American Airlines utilized the crisis to further its fleet simplicity goals and focus its long-haul flying around two aircraft types: the Boeing 787 and 777. With a smaller international long-haul fleet, the airline is mostly done with “strategic flying” and is now looking to emphasize ensuring profitable operations year-round rather. All of this translates into what will be a likely smaller international network focused on peak markets.
American Airlines has cut its fleet in the crisis
American Airlines started 2021 with 855 aircraft in its fleet. This is down nearly 100 aircraft from the 942 planes it had in its fleet at the start of 2020.
One of the primary reductions in the airline’s fleet was jets mostly pointed on long-haul routes. The airline cut the following jets:
- 15 Airbus A330-200s
- Nine Airbus A330-300s
- 17 Boeing 767-300ERs
American also removed another 34 Boeing 757-200s from service. Though not widebodies, the airline primarily placed the aircraft on longer-haul routes, focusing on international operations.
Flexibility with its future fleet
Beyond retirements, American Airlines has also retained flexibility through its order book. As Chief Financial Officer Derek Kerr said at the Wolfe Research Global Transportation & Industrial Conference:
“We do have 25 787-9s that come in and ’23 to ’25. So, when we talk about are they coming back, they’re not coming back in the short term, without a doubt, but ’23 to ’25, we’re going to have 25 aircraft coming in those three years now. We can take out 777s if [demand is] not there, or we use those to grow back into places that there’s options.”
Ultimately, the demand environment will determine what American Airlines does with its Boeing 787-9s. The aircraft have incredible flexibility. The jets could upgauge some 787-8 routes. Then, American could use the spare 787-8s to unlock new routes.
Or, American could stick with a conservative strategy. That strategy would involve taking out older Boeing 777-200ERs, most of which are owned, and replacing them with newer, more fuel-efficient Boeing 787-9s that are also larger than the -200ERs.
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The end of strategic flying?
Strategic flying is a completely different ball game. While an airline may add a new route, from, say, a hub to a partner city or country with a focus on higher yield flying, strategic flying is a different ballgame.
According to Chief Revenue Officer Vasu Raja, strategic flying is “a euphemism for losing money.” He further stated that the idea surrounding strategic flying was focused on building “something which may lose money today, but can make money tomorrow,” but that American needs to have some discipline now.
As he described the strategy, he discussed some of the issues with widebodies in American’s fleet previously and changing the notion of strategic flying:
“The strategic flying, which is we will be in the markets that our customers want and to be able to go serve profitably, and we can’t tell ourselves that we’re going to go foot the cost of 60 widebodies that we get to go make money on for four and a half months of the year, and can barely cover the capital expense.”
This means that less profitable routes before the crisis likely will not be coming back, and in the future, the airline may not be more tolerant of money-losing routes. For the future 787 fleet, this means the following:
“We’re not just going to go get a bunch of 787s and put them in markets because we think they’re strategic. The idea is any of those airplanes that are coming in need to be able to produce a real return on capital.”
All of this translates to a smaller yet more profitable long-haul network that shies away from lower-yield flights. The international reset from July 2020 saw the airline announce it was pulling out of some more leisure-oriented routes, cutting long-haul Latin American flying out of Los Angeles, and deferred the launch of new long-haul routes.
In 2019, before the crisis hit, it made sense for American Airlines to devote some of its long-haul jets to servicing new points. The Boeing 757s and 767s were mostly owned, and the cost to experiment with new routes was relatively low. Now, the airline does not have an excess of long-haul jets, but it is seeking a “Goldilocks” approach of creating a network that is “just right.”
What do you think of American’s international long-haul strategy moving forward? Let us know in the comments!