American Airlines Accelerates 737 Deliveries
American Airlines, Inc., a wholly owned subsidiary of AMR Corp. , today said that it has accelerated its fleet renewal plan by beginning the replacement process for a portion of its MD-80 fleet. The Company said that the decision also provides it with substantial fleet flexibility in the future.
Following approval by AMR's and American's Board of Directors, American has notified The Boeing Company of its intent to begin pulling forward the delivery of 47 Boeing 737-800 aircraft under a previously existing purchase commitment. American initiated this process by notifying Boeing that American will take delivery in early 2009 of three of these aircraft previously scheduled for delivery in 2016. American intends to continue pulling forward deliveries of the other aircraft from their current 2013-2016 delivery schedules into the 2009-2012 timeframe.
American emphasized, however, that any decisions to accelerate aircraft deliveries will depend on such factors as future economic and industry conditions and the financial condition of the Company.
"We believe that beginning to replace some of our MD-80s in a measured way makes economic sense and represents prudent and strategic reinvestment in our business that will bring long-term benefits to shareholders, customers and employees," said AMR Chairman and CEO Gerard Arpey. "Our existing agreement with Boeing gives us ample flexibility for our long-term fleet plan. While the MD-80 remains an excellent aircraft that serves us and our customers well, the new 737s will be a great addition to our fleet that will lower our operational costs, boost the fuel efficiency of our fleet and also bolster our efforts to lower emissions and noise levels."
Arpey noted that American's long-term purchase contract with Boeing gives the Company substantial fleet flexibility and includes the right to purchase on short notice additional 737s well beyond the 47 committed aircraft as well as the right to purchase 787 aircraft.
He also stressed that the purchase contract with Boeing gives American the ability to obtain the 47 aircraft and additional 737 aircraft with a delivery schedule that best meets the needs of the business, without having to make large firm delivery commitments at a specific time, and that American's "purchase rights" give it the ability to acquire such additional aircraft from Boeing with as little as 15 months notice.
Arpey cited American's plan to replace some of its MD-80s with 737s as the latest example of the Company's efforts to reduce operating costs and fuel consumption. American estimates that the 737 consumes 25 percent less fuel per available seat mile than an MD-80.
Arpey also stated that American has a goal to improve the fuel efficiency of its fleet by more than 20 percent by 2020, and he emphasized that today's announcement is a step toward achieving that objective.
The effort to improve fleet fuel efficiency is a part of a companywide initiative to reduce fuel consumption to both lower costs and reduce emissions. In addition, as part of its Fuel Smart program that has reduced the Company's consumption of jet fuel by about 95 million gallons annually, American continues to add winglets to its 737 and 757 fleets and is also saving fuel by employing high-speed tractors to tow airplanes on the ground and by taxiing aircraft with a single engine when feasible. American has set a goal in 2007 to increase Fuel Smart annualized consumption savings to 125 million gallons.
"Strengthening our balance sheet remains a high priority and an important element of building a stronger financial foundation under our Turnaround Plan," Arpey said. "Our announcement today shows that we are taking action to strike the right balance between reinvestment in the business and the need for continued financial improvement. As we continue to improve our financial performance we will have more flexibility to reinvest in the business for the future."
Statements in this release contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represent the Company's expectations or beliefs concerning future events. When used in this release, the words "expects," "plans," "anticipates," "indicates," "believes," "forecast," "guidance," "outlook," "may," "will," "should" and similar expressions are intended to identify forward-looking statements. Forward-looking statements include, without limitation, the Company's expectations concerning operations and financial conditions, including changes in capacity, revenues and costs; future financing plans and needs; overall economic and industry conditions; plans and objectives for future operations; and the impact on the Company of its results of operations in recent years and the sufficiency of its financial resources to absorb that impact. Other forward-looking statements include statements which do not relate solely to historical facts, such as, without limitation, statements which discuss the possible future effects of current known trends or uncertainties, or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. All forward-looking statements in this release are based on information available to the Company on the date of this release. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements are subject to a number of factors that could cause the Company's actual results to differ materially from the Company's expectations. The following factors, in addition to other possible factors not listed, could cause the Company's actual results to differ materially from those expressed in forward-looking statements: the materially weakened financial condition of the Company, resulting from its significant losses in recent years; the ability of the Company to generate additional revenues and significantly reduce its costs; changes in economic and other conditions beyond the Company's control, and the volatile results of the Company's operations; the Company's substantial indebtedness and other obligations; the ability of the Company to satisfy existing financial or other covenants in certain of its credit agreements; continued high fuel prices and further increases in the price of fuel, and the availability of fuel; the fiercely competitive business environment faced by the Company, and historically low fare levels; competition with reorganized and reorganizing carriers; the Company's reduced pricing power; the Company's likely need to raise additional funds and its ability to do so on acceptable terms; changes in the Company's business strategy; government regulation of the Company's business; conflicts overseas or terrorist attacks; uncertainties with respect to the Company's international operations; outbreaks of a disease (such as SARS or avian flu) that affects travel behavior; uncertainties with respect to the Company's relationships with unionized and other employee work groups; increased insurance costs and potential reductions of available insurance coverage; the Company's ability to retain key management personnel; potential failures or disruptions of the Company's computer, communications or other technology systems; changes in the price of the Company's common stock; and the ability of the Company to reach acceptable agreements with third parties. Additional information concerning these and other factors is contained in the Company's Securities and Exchange Commission filings, including but not limited to the Company's Annual Report on Form 10-K for the year ended December 31, 2006.
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