American adds eight aircraft to its Boeing 737-800 order

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American Airlines has added eight aircraft to a 737-800 order with Boeing, resulting in expanded deliveries for 2009 and 2010.

The amended agreement with Boeing shows American's purchase commitments from 2009 rising from 29 to 31, with 2010 deliveries growing from 39 to 45.

Dallas-based American says it has backstop financing for all 737-800 aircraft deliveries from 2009 to 2011, which totals 84 aircraft, with the exception of $308 million due in the fourth quarter of 2010.

For the remainder of this year, American explains it owes about $768 million to support 737-800 and 777 purchase commitments. Seven of the widebody models are scheduled for delivery from 2013-2016.

While American plans further capacity reductions beginning in August, carrier chief executive officer Gerard Arpey tells attendees at the Bank of America/Merrill Lynch transportation conference the carrier still is making strategic additions in markets important to its best customers.

The carrier is continuing to build a presence in China and India and expand its reach into new markets such as Barcelona and Milan, Arpey explains.

But Arpey admits demand for air travel remains challenged as American's advanced booking in both international and domestic offerings are down two points.

American's chief executive says the H1N1 virus has created a "devastating" effect on traffic to Mexico and dampened demand throughout the carrier's network.

Capacity cuts American instituted last year during record fuel prices were helpful, notes Arpey, which resulted in no major change to the carrier's summer schedule. But looking forward adjustments to American's fall scheduled are warranted, he explains.

American's mainline capacity is estimated to fall by 7.5% this year, with the second half reductions falling a further two points versus previous estimates.

Outlining American's capacity reductions over the last two year, Arpey says during the second half of 2009 domestic capacity is down 15% versus 2007, while international available seat miles have fallen 5% below 2007 levels.