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Additional widebody aircraft

My WAG is that Boeing is essentially loaning AA some 777-300ERs as compensation for the multi-year delays in AA's 787-9 deliveries. I suspect the rent on these planes will be very cheap and it won't be the last good deal Boeing makes to AA over the next couple of years.
Since AA has not converted its 787 orders to firm due to waiting for the pilots, there should not be any compensation.

AA is not trial flying the 773ER. It is a well known, flying airplane. AA knows what it is buying and will buy more in time... just not boatloads right now.

BTW, apparently AA either has a side deal with APA to fly the 773ER or has rates for the aircraft already. which is it?
 
Or maybe the contract language is loose enough that it doesn't trigger different rates?...

IIRC, there aren't different rates for the 762 and 763 despite having different MGTOWs. Maybe nobody thought to be specific on the 777.
 
I guess the rumor about getting aircrafts from JAL was just that a rumor. FWAA you where right. AA went straight to Boeing
 
Range on the -300 increases to 7930nm vs. 7700nm on the -200ER. There aren't too many markets at the edge of that envelope, so I have to think these may really just be targeted for markets with wingtip departures *or* perhaps India. I don't see them looking to open up anything like BKK, SIN, or KUL, although all three of those are large enough markets that aren't covered nonstop from the US today by any of the oneworld carriers.
 
Range on the -300 increases to 7930nm vs. 7700nm on the -200ER. There aren't too many markets at the edge of that envelope, so I have to think these may really just be targeted for markets with wingtip departures *or* perhaps India. I don't see them looking to open up anything like BKK, SIN, or KUL, although all three of those are large enough markets that aren't covered nonstop from the US today by any of the oneworld carriers.

I agree this is not about range it is about capacity and whether or not AA wants back into this size airplane don't forget both DL and UA have 747 we have to compete against this may be the answer.
 
Since AA has not converted its 787 orders to firm due to waiting for the pilots, there should not be any compensation.

You might be right, but I doubt it. AMR has referred to the 789s as firm orders for several quarters now in its SEC filings, such as in the 3Q2010 10-Q:

In 2008, the Company entered into a new purchase agreement with Boeing for the acquisition of 42 firm Boeing 787-9 aircraft and purchase rights to acquire up to 58 additional B787 aircraft. Per the purchase agreement, the first such aircraft was scheduled to be delivered in 2012, and the last firm aircraft was scheduled to be delivered in 2018 with deliveries of additional aircraft, if any, scheduled between 2015 and 2020. In July 2010, the Company and Boeing agreed upon a revised delivery schedule due to the impact of the overall Boeing 787 program delay on American's delivery positions. The first aircraft is currently scheduled to be delivered in 2014, and the last firm aircraft is scheduled to be delivered in 2018 with deliveries of additional aircraft, if any, scheduled between 2016 and 2021. Additionally, the revised delivery schedule includes terms and conditions consistent with the original agreement and allows the Company the confirmation rights described below.

Under the current 787-9 purchase agreement, except as described below, American will not be obligated to purchase a 787-9 aircraft unless it gives Boeing notice confirming its election to do so at least 18 months prior to the scheduled delivery date for that aircraft. If American does not give that notice with respect to an aircraft, the aircraft will no longer be subject to the 787-9 purchase agreement. These confirmation rights may be exercised until a specified date, May 1, 2014 under the current agreement, provided that those rights will terminate earlier if American reaches a collective bargaining agreement with its pilots union that includes provisions enabling American to utilize the 787-9 to American's satisfaction in the operations desired by American, or if American confirms its election to purchase any of the initial 42 787-9 aircraft. While there can be no assurances, American expects that it will have reached an agreement as described above with its pilots union prior to the first notification date. In either of those events, American would become obligated to purchase all of the initial 42 aircraft then subject to the purchase agreement. If neither of those events occurs prior to May 1, 2014 under the current agreement, then on that date American may elect to purchase all of the initial 42 aircraft then subject to the purchase agreement, and if it does not elect to do so, the purchase agreement will terminate in its entirety.

