Concerned About 737 MAX Order Placed By The Airline

AMR Corp's Chapter 11 filing has Boeing officials concerned about an order placed by American Airlines for 100 new 737 MAX airplanes, and the potential effect on its competitive position with rival Airbus.

Airbus is about a year ahead of Boeing in the development of a more fuel-efficient version of its workhorse single-aisle airliner. Reuters reports that the filing may delay confirmation of American's order with Boeing for the re-engined 737.

U.S. bankruptcy law allows the courts to confirm or deny contracts that commit a company's financial resources during an 18-month "breathing space" Chapter 11 provides. But courts often will not green-light significant new spending before a full reorganization plan is competed. Exceptions are possible, but certainly not guaranteed.

Industry analysts told the news service that it is likely both the Airbus A320neo and Boeing 737 MAX deals will ultimately be confirmed because AMR is depending on reductions in fuel costs to help bring it back to solvency. Boeing said it is "confident" the order will go through.

And the Airbus contract is not a foregone conclusion either. The courts must decide whether some creditors would be placed at a disadvantage because of other contracts. Analysts say the America Airlines order is "central" to the business plans of both planemakers.

FMI: www.boeing.com, www.airbus.com