By Bill Zeeble, KERA News
http://stream.publicbroadcasting.net/production/mp3/kera/local-kera-978472.mp3
Dallas, TX – On the same day American Airlines announced a record-setting jet purchase, it also announced a quarter billion dollar loss over the last 3 months. KERA's Bill Zeeble reports how the two are tied together.
American Airlines says between jet makers Boeing and French Airbus, the carrier will buy 460 new planes over the next several years, the first arriving in 2013. Tim Smith, spokesman with American Airlines, says the company lost $268 million in the second quarter - a lot of it due to high fuel costs. So this purchase should help the bottom line.
Tim Smith: It's going to give us the most environmentally-friendly, fuel-efficient domestic fleet in the U.S. industry within five years.
The new planes will also help rid American's fleet of its aging MD 80s. Tom Parsons, CEO of Bestfares.com, says customers will appreciate the updated jets that saavy competitors like Virgin America and Jet Blue already use.
Parsons: This is one way they can get out of the bottom of the basement and maybe turn a profit. It seems weird to buy something new, a whole bunch of them and say that now we're on the way to making a profit. What they have to do is still retire more and more of their MD80s, at the same time they're also looking for future growth to retire other planes. They can also go out and brag and boast that they've got the newest fleet in.
Parsons says new cabins filled with what he calls toys - wifi, digital screens and entertainment, communications options, varied lighting, larger overhead bins and other pluses - are in demand from American Airlines' target - the profitable business client. He says American is late in buying these efficient, 21st Century jets, but was smart to purchase them from the two big jet makers.
Parsons: I'm sure they got one heckuva pricing from both companies because they put them against each other and at the end of the day they knew they were going to get so many from each airline. They just wanted to see how cheap they could get them.
American would not provide the final purchase price, clearly in the tens of billions of dollars. But Tim Smith said the carrier will not pay retail.
Parent company AMR also said it plans to sell off regional carrier, American Eagle.