American Airlines Announces Massive Order For 460 New Aircraft

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In an announcement to the press American Airlines confirmed that they have just placed a record order for 460 new aircraft. The aircraft air to be made by both Boeing and Airbus, with Airbus getting a slightly larger portion of the order. This will mark the first time in many years that American has bought an aircraft from Airbus, the last Airbus to be operated by American was pulled from service in 1998. The order will be for 260 planes from airbus and the remaining 200 to be manufactured by Boeing, with options in place for a few hundred more between both manufacturers. This marks a major shift in the model being followed by US airlines. On average the United States has some of the oldest aircraft throughout the world, which is likely to soon change because of this announcement.

As we have seen in the past, when it comes to the major airlines in the US when one makes a big move the rest are sure to follow. This is good news economically speaking as this order will likely speed up plans that American’s competitors have for replacing their aircraft. The other major airlines are likely to start scrambling to put together major orders for new aircraft. If they do not they will be at a major disadvantage in the future as American will then have a fleet of aircraft which will be far superior as compared to its competitors. The new aircraft will not feature increased fuel efficiency but also much improved interiors with superior in flight entertainment options and other improvements.

The new aircraft will allow American Airlines to better cater to the business class of travelers, which are generally viewed as the most profitable segment of travelers. There had been rumors that American was going to be placing a substantial order for aircraft but no one predicted it would be this big of an order. This will allow the airline to replace its aging fleet of fuel hungry MD-80s with more fuel efficient modern designs. With the current high cost of fuel and no relief in sight, American decided that now was the time to take action. For the first time in the history of the company fuel costs are now greater than labor costs, which helped them to make this decision.

There are some who question this move by American and think it is illogical to undertake such an expensive capital investment project in a time of such dismal results. Those who question the decision think that the business model for American needs to be updated, not the aircraft. It will be some time until we see how this all plays out, but in the short term this has definitely gotten the attention of the other major airlines in the US. It is also good news for Boeing and Airbus as both manufacturers are likely to see more business as a result of this move. This move is also likely to bring much needed business to American, as the public will be more likely to book a flight with an airline that has better aircraft. The first of the aircraft in this order are slated to be delivered as early as 2013 from both manufacturers. This short turn around time means that American will only have to wait just over a year until they start to see how well this benefits the company.