Aircraft Orders

[WingNaPrayer]

Per AMR's 8K filing with the S.E.C.

***** ***** ***** *****

Entry into a Material Definitive Agreement


On August 8, 2008 American Airlines, Inc. ("American"), a wholly-owned subsidiary of AMR Corporation, entered into an amendment to Purchase Agreement No. 1977 with The Boeing Company (“Boeingâ€￾).

As part of American’s fleet renewal plan, American had previously announced its intentions to take delivery of 70 Boeing 737-800 aircraft over 2009 and 2010; pursuant to the amendment American has committed to take delivery of 36 737-800 aircraft in 2009 and 40 737-800 aircraft in 2010. In addition to these aircraft, American has firm commitments for eleven 737-800 aircraft and seven Boeing 777 aircraft scheduled to be delivered in 2013 - 2016.

Prior to this amendment, and as outlined in AMR’s second quarter Form 10-Q filing, American had commitments to purchase 34 Boeing 737-800 aircraft in 2009 and seven Boeing 737-800 aircraft in 2010. Pursuant to the amendment, American accelerated the scheduled delivery dates of nine Boeing 737-800 aircraft previously ordered by American from 2013-2014 to 2010. In addition, American exercised rights to purchase 20 Boeing 737-800 aircraft for delivery in 2009 and 2010 as part of its previously communicated fleet plan. Furthermore, American exercised rights to purchase an additional six 737-800 aircraft for delivery in 2010.

Payments for American’s 737-800 and 777 purchase commitments will approximate $400 million in the remainder of 2008, $1.1 billion in 2009, $785 million in 2010, $100 million in 2011, $218 million in 2012, and $1.0 billion for 2013 and beyond. These amounts are net of purchase deposits currently held by the manufacturer.

In conjunction with this transaction, American has arranged for backstop financing of approximately two-thirds of its 2009 and 2010 Boeing 737-800 deliveries, subject to certain terms and conditions. American could finance all of its 2009 737-800 deliveries under this arrangement should it elect to do so. Other than this financing arrangement, American currently has no committed financing for any aircraft that it is committed to purchase or that it may order.

 

[The Dissident]

Hold on to yer shorts. The pain is a coming!

 

[eolesen]

The "new" orders aren't exactly new. A few years ago, AA and Boeing agreed to defer seven 777 and 47 737 firm deliveries. 36 of the 47 deferred orders were subsequently advanced for delivery in 2009. That left the 11 referenced above.

AA already placed deposits and made advance payments for those aircraft, which Boeing held onto (hence the "net of deposits and payments held by the manufacturer" statement).

This just confirms those deliveries.

FOR RELEASE: Monday, Nov. 22, 2004

AMERICAN AIRLINES, BOEING REACH AGREEMENT TO DEFER
AIRCRAFT DELIVERIES

FORT WORTH, Texas -- American Airlines and The Boeing
Company announced today that American will defer 54 of 56
aircraft originally scheduled for delivery between 2006 and 2010.
The delivery of 47 Boeing 737-800 aircraft and seven Boeing 777
aircraft will be deferred by seven years and six years,
respectively, beyond their originally scheduled delivery dates.
The arrangement allows American to postpone $1.4 billion of
capital spending previously planned for 2005 through 2007 and a
total of $2.7 billion in capital spending through 2010.

 

[lpbrian]

What this means is a net increase in 6 737's for 2010 delivery: http://biz.yahoo.com/ap/080813/amr_fleet_renewal.html?.v=2

 

[IORFA]

According to the 8K. AA is going to get 2 more 737-800's in 2009 and 4 more in 2010. For a total of 6 more than previously announced. Either way, it is good news. I am hoping that a couple 777's get moved up soon. Even better, a 787 order.

EDIT: AA's press release says 6 more in 2010, although if I remember correctly, it was 34 in 2009 and 36 in 2010 previously. Now they are saying 36 in 2009 and 40 in 2010. Who knows, who cares, bottom line is that it is 6 more aircraft.

 

[Winglet]

6 aircraft. Big deal. What about the 300 gas guzzlers still sitting on the ramp that should have been replaced years ago.

 

[kirkpatrick]

Time,winglet, time. You don't replace a fleet overnight.

I have a 2001 Honda Odyssey in the driveway that doesn't get great mileage, but it's paid for. I'd like to replace it with something greener, but every time I do the math I can't get past the increase in the insurance, much less the car payment.

The Mad Dogs may burn more fuel, but I wonder if the expensive new leases or payments on the 737's aren't offset somewhat by aircraft that are fully amortized or leased for a song.

MK

 

[Hopeful]

Time,winglet, time. You don't replace a fleet overnight.


The Mad Dogs may burn more fuel, but I wonder if the expensive new leases or payments on the 737's aren't offset somewhat by aircraft that are fully amortized or leased for a song.

