Potential Mega-Deal: Over $6 Billion Worth of Aircraft on the Horizon for American

  • American Airlines Group Inc. is liaising with Airbus SE and Boeing Co. over a possible order of at least 100 narrowbody jets.
  • The intended purchase, potentially rising to 200 aircraft, aims to replace older models in the fleet with an estimated value of around $6 billion.
  • Current negotiations point towards an order of Boeing’s 737 MAX or Airbus’s A321neo, with a decision still in the pipeline.

FORT WORTH — American Airlines aiming to rejuvenate its aging fleet, has reportedly entered negotiations with aviation heavyweights Airbus and Boeing about procuring a minimum of 100 narrowbody aircraft, Bloomberg reports. People familiar with the matter, not authorized to discuss publicly, suggest that the company is leaning towards acquiring Boeing’s 737 MAX or Airbus’s A321neo. These would stand as replacements for the older 737-800, A319, and A320 single-aisle variants by the end of the decade.

The potential order's magnitude could reach 200 planes, incorporating provisions for future acquisitions. This would help the airline refresh the approximate 255 jetliners nearing two decades of service, a milestone associated with heightened maintenance expenses.

Market analysts, including those from Bloomberg Intelligence, estimate the order's value to hover around the $6 billion mark. However, insiders indicate that, despite months of ongoing discussions, a concrete decision remains elusive.

An official statement from an American Airlines spokesperson noted, “We are engaged in dialogues with both Airbus and Boeing regarding our narrowbody aircraft requisites for the upcoming years, spanning the latter half of this decade and beyond.”

Stakeholders of Airbus and Boeing opted to stay tight-lipped when approached for comments.

This news coincided with a slight dip in market sentiment, with American Airlines' shares and Boeing's value contracting by 2.3% and 2% respectively in New York’s morning trade. Airbus's share price, however, remained relatively stable in Paris.

A significant order by American Airlines underscores a global trend of large-scale aircraft acquisitions. Leading airlines such as India’s IndiGo, Europe's budget frontrunner Ryanair Holdings Plc, and United Airlines Holdings Inc. have collectively secured hundreds of planes in recent transactions. Notably, this spike in demand comes as the production pace at Airbus and Boeing remains subdued compared to pre-pandemic times.

Interestingly, American Airlines is in the process of receiving the last few jets from a monumental order placed in 2011 with the same manufacturers. By 2027, the carrier is slated to take delivery of an additional 148 single-aisle aircraft.

Robert Isom, American's CEO, recently voiced the company's forward-thinking approach to long-term aircraft procurement. Emphasizing the necessity for newer jets, he commented during a town hall session, “As we move beyond 2027, I foresee us making definitive commitments to narrowbody aircraft.” Isom remains optimistic about securing favorable deals, despite surging demand in the industry.