American Airlines orders 42 Boeing 787s

Published 11:03 pm Wednesday, October 15, 2008

EVERETT — Despite a bumpy economy, American Airlines plans to place an $8 billion order for 42 Boeing Co. 787 jets, the airline announced Wednesday.

“Even as we battle the challenges of volatile and historically high fuel prices and serious economic uncertainty, we must continue to prudently invest in our company, for the long-term benefit of our shareholders, customers, employees and the communities we serve,” said Gerard Arpey, chief executive of AMR Corp., the parent company of the airline. “The 787 will help reduce our fuel and maintenance costs, lessen our environmental impact, and support our goal of providing industry-leading products and services over the long haul.”

American Airlines said it expects to begin receiving the 787-9 Dreamliner aircraft in 2012 with deliveries scheduled out until 2018. The nation’s largest airline also secured options for an additional 58 of Boeing 787 jets.

The new order, worth $8 billion at list prices, is the first major request for the 787 that Boeing has received since March. The order comes as Boeing’s commercial jet factories have been shut down because of a strike by its Machinists union, which began Sept. 6.

“American Airlines’ endorsement of the 787 Dreamliner, after American’s many years of study, attests to the airplane’s technological advances and ability to contribute to a carrier’s bottom line,” said Ray Conner, vice president of sales for Boeing Commercial Airplanes. “We look forward to working with American Airlines to bring these newest airplanes into American’s growing fleet of Boeing airplanes.”

American said its 787 purchase order includes a provision allowing the airline to back out of the deal should the airline fail to reach an agreement with its pilots’ union. American has to notify Boeing of its intent to purchase a 787 at least 18 months prior to its first scheduled delivery date, September 2012.

Before its Machinists union strike began, Boeing already had fallen 15 months behind schedule for the delivery of its 787-8, the first version of the Dreamliner to be delivered. Earlier this year, Boeing said it would push back the initial delivery of its 787-9 to early 2012.

American has 150 wide-body jets that are used heavily on international routes. Many of them are nearing retirement age. At a minimum, the 787s would be replacements for older planes that burn 20 percent more fuel. That’s a major consideration for an airline that spent $2.72 billion on fuel in the July-to-September period.

The new planes could even carry American’s hopes to expand its international service, which has held up much better than domestic service in the current slump. The 787 is designed to carry up to 290 passengers and has a range of up to 8,500 nautical miles.

American also plans to shed many of its gas-guzzling MD-80s in favor of a previously announced order for 76 Boeing 737s.

As of Oct. 7, Boeing had won 623 net orders in 2008 including 78 requests for its 787 Dreamliner. The mostly composite 787 Dreamliner has picked up 895 orders since its launch in 2004.

Boeing’s business plan for its 787 Dreamliner has been harshly criticized by the aerospace giant’s unions. The jet maker relied heavily on global partners to supply major assemblies for the Dreamliner. Supply and production issues caused the company to push back 787 deliveries by at least 15 months. However, the Machinists strike is expected to delay the Dreamliner even further.

The Machinists say Boeing wants to eliminate 2,000 union jobs — materials and inventory handling positions — in the long run. The union fears Boeing would allow outside vendors to begin performing Machinists work the way the company uses another company to handle 787 materials. Boeing has said it will not guarantee jobs because it needs to remain flexible if it is to compete with rival Airbus.

Boeing’s shares closed down 6 percent Wednesday at $42.33. The company’s stock has dropped $56 from its 52-week high, set Oct. 25, of $98.97.

The Associated Press contributed to this report.