Carrier Tells Boeing It Wants More 737s... Yesterday, Please

Confirming reports American Airlines will soon retire the more aged members of its fleet, on Wednesday the carrier announced it has accelerated its plan to replace some the carrier's MD-80s, by notifying Boeing it wants to move up deliveries of 47 Boeing 737-800s remaining under a previous 124-plane purchase commitment.

American initiated the process by notifying Boeing the airline will take delivery in early 2009 of three of these aircraft, which originally had been scheduled for delivery in 2016. American intends to continue pulling forward deliveries of the other aircraft from its current 2013-2016 delivery schedules into the 2009-2012 timeframe.

The airline hastened to add subsequent decisions to accelerate deliveries -- or for new plane orders --  will depend on such factors as future economic and industry conditions, and the financial condition of the company.

"We believe that beginning to replace some of our MD-80s in a measured way makes economic sense and represents prudent and strategic reinvestment in our business that will bring long-term benefits to shareholders, customers and employees," said AMR Chairman and CEO Gerard Arpey. "Our existing agreement with Boeing gives us ample flexibility for our long-term fleet plan."

"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," Arpey added.

Showing that -- at times, anyway -- it pays to be the world's largest airline, Arpey noted American's long-term purchase contract with Boeing gives the airline substantial flexibility -- and also includes the right to purchase on short notice additional 737s well beyond the 47 committed aircraft. American also reserves the right to purchase 787s, either by converting some of its 737 orders or through new orders.

Arpey said the decision to begin replacement of American's older MD-80s is part of the carrier's goal to improve the fuel efficiency of its fleet by more than 20 percent by 2020 -- a move which will also benefit the airline's bottom line in the long run.

Other fuel-saving measures now underway at American includes adding winglets to its 737 and 757 fleets, and employing high-speed tractors to tow airplanes on the ground and by taxiing aircraft with a single engine when feasible. American has set a goal in 2007 to increase annualized fuel consumption savings to 125 million gallons.

"Strengthening our balance sheet remains a high priority and an important element of building a stronger financial foundation under our Turnaround Plan," Arpey said. "Our announcement today shows that we are taking action to strike the right balance between reinvestment in the business and the need for continued financial improvement. As we continue to improve our financial performance we will have more flexibility to reinvest in the business for the future."

FMI: www.aa.com