What Will American Do With All Those Airplanes?

In case you missed it, American has decided to buy an insanely large number of airplanes. With 460 orders and another 10 million options (ok, maybe just 465), this was easily the largest order ever for an airline. Not only did American order a lot of airplanes, but it gave the lion’s share to Airbus, a huge coup for the manufacturer. This is a huge chunk of change, so why is American, the airline with one of the weaker balance sheets around, playing with fire? A few reasons. This might actually be a smart move.

Unfortunately, we don’t know a ton of details about American’s plans just yet. We do know that American will buy 100 more current generation 737s, 100 737s with new, more efficient engines, 130 current generation A320 series airplanes, and 130 A320neo (new engine option) series airplanes. That comes to a total of 460. How will this massive buy fit into the airline’s fleet? That remains to be seen since American hasn’t said which versions of each series it will take. But we do know something.

The MD-80 is Almost Done at American

When this order is fully filled, the MD-80, 757, and 767-200 will have disappeared from American’s fleet. The MD-80 retirement is no surprise. American has slowly been replacing those with 737-800s, and this will be the nail in the coffin for the older technology, less fuel efficient “Mad Dog” aircraft. I know a lot of people hate MD-80s, but I do have a special place for them. Soon enough, there won’t be any Douglas airplanes flying. Sad.

But time marches on, and it was a given that this would happen. Today, American has 214 MD-80s left in the fleet with 154 737-800s. There were previously 54 737-800s on order, so really, there were just 160 MD-80s that still needed to be replaced. That will undoubtedly happen with the 737 and A320 current generation airplanes on order in some form.

Then there’s the 757. It’s a great airplane that uniquely can fly passengers across the Pond to Europe, over to Hawai’i and into a variety of hot and high locations with ease. No other airplane has been able to duplicate this with so few seats, and even though it’s out of production, the airplane is still a strong performer. American has decided that it can replace it, but I don’t think that will be with one airplane. The 737 can do Hawai’i, the A321neo and next gen 737s should be able to get to Europe. It probably won’t be a one size fits all solution, but with these new-engined airplanes, there is finally a way to replace the 757.

The 767-200 is a niche airplane that primarily flies the JFK to LA and SF routes. That will be easy to replace, and probably should be toast sooner rather than later.

That’s pretty much what we know. The problem, as mentioned, is that we don’t know which airplanes in the series American will actually take. It notes that it has flexibility and can opt for any family member in each series, specifically the 737-700, 737-800, 737-900ER and the A319, A320, and A321 are mentioned. So what will the counts look like of each? We don’t know, and American probably doesn’t know either. The airline does like to talk about what amazing flexibility it has in this deal. It can make changes as it sees fit over time. One thing is clear; this will add a lot of airplanes to the fleet, and it reintroduces Airbus into the Boeing-loyal airline.

American's Two Dads, Boeing and Airbus

I’m still surprised that American bothered ordering from both Boeing and Airbus. It seems to me that Airbus had this thing sewn up thanks to Boeing’s refusal to move on an heir apparent to the 737 while Airbus had the A320neo. When Boeing finally budged (note that the new engine 737 isn’t approved yet by Boeing’s board but is part of the order), it was able to squeeze back in to the race. But why not pick one over the other? It would seem that with a re-engined option, one manufacturer could fill the need. But I think it’s all about money.

As part of this deal, there’s no doubt that American went back and forth to both manufacturers and played them off each other. They got the absolute best deals they could and then, they took them both. That’s a great move. There will be enough airplanes in each fleet to really not make much of a difference whether there’s one type or two. And this way, American can walk away with big money. In fact, the first 230 deliveries are already covered by financing from the two manufacturers. It’s like American is the kid who went up to its parents and asked for money . . . and dad handed over his whole wallet.

But with all these massive orders, American is still going to have a lot more airplanes than it has today. Let’s assume that American retires all its 757s, 767-200s, and MD-80s. That’s 299 airplanes out of the fleet but 460 coming in. Huh? That’s huge growth, and it doesn’t even count the options. I can’t imagine a need for that much growth, so how will this play out?

Some of it could be counting on the new-engined aircraft replacing some of the current generation 737s and A320s that come in, but there could be more to it. And that could lie with American Eagle.

