July 20, 2011

American Airlines Bets Big

David Koenig, writing for MSNBC:

"American Airlines is buying at least 460 new planes over the next five years in what it calls the biggest airline order in history. And in a victory for Airbus, it's splitting the work between the European plane maker and Boeing."

Two things worth noting: first, American is apparently playing the world's two major airframers off against one another, in order to get the best prices. A side-benefit of ordering from both manufacturers is redundancy. A slowdown, strike or technical problem on one line won't stall American's refitting program. And the two models on order, the Boeing 737 and Airbus A320, are nearly identical aircraft, so a delay from one manufacturer doesn't leave the airline short whichever type is delayed. They are interchangeable.

Second, this order says a lot about American's guess on the US economy. The full order, worth $38 billion dollars, is a large bet that air travel in the US will rebound as the economy improves, making full use of the new, more fuel efficient jets.

And there's continued employment for all those Boeing employees. Good deal, all around.

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