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TheStreet Open House

American Places Huge Order With Boeing, Airbus

DALLAS ( TheStreet) - American (AMR) announced the largest aircraft order in history on Wednesday, saying it will order a total of 460 narrow-body jets from both Boeing (BA) and Airbus.

The carrier also said it lost $286 million, or 85 cents a share ,in the second quarter, citing high fuel costs as a principal contributor. Analysts surveyed by Thomson Reuters had estimated a loss of 75 cents a share.

American will become the first U.S. network carrier to take delivery of the Airbus A320neo and also the first to commit to an expected new Boeing 737, with deliveries beginning in 2017.

From Boeing, American will order 200 B737 aircraft, with options for another 100. From Airbus, American will acquire 260 aircraft, with options and purchase rights for up to 365 more. The Airbus order includes 130 current generation A320 aircraft starting in 2013, as well as 130 A320neos starting in 2017. The Boeing order includes 100 next generation 737s with next generation engines.

American said it will benefit from about $13 billion of financing provided by the manufacturers through lease transactions, which will cover the first 230 deliveries.

In a prepared statement, CEO Gerard Arpey said American's record of never seeking bankruptcy helped it to secure financing.

"We have a long track record of meeting our obligations to all of our stakeholders, including strategic partners, lenders, suppliers and investors," Arpey said. "We believe this history continues to help us."

The deal should help American to reduce costs that likely made it the only carrier to lose money in the second quarter.

"With today's news, we expect to have the youngest and most fuel-efficient fleet among our peers in the U.S. industry within five years," Arpey said. "This new fleet will dramatically improve our fuel and operating costs, while enhancing our financial flexibility."

The order will enable American to reduce four fleet types -- the MD-80, 737-800, 757 and 767-200 -- to just two, the 737 and A320.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

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