American Eagle Flies Away

American also announced that it will go ahead in spinning off American Eagle into a separate company. As part of that, the Eagle pilots got a guaranteed path into American with 35 percent of new hire pilots at American required to come from Eagle. American likes to say that it’s spinning off Eagle so that it can fly on its own and can start working for other airlines as well. Yeah, right. Eagle is expensive compared to other providers, and its chances aren’t great for getting new flying. The reality is that American really just wants to start looking for other airlines to do some of its express flying for less. So it spins Eagle off and slowly shrinks it into oblivion.

But remember, today American flies nothing smaller than the 140 seat MD-80. What if it chooses to get A319 and 737-700 airplanes as part of this order? You figure those would fly in around a 120 to 124 seat configuration. With that smaller airplane, could American start bringing mainline flights back to places that are served with 70 seaters today?

It might be a stretch, especially since my assumption is that the pilots aren’t going to work for less to win that flying back. But there are a lot of routes out there that are on 70 seaters today, like Chicago to Atlanta, that might work better with a larger airplane. American hasn’t had that type of capacity for years, so we have no idea how the airline would use it. But it could be a way of reducing dependence on Eagle, if labor is willing to take on the challenge.

In the end, we really don’t know what American’s strategy is. I doubt American even fully knows what it’s going to do with all these airplanes. But it is encouraging to see the airline make these moves. American is finally, actually, going to try to do something about its cost problem instead of continuing to whine about how others will eventually catch up. With sweetheart financing from the manufacturers and much more fuel efficient aircraft, this should help the airline keep costs down. If only we had more details to know for sure . . .

[Original Aircraft Photo via Flickr user JF10/CC 2.0]

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60 Comments on "What Will American Do With All Those Airplanes?"

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Mike
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Maybe availability of planes plays a role in splitting such a large order in two? I would assume an order double the size just with Airbus or just Boeing would require delivery to be spread even more given the pretty full orderbooks? (AA will obviously take delivery in the 2020’s but still its not like there is a lot of spare production capacity with Airbus & Boeing) I guess the position in that orderbook is largely determined by willingness to pay but I presume the premium for AA for that would have been substantial. (individual contract details would specify all… Read more »
million miler
Guest
Lots to chew on. few details given so far 1. Many of the current orders on the books with Boeing and Airbus will never happen. Airlines come and go with shocking frequency, options are not exercised, fleets are downsized, leasing companies redeploy aircraft to more lucrative opportunities, new designs are delayed in production. etc. This order is no different. There will be changes, what they are, who knows? 2. Split the order? Single fleet type is tempting – lots of cost savings. look no further than a dozen miles down the road from DFW to Love Field to see the… Read more »
David SF eastbay
Member
They will never take all those planes into their fleet, but could years down the road make some money selling their place in line to other airlines who really need the planes. Options mean nothing since they are options so AA’s plan to scare Boeing into doing something with the 737 by ordering a much larger number of planes from Airbus could work in their favor. With the big US carriers in one of the big alliances, they don’t as many airplanes for international flying as they did since one of the alliance partners does the flying these days on… Read more »
longtimeobserver
Member

As reported in TheStreet…

“Internally, American executives knew they were making history with such a huge order. They repeatedly reminded themselves that “we are trying to replace a fleet the size of US Airways, Vahidi said. US Airways mainline has a fleet of 338 aircraft.”

Oops, cat left bag…

Carl
Guest

http://bit.ly/qYsNRz

if you look at this link from aa.com, and take their pictures as a clue, AA will go with A319, B738, and A321 for their NB fleet, or so they’d have you believe.

