Most U.S. Airlines Putting Off Plane Orders

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.

"When we get to that point, when profitability allows us to be thinking about new airplanes as either replacements or for growth, we clearly will look at all the options out there and decide what's best for our company," he said

American is a founding member of the OneWorld alliance, which announced Sunday that Japan Airlines, Asia's biggest airline, will join the group.

Arpey delivered a formal invitation to JAL Chief Executive-designate Haruka Nishimatsu at a meeting of the OneWorld governing board in Paris, ahead of the meeting of the International Air Transport Association.

In addition to American, the alliance includes British Airways, Qantas, Cathay Pacific, Iberia, LAN, Finnair and Aer Lingus, although the Irish carrier is leaving the alliance. Malev and Royal Jordanian will also be joining the alliance.

In an interview with the P-I after the OneWorld meeting, Nishimatsu said Japan Airlines will eventually consider Boeing's planned 450-passenger 747-8 Intercontinental, or the 555-passenger Airbus A380. But for now, he said, the airline is focused on smaller jets such as the 737 for its domestic fleet. JAL has 30 of those planes on order and could buy more.

Boeing has not yet landed a customer for the passenger version of its 747-8, known as the Intercontinental, but has said it expects to do so this year. The 747-8 Intercontinental will be the first-ever stretch of the 747 and will seat about 35 more passengers than the current 747-400.

Boeing has orders for the 747-8 freighter, which will enter service in 2009. The 747-8 Intercontinental will enter service in 2010.

Japan Airlines operates about 60 747 passenger planes, of which about 30 are older models. It also has a growing fleet of 777s and has ordered Boeing's 787.

Nishimatsu said JAL will continue to consolidate its long-haul fleet around the twin-engine 777 rather than the four-engine 747.

"This will be our policy for the near future," he said, suggesting it could be some time before any serious consideration is given to Boeing's 747-8 or the Airbus A380.

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