Perhaps AA's somewhat flexible firm purchase agreement excuses Boeing from multi-year delays in deliveries, but I doubt it. My guess is that Boeing has had to compensate AA for the delays.
 
good post.... if AA gets a "penalty" from Boeing, then it is clearly being offset by AA's ability to cancel the order based on the possibility of the pilots not approving the plane. Boeing wants the business but they aren't going to give AA the same price and benefits and also give the ability to cancel the contract.

also, AA did not order the 787 at the same time as the launch customers and so the timeline for the 787 was already pushed back by the time AA ordered.

DL is very much interested in the 773ER but have decided that they will stick w/ the 744s for the next several years instead of incurring the costs of buying new aircraft.

Don't underestimate the power of a hub to hub flight such as DFW/ORD/MIA/JFK to LHR or NRT and NRT and LHR essentially become AA hubs from a revenue perspective under the joint ventures.
 
good post.... if AA gets a "penalty" from Boeing, then it is clearly being offset by AA's ability to cancel the order based on the possibility of the pilots not approving the plane. Boeing wants the business but they aren't going to give AA the same price and benefits and also give the ability to cancel the contract.

also, AA did not order the 787 at the same time as the launch customers and so the timeline for the 787 was already pushed back by the time AA ordered.

DL is very much interested in the 773ER but have decided that they will stick w/ the 744s for the next several years instead of incurring the costs of buying new aircraft.

Don't underestimate the power of a hub to hub flight such as DFW/ORD/MIA/JFK to LHR or NRT and NRT and LHR essentially become AA hubs from a revenue perspective under the joint ventures.
 
It will be interesting if this two aircraft are just the beginning
I find it kind off odd that AA only order two aircraft
 
Maybe the small order is quite intentional. The 787 order was clearly a carrot to the APA, and it didn't work.

Ordering just two 733's could just be the stick.... No contract, no significant fleet growth.
 
Maybe the small order is quite intentional. The 787 order was clearly a carrot to the APA, and it didn't work.

Ordering just two 733's could just be the stick.... No contract, no significant fleet growth.


They are village idiots if they think that tactic has the slightest affect.

It may work with a group that is very junior, less than 10 years on the property. With the current demographics, nobody is that dumb to believe it. I haven't heard even the slightest "maybe they've got a point?" comment regarding managements B787 pilot contract clause. I have heard a million expressions of open contempt about the tactic ever since they announced it.
 
good post.... if AA gets a "penalty" from Boeing, then it is clearly being offset by AA's ability to cancel the order based on the possibility of the pilots not approving the plane. Boeing wants the business but they aren't going to give AA the same price and benefits and also give the ability to cancel the contract.

Do you work for Boeing or AA? If not, then how do you know with such certainty (like your use of the word "clearly")?

also, AA did not order the 787 at the same time as the launch customers and so the timeline for the 787 was already pushed back by the time AA ordered.

Only partially correct and somewhat incorrect. Some delays were already obvious, but AA's order has been delayed by two years since the order. When AA announced the order, the first 789 was expected to be delivered to AA in 2012. Two years later (this past July), AA and Boeing agreed that the first 789 would not be delivered until 2014. You really think AA didn't get anything out of Boeing for that delay?
 
I'm not saying that AA may not be "due" some compensation for the delays but Boeing is also "giving" AA the right to cancel the orders due to potential inability to obtain approval from the pilots to operate the 787. Boeing is not a charity operation either. They will provide an option to AA to cancel - but it comes at some cost as well. Boeing is not granting AA the same price for the 787 as other carriers plus the right to cancel the order on 18 months notice; I don't have to work for either Boeing or AA to know the way large commercial deals are negotiated.

