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  • ANALYSIS: American fleet plan unlikely to suffer in bankruptcy filing

ANALYSIS: American fleet plan unlikely to suffer in bankruptcy filing

Today's American Airlines bankruptcy protection filing comes just four months after its record-breaking $38.5 billion deal for 460 Airbus A320 family and Boeing 737 aircraft, an order which analysts do not expect to be affected by the restructuring.

These aircraft form the bulk of the Oneworld carrier's backlog, which according to Flightglobal's ACAS database comprises 284 firm orders. On top of this, the airline has commitments for orders, options and leases for more than 800 additional aircraft.

The July deal was American's first major single-aisle re-fleeting campaign for almost 15 years. At the time of the order Flightglobal's ACAS database put American's current average fleet age at 15 years, which is one of the oldest among the US major airlines.

American's current fleet comprises 610 jets. The bulk of these - 325 aircraft - are the ageing and fuel-thirsty Boeing MD-80s (203 units) and 757s (122 units) which are earmarked for rapid phase-out. Hence the airline's urgency to bring in fresh new metal.

American's firm orders include 141 737NGs and 13 777s, as well as 130 A321neos (engines yet to be selected) for delivery from 2017 (plus 280 options). It has also agreed to order up to 160 737 Max aircraft.

 American Airlines backlog

 
  Orders Commitments/leases Total Grand total
  Firm Options*   Firm Options Firm Options  
Airbus  
A319/A321 CG** 0 0 130 85 130 85 215
A321neo 130 280 0 0 130 280 410
Airbus Total 130 280 130 85 260 365 625
Boeing  
737NG 141 40 0 0 141 40 181
737 Max 0 0 100 60 100 60 160
777 13 29 0 0 13 29 42
787 0 0 42 58 42 58 100
Boeing total 154 69 142 118 296 187 483
GRAND TOTAL 284 349 272 203 556 552 1108
 *Breakdown of options between A320neo variants n/a; Exact status of 737NG/777 options not confirmed       
**A319/A321 current generation aircraft to be acquired indirectly via lease       
Source: Flightglobal, ACAS and American Airlines

In the nearer term, American will take 130 A319/A321 current generation aircraft (or "classics") from 2013. The airline has said that these aircraft will be "fully financed through lease transactions" and as they are not coming directly from Airbus are therefore not included on the airframer's order book assigned to American.

"There is no doubt that American will go with the modernisation of its narrowbody fleet," said Massachusetts Institute of Technology airline analyst William Swelbar. "The question is, what size will American be when it emerges from bankruptcy protection? A lot of the aircraft earmarked for potential growth - those will have a question mark over them."

But he feels the plans to bring in replacement narrowbodies will not be affected.

"The restructuring will definitely speed up the shedding of the MD-80s," said Swelbar. "American desperately needs to get rid of the MD-80s. Anything that can be done will have a bottom line effect."

Although the split between the A320 classic types has not been revealed, American recently announced that it had chosen CFM International to power the A319s and International Aero Engines to power the A321s. It previously announced options for 85 additional A320 Classics.

The airline's commitment for 100 737 Max aircraft plus 60 options, for delivery from around 2017, is not due to be finalised until Boeing has completed the definition of the re-engined 737 variant and is ready to sign firm contracts.

"Given that both sides, but particularly Airbus, will be eager to work with [American's parent] AMR on financing, there's a very good chance that the orders survive," said Richard Aboulafia, vice-president analysis at Teal Group.

"Also, this move will probably be good in the long run for AMR, and it does need to re-fleet in the second half of the decade. The pace of this re-fleeting will depend on the finance environment at the time, but the money people will likely view restructured AMR as a pretty good bet."

A deal originally agreed with Boeing three years ago for up to 100 787s (42 orders and 58 purchase rights) for delivery from 2014 has remained in limbo awaiting the negotiation of a new labour agreement with pilots. The Chapter 11 filing should clear the way for new pay rates to be negotiated and enable the 787 deal to be firmed up.

"If you look at the history of pilot agreements over jet types, the results are pretty mixed, but the odds are good that an agreement will be reached," said Aboulafia. "It's clearly in both sides' interest to get those 787s."

Boeing said it will work with the airline following bankruptcy filing and expects the fleet roll-over will be central to American's re-organisation. "So we expect these Boeing airplanes to be a part of it," it said.

"When we entered into our recent agreements with American, we were confident that these assets at issue will be core to their operation in almost any scenario. We have no reason to doubt that today."

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