DesertGhost
Guest
I think the order was split to hasten the replacement of the MD-80s. Anything, even “classic” 737s and A320s, are an economic improvement. I too will miss them. I always found them pleasant to fly in. There seems to be a lot of odd “over ordering” (for lack of a better term). Does Frontier really need 40 CS300s and 40 A319neos? I doubt it. But I digress … AMR’s deliveries are scheduled to take nearly a decade and some of the positions could be place holders for newer technologies or other order conversions in the future. Maybe these moves are… Read more »
DesertGhost
Guest
On the other hand, taking so long to be “proactive” left AMR little choice but to act aggressively. Their 2Q losses were pretty awful. That’s kinda gotten lost in all of the other news. A point about the Eagle situation. I think it’s part of what has to be a major shake up / consolidation of the entire regional sector. There are too many providers providing economically unsustainable lift. Mesa just exited bankruptcy half its former size. Even Skywest is having challenges. What do Air Wisconsin and Mesa do when their current contracts expire? Comair seems to be in the… Read more »
Eric
Guest
I agree that there is allot of ‘over-ordering’ here and many of those options will never see the light of day. It will be interesting to see how the AE Spinoff Attempt 2.0 goes. The number crunchers in Euless know that AE as a stand alone Company in their price environment and economy is doomed. AA…(like DL and UA/CO), are heavily dependent on RJ operations in markets like ORD-ATL/MSP/DTW/DCA, DFW-MKE/CLE/CVG and that bizarre mess in LAX. By bringing right-sized mainline aircraft into the fold, they can improve the brand while enjoying lower CASM vs the E135/45 & CRJs. I do… Read more »
MrSkyGuy
Guest
I almost love participating on Cranky more than I do on a.net. I also applaud Brett for taking the time to give the Eagle divestiture some podium time as well. Were it not for this earth-shattering aircraft order, the Eagle divestiture news would have been covered in far greater detail (and negativity). It seems that the aviation world is all “high-fives” over this order, but there’s still little talk of what hasn’t changed. AMR is still the same AMR it was before, and that, to me anyway, is it’s greatest problem. In fact, the Wall Street Journal gives a pretty… Read more »
MrSkyGuy
Guest

I also failed to mention that American bought itself in to fleet synergy should it ever reconsider merging with US Airways or JetBlue.

mandel.jerry1
Member

AA is not going to “buy” those aircraft. Other firms will buy them and lease them to AA. AA’s fuel savings will pretty much cover the leases. So, AA gets newer aircraft for almost no net cost.

mandel.jerry1
Member

I would dread making very long flights in single aisle aircraft. Hard to walk around and to get to the toilets.

Sanjeev M
Guest

Well if you’re in the US. basically a majority of our domestic flights are on single aisle aircraft.

Unless you want to get some sort of Emirates flying A330’s and 777’s on 5 hour flights, this will remain because American passengers expect frequency rather than comfort. We long ago gave up our service standards because we wanted cheaper flights (which is ok with me)

apanelli
Member

I will be sorry to see the 767’s disappear — it is by far my favorite commercial airplane to fly. The two aisle, 2-3-2 configuration means aisle access is never more than one passenger to climb over, and with the two aisles, these planes seem to load and unload more quickly. I understand that 767’s are relative gas-guzzlers, though…is that the plane design or is it the engine design?

Ben
Guest

The more I look at this, the more I start to wonder if AA isn’t simply hedging its bets to be able to pick the better aircraft once more is known about both, especially the new Boeing product, while still being able to get in on the ground floor with a new airplane.

Allan
Guest

I would like to put in an order for 36 A320neos, 20 737-900’s and 6 747’s. Thanks a bunch.

Bruce
Guest

I’ll be sorry to see AA’s spacious 767-200s leave the fleet. No other carrier operates twin-aisle aircraft on the transcons. Hard to believe that at one time, it was mostly all widebodies … 747s, L-10s and DC-10s. But lower frequencies and therefore a smaller choice of departure times.

james
Guest

I’ve taken many United 777s and 767s on flights between hubs.

Bobber
Guest

Indeed – they fly 767’s and (I think) 747’s between SFO and ORD.

Anon
Guest

Delta has a dedicated subfleet of 767-300s that fly domestically (e.g., ATL to LAX, SFO, SEA)

Bobber
Guest

I don’t know how this news has been carried in the US, but in the UK I find it a little strange that it’s been on the BBC without any trumpeting from either Boeing or Airbus, and they don’t normally waste any opportunity to rub the others face in it, or twist any story to claim a victory for them. Perhaps the deal isn’t that great for them, perhaps they don’t believe it will happen, either.

Fred
Guest

Do you really think that the 321NEO or other aircraft can really replace the 757? Even with new engines, I don’t think that a 321 would work to Hawaii or transatlantics (if AA uses 757s transatlantic) as well as a 757.
Aircraft manufacturers seem obsessed with taking an airplane and just stretching it (look at the original 737, 320, CRJ and others) rather than using an appropriate aircraft for the job.

