American Airlines is delaying the delivery of 22 Airbus A321neo aircraft to at least 2024, citing high fuel prices and a weak revenue environment for the move.
The Fort Worth-based carrier moved the 22 aircraft deliveries from 2019-2021 – five in 2019, 10 in 2020 and seven in 2021 – to 2024 and beyond as a result of the "environment", says chairman and chief executive Doug Parker during a quarterly earnings call today.
"This is the result of, given the existing environment, making sure that we actually want to take airplanes in those times and we've come to the conclusion that we don’t," he says.
American saw mainline fuel expenses jump $700 million year-over-year in the second quarter. At the same time, its headline revenue growth slowed by 2.2 percentage points to a 3.7% increase during the period when compared to the growth during the first quarter.
As a result of these lacklustre results, the airline cut its full year capacity growth forecast by half a percentage point to a 2.2% increase in 2018.
American has also announced plans to modify its no-frills basic economy fares by allowing passengers to bring a carry-on bag from 5 September. This is expected to generate additional incremental revenue opportunities.
The A321neo deferral will ostensibly save American $1.2 billion in aircraft capital expenditures through 2021, says chief financial officer Derek Kerr. However, both his numbers and those in a quarterly financial filing show a net savings of less than $900 million over the period due to an order for 30 large regional jets in May.
The majority of the regional aircraft, including 15 Bombardier CRJ900s and 15 Embraer 175s, will arrive in 2019, with one due in 2020, says Kerr.
Aircraft and engine commitments at American decreased $613 million from 2019 to 2021 following the deliveries shuffle, the quarterly financial statement shows. Commitments are $2.89 billion in 2019, $1.23 billion in 2020 and $967 million in 2021.
This is not the first time American has deferred its A321neo order. In 2015, it pushed the first aircraft delivery back by two years to 2019, saying the move gave it more "capacity flexibility".
More recently, the carrier deferred 40 Boeing 737 Max 8s as part of a larger widebody order in April. It moved the aircraft deliveries from 2020-2022 to 2025 and 2026.
"The push of the A321s is more – we have the capacity already, we have aircraft we can keep around, we're putting 737s through the Oasis project and modifying those aircraft, so there really wasn't the need to take on new aircraft at this time," says Kerr when asked whether the latest deferral is comparable to the one for the 737 Max.
American is reconfiguring its 737-800s with 172 seats, the same number as on its Max 8s, up from 160 seats under project Oasis.
The airline will take delivery of 73 aircraft in 2019 under the revised schedule, its fleet plan shows. This includes 17 A321neos, 20 737-8s, two Boeing 787s, 14 CRJ900s and 20 E175s.
Source: Cirium Dashboard