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    | Apr-01-2007  Decline Of The Mad Dog? American Moves Up Fleet Renewal Plan(topic overview)CONTENTS:
REFERENCES
American Airlines, the world's largest carrier, is accelerating delivery of 47 previously ordered Boeing 737-800 jets by four years as it begins replacement of some of its oldest planes. The earlier deliveries will not spur Boeing to accelerate its assembly line at the 737 plant in Renton. "This does not affect production rates," said Boeing spokesman Randy Harrison. [1] American, the world's largest airline, also disclosed that it has purchase rights for Boeing's 787 Dreamliner, though it has not yet ordered that plane. The development could be just the start of a surge in demand for new Boeing and Airbus jets by mainstay U.S. carriers, which hunkered down and simply tried to survive after the 9/11 attacks in 2001 sent the airline industry into its worst-ever downturn.[2] Most of the U.S. legacy carriers have large fleets of older, less fuel-efficient planes, and sky-high fuel prices are hurting airline profitability. American has about 300 aging McDonnell Douglas MD-80s and wants to start replacing them with new 737s from Boeing.[2] Orders by the world's largest airline likely herald a surge in orders for new planes from Boeing Co. and Airbus SAS from long-established "legacy" carriers, including several with aging fleets that have emerged from or remain in bankruptcy, analysts told the Seattle Post-Intelligencer.[3]  SEATTLE - American Airlines wants 47 Boeing 737s four years earlier than its original request, a request that industry experts said could signal a wave of orders for new passenger jets. [4] In another sign that legacy U.S. airlines have returned to life and will need new airplanes for the domestic market, American Airlines announced Wednesday that it will push up by four years the delivery of 47 Boeing 737 jets.[2] The airline said the 737-800 it has on order consumes about 25 percent less fuel per available seat mile than the MD-80. In a statement, American Chief Executive Gerard Arpey said the airline's goal is to improve fuel efficiency of its fleet by more than 20 percent by 2020, and getting some of those 737-800 replacement jets sooner rather than later is an important step toward that goal. [2] The 737-800s will be delivered over three years. With the MD-80s burning about 25 percent more fuel than their replacements, the new planes may help American pare a jet-fuel bill that rose 14 percent in 2006 to $6.4 billion. Valero Energy Corp. officials say they won't be able to restore full production at the company's McKee refinery in Sunray until year's end at the earliest.[5] The decision follows the carrier's return to profit in 2006 after five years of losses. The new planes will help American begin retiring its aging MD-80 jets as part of a plan to reduce fuel use by more than 20 percent by 2020.[5] American's announcement'supports our thesis that the current commercial aerospace cycle will be smoother than previous cycles as North America and Europe legacy airlines are just beginning to place orders for narrow- and widebody jets,' Ronald Epstein of Merrill Lynch wrote in a note to clients. 'We continue to expect more orders from these carriers in the next 12-18 months,' Epstein added. [4] Harrison said Boeing held delivery slots for American when the carrier deferred deliveries following the steep industry downturn caused by the 9/11 terrorist attacks. The contracts agreeing to those deferrals specified dates by which the airlines needed to decide whether to completely give up the slots, he said.[1] The three aircraft were scheduled for delivery in 2016 under a previously negotiated purchase commitment, officials said. Following approval of the board of directors of AMR Corp., American's parent, American executives also told Boeing they intend to continue pulling forward deliveries of the remaining 44 aircraft from their current 2013-to-2016 delivery schedules into the 2009-to-2012 time frame.[6] American needed to decide on aircraft now rather than wait for Boeing's next generation of narrow-body jets and to keep slots in the plane maker's crowded production line, Boeing spokesman Randy Harrison said.[5] NEW YORK -- American Airlines said it will speed up replacement of its aging fleet of fuel-hogging jets, making the change earlier to a more efficient aircraft.[7] American's contract with Boeing allows the airline to purchase additional 737s on short notice, as well as the right to purchase wide-body 787 Dreamliners.[8] In a second announcement yesterday, the Fort Worth-based carrier disclosed it has rights to purchase the Boeing 787, although it hasn't ordered any of that model.[9] "The U.S. legacy carriers can't put off for much longer ordering replacement planes, and that's what we are starting to see," said Scott Hamilton of Seattle, an aviation industry consultant whose Leeham Co. Web site provides news, commentary and analysis on the Airbus-Boeing rivalry. [3] American last placed a major order for new jets in 1996. It was one of the industry's biggest ever.[2] American, which has not been through bankruptcy, decided to move faster to start replacing about 300 McDonnell Douglas MD-80s by having the 737s delivered in 2009-12, rather than in 2013-16 as previously ordered.[10] American will tap a previous agreement with Boeing to move up three deliveries of the single-aisle, medium range 737-800 from 2016 to 2009.[7] Boeing, meanwhile, has recorded two years of record orders and has been increasing production following drastic cuts that resulted from the worldwide air travel slump that followed the terrorist attacks of Sept. 11, 2001. [10] Boeing executives are being cautious in boosting production. They want to avoid putting too much pressure on suppliers.[2] Airbus, in need of cash, has responded more aggressively. This year, it has produced an average of 30 single-aisle jets per month, against Boeing's average 25.5 jets. [1] Spending for jet fuel, the carrier's second-largest expense after labor, rose 14 percent in 2006, to $6.4 billion.[11] The decision follows the carrier's return to profit in 2006 after five years of losses. "It's time for them to do it," said George Hamlin, president of Hamlin Transportation Consulting in Fairfax, Va. "It's not only a question of high fuel costs with the MD-80s, but also a question of reliability."[8] While the MD-80 remains an excellent aircraft that serves us and our customers well, the new 737s will be a great addition to our fleet that will lower our operational costs, boost the fuel efficiency of our fleet and also bolster our efforts to lower emissions and noise levels," said AMR Chairman and CEO Gerard Arpey, in a statement.[12] "We believe that beginning to replace some of our MD-80s in a measured way makes economic sense and represents prudent and strategic investment in our business that will bring long-term benefits to shareholders, customers and employees," AMR Chairman and CEO Gerard Arpey said in a prepared statement.[6] American is simply reversing the earlier deferrals, said airline spokesman Andy Backover. It will now take the 737s starting in 2009, through 2012, instead of the previously scheduled -16 timeframe. [1] The winglet work is being done at American's Maintenance & Engineering Center in Tulsa. A "fuel smart" program begun two years ago has reduced fuel consumption by 95 million gallons a year, officials said, and the company hopes to increase the savings to 125 million gallons this year.[6] The airline also wants the other planes previously scheduled for delivery in 2013-2016 to be moved up to delivery in 2009-2012. [12] REFERENCES 1. Business & Technology | American Airlines puts rush on getting 737s in air | Seattle Times Newspaper 2. American speeds up 737 order 3. thedesertsun.com | American Airlines wants 47 Boeing 737s 4. American speeds up order for Boeing 737s 5. Around the region | Chron.com - Houston Chronicle 6. Tulsa World 7. American Airlines Advances Schedule to Replace MD-80s @ AMTOnline.com Top News 8. American moves up Boeing order 9. KGBT 4 - TV Harlingen, TX: American Airlines wants 47 Boeing 737s four years sooner 10. SignOnSanDiego.com > News > Business -- American Airlines wants 47 Boeing 737s fast 11. American Orders Fuel Efficient 737s - Environmental Leader 12. American Airlines wants its 737s sooner - Puget Sound Business Journal (Seattle): |
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