Also, does American operate any 753s? Those are a size that’s hard to fill until the 787 comes unless they use a 763.

jabelson
Member
AA only has 757-200s not 757-300s. As you can see from Boeing’s site — http://www.boeing.com/commercial/737family/pf/pf_rc_newyork.html — both the 737-800 and 737-900ER have the range to reach Ireland & England from New York. The -900ER can also reach MAD and BCN (the -800 might make it to MAD but it would be very close and probably not worth the risk). Since Hawaii from LAX is 1,000 miles less than JFK-LHR, clearly both the -800 and -900ER could make the trip. The Airbus 321 — http://www.airbus.com/aircraftfamilies/passengeraircraft/a320family/a321/performance/ — has a smaller range than the -800 or -900 but it can still make Hawaii… Read more »
Fred
Guest

West coast – Hawaii would be fine with these. But given headwinds when flying west (plus accounting for payload and extra fuel and such), I don’t think that it would be smart to use 321s on transatlantics at all. Even 737s might have a tough time.
JetBlue and US have had issues with their 320s and 321s flying westbound across the country requiring fuel stops in the winter. Even with new engines, transatlantic is that much further that this doesn’t seem feasible.

Anon
Guest
Those range charts you’re citing don’t account for things like strong headwinds in the winter, extra fuel needed to make it to alternate airports, etc. Being just barely able to make it to a city under optimal conditions is not good enough for airlines, which need to be able to operate their flights year round, in varying weather conditions. You’ll notice that no airline currently flies any A320 to Hawaii, and I suggest that’s for a reason. Looking up the maximum range specs for an airplane and going over to great circle mapper is not how airline route planners make… Read more »
longtimeobserver
Member

“American has just done nothing so it suffers from lack of action.”

Why should the transcons be different than other markets? Especially as they span “pillars”… OK, LAX at least… which doubtless makes it a “free pass” (in their minds).

Eric
Guest
RE: this merger with B6/US speculation. Allot of people are speculating that this Airbus-heavy is a segue to merge with US and/or B6. What do you think of this Cranky? I personally do not thing AA ‘needs’ to merge with anyone…they need to get their house in order. Fist issue…the fleet…has been addressed now. The second one…underperforming assets (Eaglett) has been addressed with this nebulous exit strategy. The final component…and most difficult…will be to get labor and management to come up with a realistic and viable model going forward. I really hope that some backroom deals were struck with APA… Read more »
Hawke301
Guest
Ok, let’s speculate. The media loves to speculate, so why shouldn’t we speculate here… American wants to merge (again, this is pure speculation, so bear with me…). They know that their cost structure is preventing any potential merger partners from considering them seriously. They also know that the operational and maintenance costs of the older aircraft outweigh the operational and maintenance costs of new aircraft with extra cash to spare. By splitting the order between two manufacturers, AA can replace their fleet in a shorter time than they could if they only went with one supplier. As for the fleet… Read more »
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[…] ook onze Amerikaanse collega The Cranky Flier schreef, is de kans aannemelijk dat American zelf ook nog geen concrete plannen voor ogen heeft met […]

Insider Man
Guest
Do you think the manufactures are only getting interest on this 100% financing deal. I’ve been hearing that the manufacturers are going to get the heavy maintenance in the deal. AA mechanics have already been working for three years without a contract. typical corporate greed; the combined work groups give up 10.6 billion in concessions over 6 years to keep the company out of bankruptcy and now due to the companies unwillingness to negotiate in good faith those concessions have continued for an 3 additional years. Due to the railways labor act they can’t even strike until given permission by… Read more »
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[…] last week’s post on American’s decision to order 460 new airplanes, I had some great offline conversations with people about it. I still stand by my belief that it […]

teddy
Guest

this prompts you to wonder how long has American mauled the us airways merger? us is known for their airbus fleet and it makes logical sense an order this big, then you merge now you have brand new planes to provide for everyone.

Lucas Sanz
Guest

American+US Airways will buy al least 80 A350-1000s due to commonality with Airbuses ordered (A320 familiy), acording to informal talk of Leahy with french periodists lasta month in Toulouse.

Phil
Guest

I do like the MD-80s but I have never been on one. I think the rear engine design is cool. maybe American has ordered so many planes because of its merger with us airways. I know the MD-80 is being replaced because it isn’t fuel efficient and doesn’t have the new winglets that reduce drag, but why are they replacing the 757. I think that it is a perfectly good modern plane.

Phil
Guest

I do like the MD-80s even though I have never been on one. I think the rear engine design is cool. I know that the MD-80s are being replaced because they are not very fuel efficient and the don’t have the new winglets that reduce drag, but why are they replacing their 757s. The 757 is a good plane, it can go farther than the 767-200 which is bigger, and its not very old like the MD-80.

757-200
Guest

757s & 767s are not outdated
american is CRAZY

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