American Airlines places world’s largest aircraft order: 460 Boeing and Airbus
American Airlines has made the world's largest aircraft order, with a plan to buy 460 planes from Boeing and Airbus and options to acquire 465 more. The deal is worth 40 billion US dollars at list prices, with options taking the total to 81bn.
While the order will reinvigorate an ageing American Airlines fleet, it will also make a significant contribution to the UK. Aerospace is one of Britain's few world-class manufacturing industries and its high-value exports are expected to play an important role in reviving the economy.
Airbus, a subsidiary of EADS, builds the wings for all its aircraft at factories at Filton, near Bristol, and Broughton, in North Wales.
American Airlines, which has a strategic alliance with British Airways ordered 260 Airbus A320s, paying about 23bn. It has options to buy a further 365 Airbus aircraft, worth 33.6bn.
The wings are one of the most technically sophisticated parts of a plane and typically represent about one fifth of the total value. This implies that Britain's share of the Airbus orders could be worth up to 11bn.
Other companies likely to benefit from the American Airlines order include Rolls-Royce, part of a consortium that will make some of the engines for its aircraft, and Messier-Dowty, which makes landing gear.
American's order will enable it to replace its domestic fleet with more fuel-efficient aircraft.
US carriers have some of the oldest fleets among the world's leading airlines because they have been too financially weak during the past decade to commit to large orders. The result has been that aircraft have been kept flying despite burning up to 25% more fuel than the most modern jets.
Analysts have estimated that the average age of American's fleet is about 14.1 years, compared with 3.3 years for Ryanair.
Gerard Arpey, chief executive of American, said: We expect to have the youngest and most fuel-efficient fleet among our peers in the US within five years. This new fleet will dramatically improve our fuel and operating costs, while enhancing our financial flexibility.
The deal is also an important milestone for Airbus because the European company has previously struggled to win big orders from America's largest carriers.
American's order is so large that it has chosen to split it between Boeing and Airbus, and has probably squeezed better prices from both manufacturers as a result.
It will buy 100 Boeing 737s and a further 100 of the next generation 737, which is expected to be developed later this decade. The carrier will buy 130 Airbus A320s and a further 130 A320neos, which will be introduced from 2015.
The A320neo (new engine option) has been a stunning success since it was launched last December. It was the star of the Paris Air Show last month and Airbus now has orders and commitments for more than 1250 of the aircraft - worth about $US115bn at list prices.
With oil prices remaining at more than $US100 a barrel, airlines are keen to buy aircraft that can cut their fuel bills. The A320neo is expected to reduce fuel consumption by 15 per cent, compared with the existing model.
Tom Enders, chief executive of Airbus, said: ”The order by American represents a strong endorsement of our constantly improving single-aisle product line”.