Bloomberg News

Boeing Has ‘Good Meeting’ With AMR in Push to Block Airbus Order

July 13, 2011

July 14 (Bloomberg) -- Boeing Co. commercial airplanes chief Jim Albaugh said he had a “good meeting” with American Airlines this week as the manufacturer tries to stop one of its biggest customers from placing an order with rival Airbus SAS.

“They’re a great customer and obviously we want to keep them,” Albaugh said of his meeting with Gerard Arpey, the chairman and chief executive officer of American Airlines parent AMR Corp.

Albaugh, who spoke in a brief interview yesterday in Arlington, Virginia, declined to share more details of his conversation with American executives. The Fort Worth, Texas- based carrier is considering an order of as many as 280 new narrow-body jets and is in talks with both Airbus and Boeing, people with knowledge of the matter have said.

Carriers have pushed for more fuel-efficient aircraft amid surging jet-fuel prices, and Airbus responded with the A320neo, an upgrade of its narrow-body jet that competes with Boeing’s 737.

Boeing is still considering whether to offer new engines on the 737, the world’s most widely flown plane, or add an all new aircraft around 2020.

An order from American, which is the third-largest U.S. carrier and has an all-Boeing fleet, would bolster Toulouse, France-based Airbus’s quest to persuade one of its rival’s major customers to defect. The airline’s board may decide on new planes as soon as next week, people familiar with the matter have said.

Tim Smith, a spokesman for American, declined to comment.

‘What Market Wants’

Asked whether the threat of American switching to Airbus jets will affect Boeing’s decision on the 737’s future, Albaugh said: “Lots of factors go into the 737 re-engining decision. What the market wants and what customers want will influence the outcome” more than a decision from any single customer, he said.

Buying 280 planes would be a transaction of at least $22.6 billion at list prices, based on the $80.8 million retail value of the Boeing 737-800, which costs less than the Airbus A320 or the upgraded A320neo. Airlines receive discounts on published prices.

American’s main jet fleet of 613 planes now consists only of Boeings after its last Airbus aircraft, the twin-aisle A300, went out of active service in 2009.

The airline’s most-common plane type is the Boeing MD-80, a workhorse on domestic routes that makes up about a third of the fleet and averages more than 20 years of age.

All-Boeing Fleet

That jet went out of production in 1999 and is being phased out of American’s fleet in favor of 737-800s, which are 25 percent more fuel efficient. American began receiving deliveries two years ago on an order of 130 of the 737-800s that will be completed in 2013.

Boeing’s sales chief, Marlin Dailey, said in late June that the company will do “everything we can to retain American Airlines as a Boeing customer.”

Boeing added 24 cents to $72.17 yesterday in New York trading, while Airbus parent company European Aeronautic, Defence & Space Co. rose 90 cents to 24.10 euros in Paris.

--With assistance from Susanna Ray in Seattle; Andrea Rothman in Toulouse, France; and Mary Schlangenstein in Dallas. Editors: James Langford, Niamh Ring

To contact the reporters on this story: Gopal Ratnam in Washington at gratnam1@bloomberg.net; Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net


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