MK

It' not so much the lease payments, but the maintenance costs on the MD80's

 

[kirkpatrick]

Maintenance is certainly a factor, but I was just wondering how the cheaper payments affected the whole picture.

MK

 

[jimntx]

It' not so much the lease payments, but the maintenance costs on the MD80's

Even so, do those maintenance costs equal or exceed the payments on a new a/c or justify that much cash being paid out from our "stash?" My 8+-year old Subaru is in the shop right now for a repair that is going to cost in the neighborhood of $300.

That $300 would barely make 1 monthly payment on almost any new car these days unless you had it financed for 6-8 years. My Subaru is a Forester. The 2009 model (Subaru brings out next year's model in March for some reason) is over $30,000 for the same/similar equipment I have on mine. For that kind of money, I expect to want to smoke a cigarette and take a shower.

 

[Hopeful]

Even so, do those maintenance costs equal or exceed the payments on a new a/c or justify that much cash being paid out from our "stash?" My 8+-year old Subaru is in the shop right now for a repair that is going to cost in the neighborhood of $300.

That $300 would barely make 1 monthly payment on almost any new car these days unless you had it financed for 6-8 years. My Subaru is a Forester. The 2009 model (Subaru brings out next year's model in March for some reason) is over $30,000 for the same/similar equipment I have on mine. For that kind of money, I expect to want to smoke a cigarette and take a shower.

I am sure there are plenty of numbers crunchers here who can do the math. I think all these factors already mentioned added to the price of fuel may tilt the advantage to new aircraft lease payments.. Maybe some numbers' folks here can give a ballpark figure on average fuel costs per flight, routine maintenance, heavy/overhaul maintenance....etc vs. a new 737...
Also remember, a new aircraft usually has a warranty for a the first few years..


As for the $30, 000 Subaru owing u a smoke and shower.....that is the average cost of a new car and you aren't even entitled to a "feel."

 

[jimntx]

Also remember, a new aircraft usually has a warranty for a the first few years..

As for the $30, 000 Subaru owing u a smoke and shower.....that is the average cost of a new car and you aren't even entitled to a "feel."

Well, if airplanes are anything like automobiles, my guess is that the warranty runs out right before you need it. That average cost is exactly my point. Considering that my current Subaru has only 104,000 miles on it which for a Subaru is "hardly broke in" (as they say here in Texas), does it make sense to take on a $300/mo payment for 4 or more years for a new one, or make a 1 time payment for a repair?

As I work on them all the time, I am well aware of the maintenance issues on the S80s. However, the Scarebus is also known as a maintenance hog, but it's cargo capabilities have kept it flying much longer than most f/as thought it should (or at least, the f/as that I know that had to fly it).

 

[Hopeful]

Well, if airplanes are anything like automobiles, my guess is that the warranty runs out right before you need it. That average cost is exactly my point. Considering that my current Subaru has only 104,000 miles on it which for a Subaru is "hardly broke in" (as they say here in Texas), does it make sense to take on a $300/mo payment for 4 or more years for a new one, or make a 1 time payment for a repair?

As I work on them all the time, I am well aware of the maintenance issues on the S80s. However, the Scarebus is also known as a maintenance hog, but it's cargo capabilities have kept it flying much longer than most f/as thought it should (or at least, the f/as that I know that had to fly it).

True, but the A300 is showing its age. Last week another one went to the desert due to a crack in the wing structure.

 

[eolesen]

There's no question the higher cost of ownership and acquisition minus fuel savings don't compare to lower cost of ownership plus moderate maintenance expense and higher fuel consumption. NWA's the cheapest airline around, yet they still can't justify taking a fully depreciated yet somewhat high maintenance DC9-30 and replacing it with an A319.

Look at a few of the airlines who went on large scale fleet renewals:

Aloha... nine 73NG's to fund their expansion to the mainland. Ooops.
ATA... dumped mostly depreciated 757-200s and replaced with 73NG's
Skybus... horrible business plan, but bought all new aircraft
Frontier... replaced their entire fleet of moderate vintage 737's with A319's
Midwest... not yet bankrupt but on the verge... replaced paid-for DC9's and MD80's with B717's
Airtran.... also teetering, bought a bunch of new 737's
Spirit.... just wait. They're private and don't file financials.... Replaced all their MD80's with new A321's

Then look at who posted a profit last quarter....

Allegiant.... entirely content to be flying cast-off MD80's but being smart about where they operate
Southwest.... measured replacement on their older aircraft, and also being smart about where they operate


Replacement is necessary, but it's better to do it on a controlled basis.

 

[CubsFanJohn]

I think AA shouldn't rush to replace the MD80 Fleet totally I think they should maybe save about 100 of them mostly the ex-TWA Birds from the 1990's and then replace those with the Y1. Those MD80's are already paid for so that helps. I want to see a 787 order soon which I think once Coporate and Labor hammer out something they will just a guess. and I wish that AA would pull up some 777 orders and add another Asia route.