Wednesday, July 20, 2011

American Airlines (AMR) Orders 460 New Planes, Options on 465 More

After reporting a dismal quarter where the company lost $286 million, AMR Corporation announced they've ordered 460 new planes from Boeing and Airbus, which will come with more fuel efficient engines.

AMR ordered 200 from Boeing (NYSE:BA), with an option for 100 more, and 260 from Airbus, with an option for 365 more. American Airlines will acquire the planes over a five-year period.

At this time American Airlines is considered to have among the worst planes as far as mileage goes; the major reason for its poor performance.

AMR's Chairman and CEO Gerard Arpey said in a statement that American "expects to have the youngest and most fuel-efficient fleet among our peers in the U.S. industry within five years."

Even with higher revenue based on higher fees and fares, it wasn't enough to overcome the boost in American's fuel bill, which soared 33 percent in the quarter, rising over $547 million from the same quarter in 2010.

Much of this if because of the McDonnell Douglas MD-80 aircraft, one of the worst as far as fuel efficiency among aircraft. The over age of planes used by American Airlines at this time stands close to 15 years in age. They'll receive delivery of both planes in 2013.

In the short term this will mean the company will continue to struggle in a significant way.

In other news, AMR Corp. said they are going to spin off its American Eagle subsidiary as a separate company.

AMR was trading at $5.11, gaining $0.18, or 3.65 percent, as of 8:46 AM EDT. Boeing was trading at $70.53, level with the close on Tuesday.

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