American Airlines announced on Tuesday that it has adjusted its Boeing 787 order book. The airline has decided to convert some Boeing 787-8 orders to the larger 787-9 and defer those aircraft to 2023. This will leave American with outstanding orders for 14 Boeing 787-8s, which will all be delivered by the end of the first quarter of 2022.
American adjusts Boeing 787 order book
As part of the airline’s ongoing fleet and network planning revisions, the carrier reached an agreement with Boeing over the remaining 787-8 deliveries. Instead of the 19 787-8s the carrier had on order, the airline will only take 14 of these aircraft, with deliveries rescheduled to occur by the end of the first quarter of 2022.
The five orders converted to the Boeing 787-9 were also deferred. Those deliveries will occur in 2023 and will retain their existing financing.
In its annual filing, American detailed that the airline was expecting to take delivery of 19 Boeing 787s in 2021, none in 2022, and six in 2023. American has not detailed the breakdown of the new delivery schedule, but the carrier will take fewer jets, and some deliveries have moved into the first quarter of 2022.
In 2023, the airline will take at least eight Boeing 787s now. The airline has not adjusted further 787 deliveries from 2024 onwards. At the end of 2020, the airline’s total Boeing 787 backlog stood at 44 aircraft, of which 19 were for 787-8s.
Boeing 737 MAX deferrals
American finalized deferrals for 18 Boeing 737 MAX aircraft. Previously scheduled to be delivered in 2021 and 2022, the airline has pushed those deliveries to 2023 and 2024.
Related to the deferrals, American decided to prepay $248 million of outstanding loans under its pre-delivery payment 737 MAX credit facility. The related pre-delivery deposits will be returned to American Airlines from the resulting deferral.
American announced in October that it had secured deferral rights for 18 Boeing 737 MAX aircraft. Exercising them was a natural option for American, as it sought to conserve its capital expenditures in the near term. The revised delivery schedule will see American take MAX aircraft in 2024 when it previously did not anticipate receiving any new jets.
American’s rejigged order book
The rejigged order book, especially in favor of larger Boeing 787s, may seem strange at a time when travel demand is at its lowest recorded levels in years. However, fleet decisions are generally made on a longer-term basis, and American’s decision will likely impact retirements of aircraft.
When American Airlines ordered 47 additional Boeing 787s (including 22 787-8s and 25 787-9s) back in 2018, the airline stated it would use the 787-8s to replace the aging Boeing 767-300ERs while the 787-9 deliveries would go toward replacing the Airbus A330-300s and 777-200ERs.
With the Boeing 767-300ERs retired and the 787-8s ready to replace them, American turned toward the larger 787-9 to cover for more fleet-related developments. American has retired both the A330-200 and the A330-300s. To replace that lost capacity, the airline can use the Boeing 787-9.
Also, the flexibility of the Boeing 787-9 will allow American to unlock new destinations as needed. Already, the airline has announced some bold plans with its 787-9, including using it for anticipated flights to Auckland from Dallas and Bangalore from Seattle. As a fuel-efficient aircraft capable of conducting ultra-long-haul missions, the planes can replace that lost capacity and fuel expansion as necessary.
A more conservative approach with the Boeing 787-9s would be to use them to replace more Boeing 777-200ERs, some of which are approaching their mid-20s in age. When the 777-200ERs need to be fully retired, American has already set itself up well to take on more 787s, or perhaps another next-generation aircraft that will be offered on the market at that time.
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