American to Buy 50 Boeing 757s, Takes Options on 50
American Airlines said Wednesday that it will buy 50 Boeing 757-200 airliners and has taken options on 50 more, an order that will extend Boeing’s backlog of orders to a record seven years.
The new planes will enable American to retire the Boeing 737 fleet on the West Coast that it acquired in its merger with AirCal last year.
In announcing the order, Robert L. Crandall, the airline’s chairman and president, declined to reveal the exact price, saying it was “proprietary” information. However, he said American had obtained “excellent terms” and indicated that the price was about $2 billion for the first 50 planes.
A Boeing spokesman, David Jimenez, said in a telephone interview from the company’s Seattle headquarters that the order “gives a boost to the (757) program. It had been pretty bleak. The 757 had been lagging behind (other Boeing models). We hope that this order and other recent ones will encourage other companies to buy that model.”
The American order comes just a few days after International Lease Finance of Beverly Hills, an airplane leasing company, ordered 100 Boeing planes and took options on 24 more. The $4.6-billion order was the largest in Boeing’s history.
Also, United Airlines is expected to announce an order for up to 60 Boeing jets as early as this morning, industry sources said.
As a result of the new orders, Jimenez said, Boeing’s backlog of airliner orders will keep the company’s assembly lines busy until 1995. Normally, the backlog is only two to four years, he said. Boeing has received firm orders so far this year totaling $13.7 billion, compared to $8.6 billion in the same period of 1987, the company said.
If American ultimately buys all 100 planes, it will be the largest order for the 757, a twin-engine jet that needs a cockpit crew of only two. Delta Airlines earlier ordered 60 of the planes, of which 37 have been delivered.
It is known that Boeing had expected to sell between 750 and 1,000 757s by now, but since the plane was introduced in 1978 there have only been 260 orders, airline sources said.
When the medium- to long-range aircraft was introduced, jet fuel prices in the United States had recently shot up to about $1.20 a gallon from less than 25 cents (and about $2 a gallon at some airports overseas), making the older, three-engine 727 very costly to operate.
A 727-200, which requires a three-member cockpit crew, burns 1,300 gallons of fuel an hour and carries 150 passengers. A 757, on the other hand, burns 35% less fuel and is designed to carry between 186 and 239 passengers. The configuration of the American 757s will be for 194 passengers.
Morton Beyer, president of Avmark Inc., an Arlington, Va., consulting firm specializing in aircraft sales, said the 757’s lower fuel consumption was very important when the price of fuel was so high but lost some significance when prices dropped to little more than 50 cents a gallon in the 1980s.
Beyer said the order for all 100 planes would be valued at about $3.6 billion in terms of today’s prices. As in all aircraft orders, he said, there are inflation clauses.
Beyer said the list price for a 757-200 is $45 million. However, he said recent sales had been for between $36 million and $37 million. “Nobody pays the list prices today,” he said.
Will Replace Planes
Under the agreement, Crandall said, American will take delivery of nine 757s next year, 20 in 1990 and 21 in 1991. By 1992, American’s fleet will total 585 planes. It had 412 planes at the end of 1987 and will have 480 by the end of 1988.
American acquired 39 planes in the AirCal acquisition. Of these, 33 were 737s and six were BAE-146s. The British-made BAE-146s will be retained but the 737s will be replaced, as will some 727s.
American says it will replace the 737s on AirCal’s old routes with McDonnell Douglas MD-80s. The new 757s, which will be powered by Rolls-Royce engines, will replace the MD-80s in other parts of the nation. Crandall said the engine “is a very quiet, fuel efficient and extremely reliable engine that also is exceptionally cost-effective to operate.”
Crandall said the relatively small number of 737s that American owns has resulted in high maintenance costs and high training and support costs. The airline has no 737s aside from the ones it acquired last July.
By getting rid of an entire type, he said, American will obtain a beneficial commonality with the rest of its fleet. For example, he said, 53% of the 757’s parts are interchangeable with those of the larger 767. The airline has a large fleet of 767s.
