Most U.S. Airlines Putting Off Plane Orders

The skyrocketing cost of fuel has put hopes of a U.S. Market rebound on hold.


Although The Boeing Co. and rival Airbus have continued to win an impressive number of jetliner orders this year after a record-breaking 2005, they have done so without much help from the world's biggest potential market - North America.

Most of the orders have come from Asia, followed by Europe.

The legacy U.S. airlines have yet to begin ordering new jets in any significant numbers as they struggle to regain their financial footing in the wake of the industry's worst-ever downturn.

In 2005, five of the 11 largest U.S. airlines were in bankruptcy protection.

Only low-cost Southwest has bought planes in large numbers. It ordered 81 Boeing 737s this year.

Although there was speculation heading into 2006 that the year might finally see a rebound of the U.S. market, that has not happened so far. The skyrocketing cost of fuel has put such plans on hold.

American Airlines, for example, the biggest U.S. carrier, has been evaluating Boeing's 787 Dreamliner. But it won't be buying that plane or any others from Boeing until it returns to profitability, said Gerard Arpey, chairman and chief executive of American Airlines.

"It is certainly our goal and great hope to be in a position to order new aircraft from either Boeing or Airbus, but in order to do that we have to continue to focus on driving our overall company to profitability," Arpey said in an interview Sunday with the Seattle P-I.

Arpey was in Paris for the annual meeting of the International Air Transport Association, which has 261 airline members.

Among U.S. carriers, only Northwest and Continental have ordered the Dreamliner despite the difficult airline operating environment. Both have options to take more 787s.

Northwest is in bankruptcy protection. American has avoided that fate, even though it lost nearly $1 billion in 2005.

Arpey said his airline has done a good job cutting costs, but much more needs to be done before it can consider spending money for new planes.

"We have made great progress the last few years, but with oil at $70 a barrel, we are going to have to make a lot more progress in order to be in a position to make sense out of ordering new aircraft for either replacement or growth. When we get the company to the point where we are confident that we are at a level of profitability that is sustainable and will allow us to replace assets and grow, you will see us at either Boeing's or Airbus' door."

American has about 50 767s, the plane that the 787 was developed to replace.

Arpey said the 787 could make a great addition to American's fleet - in time. The twin-engine 787 will be at least 20 percent more fuel efficient than the 767. It will be the first larger commercial jetliner with a mostly composite airframe, including fuselage

"We are very intrigued with the 787," he said. "We have a lot of folks who have studied and are studying the airplane. It is a very exciting leap in technology. But we think for the time being we have to stay focused on the thousand-plus planes that we already have and make them profitable so we can afford an airplane like the 787."

American also has more than 300 older, single-aisle McDonnell Douglas jets, and those could eventually be replaced with Boeing's newest 737 or with the A320 family from Airbus, Arpey said. He also said American has talked with Boeing and Airbus about the all-new single-aisle jets that eventually will replace the 737 and A320.

Boeing has said its replacement plane probably would not be developed until sometime between 2012 and 2015.

Before Boeing's 1997 merger with McDonnell Douglas, American, along with Delta and Continental, had a long-term exclusive agreement with Boeing for new jets. But before it would agree to approve the merger, the European Union insisted that those 20-year agreements to buy only Boeing planes be changed.

Arpey said he would not rule out buying planes from Airbus.

This content continues onto the next page...

We Recommend