From kls Fri Nov 22 05:48:04 1996 Newsgroups: sci.aeronautics.airliners,misc.transport.air-industry Path: bounce-back Date: 22 Nov 96 05:48:04 From: kls@ohare.Chicago.COM (Karl Swartz) Subject: American Airlines press release regarding Boeing order References: Message-ID: Approved: kls@ohare.Chicago.COM Sender: kls@ohare.Chicago.COM Organization: Chicago Software Works, Menlo Park, California AMERICAN AIRLINES AND BOEING ANNOUNCE INNOVATIVE PARTNERING RELATIONSHIP FOR ACQUISITION OF NEW AIRCRAFT For release: 11/21/96 DFW AIRPORT, Texas -- At a press conference at the Dallas/Fort Worth International Airport today, American Airlines and Boeing Commercial Airplane Group announced an innovative, long-term partnering relationship. Under the terms of the agreement, Boeing will become the exclusive supplier of jet aircraft to American, in sizes ranging from the Boeing 737 to the 777, through the year 2018. American has placed firm orders for 103 aircraft, and has obtained "purchase rights" for 527 additional jets during the more than 20 year period, thus providing it with a very cost-effective means of replacing virtually its entire current fleet during the term of the agreement. The agreement includes the following aircraft: Aircraft Model Firm Order Purchase Rights Total Order Delivery (1998-2018) -------------- ----- -------- --------------- ----- 777 12 1998-2001 38 50 767-300ER 4 1998 26 30 757-200 12 1998-1999 38 50 737-600/700/800 75 1998-2001 425 500 Total 103 527 630 The arrangement with Boeing is contingent on ratification of the tentative agreement between American and the Allied Pilots Association, whose members will vote on the matter in December. "Our new partnership with Boeing is a completely new way of doing business," said American Chairman and CEO Robert L. Crandall. "It gives American a unique way to replace its existing fleet with great flexibility and at fully competitive prices. In return, Boeing, the world's premier manufacturer of commercial aircraft, obtains a major long-term agreement. It's an arrangement that will be enormously beneficial to both companies." Crandall laid out six principal benefits of the new agreement: 1. The relatively small number of firm orders and the introduction of highly flexible "purchase rights," rather than traditional delivery options, will enable American to carefully pace its acquisition of aircraft -- thus allowing it to match replacement and growth orders with the industry's notoriously cyclical nature, without weakening its balance sheet. 2. The length of the commitment will help Boeing optimize its planning and engineering processes, and will encourage its continuing efforts to reduce manufacturing costs. 3. Over the long term, the arrangement will give American unparalleled fleet commonality, which will result in substantially lower training, maintenance, and other operating costs. 4. The agreement gives American the ability to plan carefully for both aircraft replacement and fleet growth, and to optimize the mix of aircraft by size and range in accordance with changing competitive requirements and the industry's cyclicality. 5. The arrangement will help American maintain fleet leadership with respect to both noise and emissions. American has one of the youngest fleets in the U.S. airline industry, and its new arrangement with Boeing will ensure that American will have continuous access to state-of-the-art aircraft at attractive prices. 6. The agreement provides American with broad price protection provisions, which will ensure that American will not be commercially disadvantaged as to aircraft prices for more than two decades. Crandall emphasized that the arrangement is focused on providing American with a mechanism for systematically and carefully replacing its current fleet, while also providing it with the ability, at its option, to grow modestly. Crandall noted that the concept of "purchase rights" is a novel approach that will give American enormous flexibility with its future fleet plans. Traditional options had to be exercised 24 to 36 months prior to delivery, and once this advance time had passed, the options expired. "Purchase rights" work differently: subject to the availability of delivery positions, some of which are guaranteed, American will have the right to acquire, at specified prices, new standard-body aircraft with as little as 15 months' prior notice; wide-bodied acquisitions will require 18 months' notice. Moreover, American will be able to choose which planes in each category -- 777, 767, 757, and 737 -- best meets its needs. "This flexibility is a key element of the agreement," said Crandall. "Boeing has come forward with a uniquely creative solution, which directly addresses the many uncertainties that exist in fleet planning. The agreement will enable us to acquire the aircraft we need while avoiding the need to make larger firm commitments, thus preserving the strength of our balance sheet." American is currently negotiating with manufacturers for engines to power the 777s. The 757s and 767s, which are already an important part of American's fleet, will have Rolls Royce and General Electric engines, respectively. The 737s will have engines from CFM, a joint venture between General Electric and Snecma of France. "We are delighted with American's decision to select us as their airplane supplier for the next 20 years," said Ron Woodard, president of Boeing Commercial Airplane Group. "This partnership is based on a 40-year-long relationship and is a tremendous vote of confidence from an airline that is recognized around the world as a premier carrier. This decision is particularly meaningful for us because American has had the opportunity to operate our competitors' airplanes, and ultimately the airline chose Boeing airplanes for the value they provide." "This new agreement reflects our confidence that American's employees will use these new aircraft to produce the best customer service in the industry, thus validating this investment," said Crandall. -- Karl Swartz |Home kls@chicago.com |Work kls@netapp.com |WWW http://www.chicago.com/~kls/ Moderator of sci.aeronautics.airliners -- Unix/network work pays the bills