Consumers Win as AA Splits Order Between Boeing and Airbus

Every plane American Airlines owns was made by Boeing, but that's all poised to change following an order for 460 “existing model and re-engined small airliners” that was just given to Boeing and rival Airbus.

"(N)o single manufacturer could provide the number and variety of aircraft we need to fulfill our vision for the future," American Airlines Chairman and CEO Gerard Arpey was quoted in a report by the Seattle Post-Intelligencer

American President Tom Horton also downplayed the rivalry. "Some characterized this as a split deal,” he said. “I would characterize it as a 'both' deal. We decided that each deal was so compelling, and the replacement economics and flexibility for both was so compelling that we wanted to do both."

The airline confirmed in a press release that it had split its biggest airline order (in fact, the largest aircraft order in history) between the rival companies.

Boeing's deal: AA is buying 200 aircraft from the 737 family, with options for another 100 737 family aircraft.

Its Airbus order: AA will acquire 260 Airbus aircraft from the A320 family with 365 options and purchase rights for additional aircraft.

While it was good news to get some orders, Boeing also got to deal with a good bit of stress with the word from Reuters that another big client, Southwest Airlines, was having “‘warm’ top-level talks” with Airbus, which led plenty to surmise that Boeing could be losing some business soon.

USA Today surmised that Southwest “may be feeling that Boeing did not consult with it enough before its seemingly abrupt decision to re-engine its 737 in order to win a share of American’s big order.”

However, Southwest CEO Gary Kelly told FOX Business those rumors are bogus, according to USA Today.

“There is no truth to that at all,” Kelly stated. “They’re a great company and great friend of Southwest and we certainly correspond and interact with those folks. But we’re talking exclusively with Boeing, and that’s only fair because that’s what we want to make work and waiting to hear from the Boeing Company about what opportunities we have with this newly re-engined 737.”

Boeing also reported that two earlier orders for 737s from a Turkish airline were canceled.

The winner from all this: consumers, as American's massive order will retire some of the oldest planes still flying in the U.S. and beyond. Also sweetening the flying experience: AA will be the first U.S. airline to offer in-flight streaming video.

Wall Street analysts, however, questioned the aircraft spending spree.

As AP noted, "analysts wonder about the wisdom of borrowing more while the company is still posting huge losses."

"We understand that American's fleet (and brand) are tired," UBS analyst Kevin Crissey wrote in a note to clients, AP reported. "(B)ut this announcement represents a ton of new capital being put into a failing business model."