Today, American Airlines announced their long awaited order for the narrowbodies, and nobody saw this one coming. Short background. In the mid late 90′s American Airlines, Delta Airlines and Continental Airlines entered into a deal with Boeing that basically said: If you (AA/DL/CO) order all aircraft types for which we have at least a competing product with us, we guarantee you not only a great price, but also darn good delivery slots. When Boeing later wanted to acquire McDonnell Douglas a few years later, the European Union forced Boeing into not being able to enforce said contract due to it being perceived as being anti-competitive, but nothing withheld AA, DL, CO or Boeing to simply continue the deal without enforcement. AA remained a loyal Boeing-only airline. So did Dl and CO, until they merged with Northwest and United respectively, who were both already operating Airbus aircraft.

After the huge problems with the 787 and to some extent the 747i in terms of promised delivery (and for that matter, the A380), airlines faith in OEM’s to actually deliver on time has melted away rapidly, and therefore, imho, part of the value of said contract. Mitigating that risk is only possible by diversifying ones OEM’s. And this is what happened today. Despite all the broo ha ha that “American will NEVER order anything but Boeing”, “If it ain’t Boeing, I am not going”, they ordered a stunning 260+365 Airbusses and 97+200 Boeings (see below for the breakdown). The Boeing part is slightly more vague, as the actual model offered (737 with new engines) has not been approved by the board yet as far as we know. I really feel for the guys in Seattle (less for the ones in Chicago btw) because it seems to be a royal slap in the face.

Now in all honesty, there is a lot more to this order than the above, so allow me to just add a few oneliners:

  • What helped was actually Airbus offering the better airplane  (google 320 NEO).
  • What helped was probably a very intricate financing deal. Airbus is known for pulling that sort of thing off, and AA is financially NOT in good shape. I don’t think Boeing was feeling comfy with all that exposure.
  • >50% (probably MUCH more) will be US manufactured (think engines and avionics), so it is good for the US economy either way. And Airbus might open that factory they had promised for the tanker deal they eventually lost anyway.
  • We (the Europeans) buy a lot of Boeings, Air France (yes them) and KLM (my home patch) especially. Don’t come crying to me.

Fair deal I think. Congrats to AA, Airbus AND Boeing.

ps: yes, I know a few readers are chiming for the home team, and that is great. So am I. But even more, this is, whatever one thinks about it, a major shift in this industry and we’re talking billions and billions of dollars.

Edit: The actual numbers are in layman’s terms:

OEM-model Firm Option Intended Intended Option (?) Sub total Delivery notes (ex options)
Airbus 32x classic 130 130  20-35/yr 2013-2017
Airbus 32x NEO 130 365 495  10 in ’17, 20-25/yr ’18-’22
Sub total Airbus 260 365 625
Boeing 737NG 97 40 137  20/yr, 2013-2017
Boeing 737RE 100 60 160  20/yr, 2018-2022
Sub total Boeing 97 40 100 60 297
GRAND TOTAL 357 405 100 60 922

 

An Airbus A32x “classic” and a Boeing 737NG is what you’d fly in today.

A NEO is the big hit of the moment really. It has sold close to 1000 over 1200 units, and will be available in a few years

An  “RE” is a non-existing designation, but is the Boeing equivalent of the NEO. It is not defined nor authorized for sale yet. AA promised to be a launch customer IF Boeing commits to building it for this one, read: get ‘m cheap but with the usual early production quirks. (but will not be the launch OPERATOR)

Good grief.

Edit: few more words about the late 90′s deal. Some typos