Leeham News and Analysis
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American Airlines order after-thoughts
It will take a while to absorb all the information that’s been released on the massive AA deal with Airbus and Boeing, and to learn data yet to come, but here are some initial thoughts:
American press conference on huge order
Running comments from the American Airlines press conference:
Tom Horton
- Today is a transformational day for American.
- American’s order presentation, 19 page PDF: AMR Aircraft
- With this plan we are jumping to the front of the line and will be ahead of our peers.
- We will have the youngest fleet of our peers.
- We will lower our costs with this modern fleet.
American orders: Airbus, 260; Boeing, 200
American Airlines this morning announced its blockbusting order that has been the subject of international intrigue since the Paris Air Show. The order is comprised of:
- 260 A320 family airplanes from Airbus plus 365, with conversions rights within the family;
- 100 737NGs and 100 737REs from Boeing and 100 options; and
- Engines from CFM for the 737RE; the press release is silent on the engine selection for the NEO; Airbus tells us the engine is to be determined.
Dominic Gates of The Seattle Times has this story about the last-minute flurry of activity by Boeing to save the day.
There are a couple of interesting references in the Gates article:
- We had reported Monday that Boeing’s timeline for the New Small Airplane was moving to the right to the 2020-2025 decade, being closer to 2020. On Tuesday we reported that this date is 2021. Gates reports 2022 and that this is just a “placeholder” date, which could move to the right.
- The 737RE was characterized as a ‘paper’ airplane. Indeed, we have learned that Boeing is still massaging design details. It remains to be decided if Boeing will go with a 70-inch fan that will require more work statement for the airframe, including changes to the nose gear, or if it will go with a 66-inch fan that will eliminate the need for nose gear modifications, reduce the R&D costs but will trade off fuel efficiency slightly and be noisier than the 70-inch fan.
American’s order, as we see it
- Note: It’s impossible to keep up with the changing and leaking information. Just do a Google News search for the latest.
The situation today remains fluid and often contradictory. News stories, and our own information, agree that a split order is coming from American with Airbus and Boeing but contradictory information is flying about as to which company comes out with the majority of the orders.
But here’s the outcome, as we see it:
American to announce big order Wednesday
Flightblogger confirms American will announce a big single-aisle order Wednesday.
We understand it will be a split between Airbus and Boeing. We think we have a basic understanding of the broad details but not yet solid enough to go into print. We’re working on it.
Wednesday is also American’s 2Q earnings call. The announcement is expected before the call, so expect lots of conversation on the call. The webcast information is here.
737RE in 2017, NSA in 2021
In the rapidly changing situation at Boeing over the future of the 737 class of aircraft, it appears almost certain that Boeing will move forward with a re-engine of the 737 and follow it with the New Small Airplane a short time later, under the current thinking.
We reported the possibility Boeing may do both June 15, becoming the first outlet to do so. This posting explains the rationale. Boeing recognizes that the 737 must be replaced, regardless of the re-engining.
Whereas the prospective EIS of the NSA was 2019-2020, we now have learned 2021 would be the new target date. We reported yesterday the NSA had moved from 2019-2020 to the 2020-2025 period but “closer” to 2020.
The 737RE EIS is now targeted for 2017. Fuel burn target is the A320neo minus a couple of percentage points. As we reported this week in another post today, Boeing figures the all-in cash cost gives the 737RE an 8% advantage over the A320neo.
Boeing’s American dilemma
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Bloomberg has this story about the competition.
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Wall Street Journal has this story.
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Here is a story we did for Commercial Aviation Online on the American Airlines aircraft order situation.
| Date: | 18/07/2011 10:37 |
| Source: | Commercial Aviation Online |
| Location: | Seattle |
| By: | Scott Hamilton |
Boeing has a major dilemma facing it in the hot competition with Airbus for a major order from American Airlines.
The deal could be decided as early as this week, and as of Friday, neither company was confident of the outcome. American wants to replace its fleet of more than 200 ageing Boeing MD80s and the large fleet of Boeing 757s. An order for between 200-250 aircraft is widely expected.
Countdown to 737RE or NSA: Odds now favor Re-engine
It’s been a slow but steady shift in Boeing’s thinking that became evident during the pre-Paris Air Show briefings: Boeing is warming to the idea of re-engining the 737. According to sources with direct knowledge of the situation, it is likely officials will choose to do so and push out development of the New Small Airplane (NSA), with an EIS for the latter in the early half of the 2020 decade instead of 2019 or 2020 that Boeing has been talking about.