If the 773ERs were ordered as a carrot to get the pilots to agree to concessions, I doubt if they will succeed. Given there was nothing publicly stated about AA needing union approval to place the aircraft in service, I suspect the 773 rate already exists or APA is willing to provide a side letter for a couple aircraft - likely because AA has determined they can operate the 773ER profitably at current rates. The 787 order was based on a whole rework of AA's pilot labor contract -and it may be that AA and the APA don't see that happening so AA is willing to fly a small number of more cost-effective aircraft on a transition basis until a new contract is negotiated that will allow for more growth and a reworked labor contract that will support ordering the 787s.
 
The 787 order was based on a whole rework of AA's pilot labor contract -and it may be that AA and the APA don't see that happening so AA is willing to fly a small number of more cost-effective aircraft on a transition basis until a new contract is negotiated that will allow for more growth and a reworked labor contract that will support ordering the 787s.


World,

Respectfully, your last post is "out there" and my guess is about 1% related to reality. the pilot contract was "reworked" in 2003. For perspective, the only AA pilots paid equal or greater than the pre 2003 hourly rate for Captains are about 380 B777 Captains. Every other Captain is paid at an hourly rate that the FO's were pre 2003.

Productivity is another issue. For one, AA pilots are getting old. That also means 4 weeks of vacation plus the health issues of of an aging group. They want sick leave reduced? Not happening. Reduced vacations? Again not happening. Other issues are out of control of the pilots. Talk to crew planning if you want to know why a guy is sent to recurrent training on one plane even though he's scheduled to train on another plane weeks later. We all scratch our heads at that stuff. Fleet types is another issue. It's AA's decison to go to an all B737/B777/B787 Fleet. Training will be cut by 75% and much of what's left will be done at home with new technology. Finally, there are the rest of the productivity issues. Those can be phased in with recalls and most pilots would probably agree to improvements for both sides. The problem is that goodwill has been absolutely destroyed by the actions of senior management and that is a trust issue that no clause in a Boeing contract will affect in the slightest.

Run the number of ASM's flown today compared to 2001, then compare the number of pilots then and now.
 
World,

Respectfully, your last post is "out there" and my guess is about 1% related to reality. the pilot contract was "reworked" in 2003. For perspective, the only AA pilots paid equal or greater than the pre 2003 hourly rate for Captains are about 380 B777 Captains. Every other Captain is paid at an hourly rate that the FO's were pre 2003.

Productivity is another issue.

Not happening.

Again not happening.

I suppose my post is "out there" because it contains things you would rather not be said.

With alll due respect, you do realize this is 2011 - would would make 2003 to be 8 years ago - an eternity in the airline industry. I would guess that the APA is equally interested in seeing the 8 year old contract replaced - just like AA, the difference being a substantial difference in which way things should change.

Yes, productivity is indeed the WHOLE Issue - not just for the pilots but also for all of AA's labor groups.

You see,m the problem w/ a stagnant company (no-growth) is that employees all hit the top of scale - which as you point out drives benefit costs through the roof - and of course, everyone makes top wages.

I generally do not try to debate various benefit components for specific labor groups because the collective bargaining process puts values on each of those items as part of the negotiation process - so it doesn't accomplish anything to argue about whether a specific benefit cost is too high.

What I can do is point out that AA's labor costs - including its pilot labor costs - are the highest in the industry. Again, AA's pilots don't necessarily have the highest pay scales but because (virtually) everyone is at top of scale and there is little growth, there is no way to bring pilot costs down without something dramatic such as bankruptcy or a major reducition in costs - followed by a significant growth of the company. The success of CO and DL after their bankrutptcies is because of the growth that followed, not because of the costs they maintained.... many people note that CO employees before and DL employees now are moving into the highest paid among network carrier employees.

So, that is why AA is ordering 2 773ERs and the rest of the 787 order is still on hold.

When a NEW labor cost structure across the board is introduced, AA will grow substantially. If AA orders significant numbers of new aircraft with their present labor contracts/costs, let me know and I will happily admit I was wrong.... but AA is following the history of other network carriers in similar positions before - so I am reasonably confident in my prediction.
 

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