American Airlines places massive order with Airbus

American Airlines has announced a record order for 460 aircraft worth some $38 billion from Airbus and Boeing that breaks Boeing's monopoly grip on its fleet. American Airlines parent AMR Corp. said it would buy 200 Boeing 737s and 260 Airbus A320 jets in the "largest aircraft order in history." The split order marks a huge victory for the European aircraft manufacturer and ends Boeing's 1996 exclusive contract to supply airplanes to American. Related article: US airline's Airbus deal forces Beoing to upgrade jets Both the US aerospace giant and Airbus are selling more fuel-efficient versions of their popular single-aisle passenger jets as part of the massive deal. Chairman and chief executive Gerard Arpey said that AMR expects to have "the youngest and most fuel-efficient fleet among our peers in the US industry within five years. "This new fleet will dramatically improve our fuel and operating costs, while enhancing our financial flexibility," he said. American, the fourth-ranked US carrier in terms of passengers, behind Delta, United and Southwest, also said it has options for 365 additional Airbus aircraft and 100 Boeing 737s. The total order is worth $38 billion at list prices -- $23 billion for Airbus, and $15 billion for Boeing -- but planes are often sold at sharp discounts. The Fort Worth, Texas-based AMR did not reveal the amount of the order, but said it had $13 billion of committed financing from Boeing and Airbus through lease transactions which fully covers the first 230 plane deliveries. "Although the order was split between Boeing and Airbus, we believe it is more positive for Airbus, as it was able to gain American Airlines, which currently has an all-Boeing fleet, as a customer," ratings agency Standard & Poor's said. Deliveries will begin in 2013, with American becoming the first US airline to take delivery of "next-generation" versions of both the 737 and A320 in 2017. AMR said the agreements with Boeing and Airbus were part of American's strategy to simplify its fleet from four aircraft types -- MD-80, 737-800, 757 and 767-200 -- to two: Boeing's 737 and the A320 families. American also intends to order 100 of Boeing's expected new fuel-efficient 737NG, with options for 60 more. "American is pleased to be the first airline to commit to Boeing's new 737 family offering, which is expected to provide a new level of economic efficiency and operational performance, pending final confirmation of the program by Boeing," AMR said. Boeing said the new airplane would be powered by CFM International's LEAP-X engine. The Leap-X engine, still under development by the US-French company, a joint venture between General Electric of the United States and France's Snecma, is one of two available on Airbus's A320neo (new engine option) planes. American said it will buy 130 of the A320neos. Launched in December, the fuel-efficient plane was a star attraction at the Paris Air Show last month. Malaysian airline AirAsia ordered 200 A320neos, at the time a record single order for any Airbus aircraft. Boeing's decision to offer its best-selling 737 with a new engine, after it was generally expected to instead build an all-new fuel-efficient plane, was seen as forced by the competition from the A320neo. Airbus, the France-based unit of EADS, hailed the American order as a "strong endorsement" of the company's single-aisle planes. "We are extremely proud and gratified once again to count American Airlines among Airbus's global customers," Airbus president and chief executive Tom Enders said in a separate statement. American's fleet has not included an Airbus plane since 2009. AMR separately announced Wednesday a net loss of $286 million for the second quarter, citing higher fuel costs. Revenue was $6.11 billion, up 7.8 percent from a year ago, in line with forecasts. AMR also announced it was spinning off its regional carrier American Eagle after a 26-year partnership and closing its reservations office in Dublin, Ireland, to reduce its operating costs. Investors initially welcomed the news, pushing up AMR and Boeing shares in New York trade. AMR shares closed 0.2 percent lower as the broader market fell, while Boeing bucked the downtrend, surging 2.2 percent.