AMERICAN AIRLINES has placed firm orders for 103 Boeings as part of a deal which could see it buying a total of 630 aircraft over the next 20 years.

Based on Boeing's list prices, the firm order is valued at $6.6 billion, but Robert Crandall, American's chairman and chief executive, says: "You can count on the fact that I bought them for a few dollars less than that."

Boeing will become the exclusive supplier of long-haul passenger aircraft to American, providing aircraft ranging from the next-generation Boeing 737 to the 777. The deal is contingent, however, on ratification of a deal reached between American and the Allied Pilots Association. The 9,000 members will vote during December.

A novel approach to the long-term aircraft deal includes "purchase rights" for 527 more Boeing aircraft. Under current practices, traditional delivery options have to be exercised 24 to 36 months before delivery, or they expire.

Under the alternative scheme, which is subject to availability of delivery positions, some of which are guaranteed, American will have the right to acquire, at specified prices, new narrowbodied aircraft with as little as 15 months' prior notice and widebodied aircraft with 18 months' notice. In part this flexible plan is a result of Boeing's on-going aircraft production cycle-time reductions.

"American will be able to match replacement and growth orders with the industry's notoriously cyclical nature," says Crandall. The 103 firm orders include a dozen Boeing 777-200IGWs that will replace the McDonnell Douglas MD-11s, which American has agreed to sell to FedEx in 1997. American still has 16 MD-11s. The 777s on order will be delivered between 1998 and 2001. Negotiations are currently under way with the engine manufacturers.

American will begin retiring Boeing 727s, replacing them with 75 Boeing 737-800s powered by CFM International CFM56-7 engines, from 1998. In the interim the 737 delivery schedule will require American to retain and hush-kit as many as 50 727s. Orders for 12 additional Rolls Royce RB.211-powered Boeing 757-200s and four more General Electric CF6-80-powered 767-300ERs were also placed, which will bring American's fleet of the types to 102 and 75 respectively.

The "purchase rights" for an additional 527 aircraft are due through to 2018, and the complete fleet modernisation plan will yield an overall 2% capacity growth. Over the next two decades, American will replace all of its 727s, McDonnell Douglas MD-80s and Fokker 100s. It will, however, retain its 35 Airbus A300s.

Source: Flight International