Boeing wins cautious Dreamliner order from American

American Airlines has entered into a purchase agreement with Boeing under which American intends to acquire an initial 42 Boeing 787-9 Dreamliners scheduled for delivery beginning in 2012 and ending in 2018, with the right to purchase up to 58 additional 787s that may be scheduled for delivery beginning in 2015 and ending in 2020.The purchase of the initial 42 787-9 aircraft is subject to certain contingency provisions.

AMR Chairman and CEO Gerard Arpey said the agreement would support American’s wide-body replacement efforts as well as the international growth that is expected after American, British Airways, and Iberia achieve antitrust immunity and implement a joint business agreement for flights between North America and Europe. The airlines have an application for antitrust immunity pending with the U.S. Department of Transportation.

“Even as we battle the challenges of volatile and historically high fuel prices and serious economic uncertainty, we must continue to prudently invest in our company for the long-term benefit of our shareholders, customers, employees and the communities we serve,” Arpey said. “The 787 will help reduce our fuel and maintenance costs, lessen our environmental impact, and support our goal of providing industry-leading products and services over the long haul. Fortunately, our agreement with Boeing, our long-time partner, allows for significant flexibility to manage our fleet replacement and growth plans in the way that best meets all of our stakeholders’ interests.”

According to Boeing, the technologically advanced 787 will use 20% less fuel than today’s airplanes of comparable size, provide airlines with up to 45% more cargo revenue capacity, and present passengers with innovations including a new interior environment with enhanced air filtration, larger windows, more stowage space, improved lighting, and other passenger-preferred conveniences. To date, Boeing says it has received nearly 900 orders for the 787 Dreamliner from more than 55 customers worldwide.

The 787-9 is designed to carry up to 290 passengers. With a range capability of up to 8,500 nautical miles, it is expected that the 787-9 could operate on every route American serves today, while offering potential to support new routes if business conditions warrant. American has yet to decide on a specific cabin configuration or engine type for its 787s and is in the process of determining the specific wide-body aircraft in its fleet that the 787 would replace.

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American announced previously that it will take delivery of 76 more-fuel-efficient Boeing 737-800 aircraft in 2009 and 2010 as it replaces its narrow-body MD-80 fleet.

American also has undertaken multiple initiatives over the past several years to enhance its existing fleet with improved cabin interiors, onboard services and passenger amenities. These efforts have included installing new premium class seating, with the next-generation Business Class seats introduced for the 767-300 and 777. In addition, American added two new First Class seats to the 777 and standardized the fleet in 2007 and 2008 with the addition of Flagship Suite seats for those flying transpacific routes.

American enhanced in-flight entertainment with the current trial for Gogo inflight broadband Internet service, available on the 767-200. American also installed new LCD monitors, digital entertainment equipment for economy class passengers and personal entertainment devices for First and Business Class customers on the 767-300, 767-200 and 777 aircraft. American continues to invest in its food and beverage products with the launch of its menu variety program for First and Business Class customers and new buy-on-board options.

The 787 purchase agreement contains provisions that would allow American to choose not to acquire some or all of the 42 initial 787s if it has not reached a satisfactory agreement with its pilots union to operate the aircraft. American must notify Boeing of its intent to purchase a 787 at least 18 months prior to its scheduled delivery date, with the first scheduled delivery date occurring in September 2012.
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