AMR CFO Says Cost-Analysis Study Under Way

AMR CEO Tom Horton says American Airlines is studying plans to replace its aging fleet of MD-80 airliners. The airline currently owns or leases 327 MD-80s with an average age of 17 years.

Horton says operating an MD-80 costs 20% more than operating one of Boeing's nexgen 737s such as the 800 series, adding that would be his pick to replace the airline's "Mad Dogs."

The airline also says it doesn't want to make too hasty a decision though, preferring to wait and see what might be coming after the 737.

Speaking at a Calyon Securities conference on Thursday, Horton said, "We want to be thoughtful about what's coming next before we order too many of the current generation," adding the 737's replacement might be more like Boeing's new flagship 787 Dreamliner.

Horton says it would cost around $10 billion to replace the MD-80s with 737-800s.

American actually operates only about 300 of its MD-80s. Since Boeing's 737-800 would seat about 50% more pax, it stands to reason American's MD-80 fleet could be replaced with 200 737-800s.

If that's the case, Horton's estimate of $10 billion is about $4 billion shy of Boeing's list price for 200 737-800s -- unless American is already talking with Boeing and it's offered a discount.

Replacing those aging aircraft would benefit both sides of that deal. American's fleet size would shrink along with operating costs, and Boeing would be one step closer to shedding all the overhead needed to support an inherited rival's old design.

Horton didn't mention when American might start placing orders, only that, "We'll probably have more to say about that in the new year."

FMI: www.aa.com