love to be able to do all the flying that’s done on American’s behalf. The question is whether the airline and union can reach an agreement that makes American’s flying competitive with other carrier’s flying in that size of aircraft.
8. I don’t know which is a bigger deal — Airbus getting its foot in the door, or Boeing losing American as a Boeing-only airline. But with Boeing getting orders for a lot of airplanes from American, probably over 250, it’s not like Boeing didn’t get anything out of the deal.
9. What gets ordered and what gets delivered are often entirely different things. As a reminder, the big November 1996 order in which American pledged allegiance to Boeing included 103 firm orders and purchase rights for another 527 Boeing jets over the next 20 years. We still haven’t gotten to a total of 630 Boeing jets delivered in the 15 years since.