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AMR Holds an Ace: Most Aircraft Orders of Any U.S. Airline

Written by: Ted Reed 07/31/12 - 6:59 AM EDT
Tickers in this article: SAVE DAL JBLU LCC

"Taking over 500 new aircraft presents a tremendous opportunity to modernize our brand," said Rob Friedman, American's vice president of marketing. "Our customers understand that we are moving forward to having the youngest fleet in the industry in five years, and the feedback has been tremendous."

Friedman said the carrier plans to modernize its colors as well. "Airbus aircraft are made from composites, which can't be polished," he said. "So we're evaluating the look and feel of the exterior, evaluating a lot of different options. American is an iconic American brand, but we feel that with the level of investment we have a terrific opportunity to modernize our brand."

Among American competitors, Southwest(LUV) has orders for 350 Boeing 737s, of various types. United(UAL) has about 270 aircraft on order. Delta(DAL) has 100 new 737-900ERs on order as well as 88 used Boeing 717s. JetBlue has orders for 80 aircraft. US Airways has 66 Airbus aircraft on order, including 58 narrowbodies and eight A-330s.

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Regarding the narrowbodies, American said its transcontinental A321 flights will all provide three-class service, lie-flat seats and screens at every seat, with varying levels of free entertainment. Various carriers including US Airways and Spirit fly the A321 on transcontinental flights, but none offer three-class service.

Currently, American offers transcontinental service with about 15 older 767-200s with three class service and 169 seats, including 10 in first and 30 in business. The new A321s will have just 102 seats, including 10 in first, 20 in business and 72 in coach including 36 with extra legroom. That is not a lot of seats. US Airways flies the A321 with 183 seats, including 167 in coach. Spirit operates the aircraft with 218 seats. It appears American will continue to bet, as it has with a "cornerstone strategy" that involves operating hubs in highly contested business markets, that it can attract more premium passengers than its peers.

"American won't be able to charge more (than others)," said aviation consultant Robert Mann. "However, if its revenue management works properly, 44% fewer coach seats should reduce the need to sell junk fares and thus improve the onboard fare mix and the (revenue per available seat mile.)

Meanwhile, on the cost side "A321 hourly and trip costs are less than half those of an aging 767-200, so on 40% fewer seats, you have a lower (cost per available seat mile.)," Mann said.