American Delays Boeing Deliveries

AMR Corp.’s American Airlines, the world’s largest carrier, delayed delivery of 54 Boeing Co. planes to save $2.7 billion in spending over the next six years.

The agreement with Boeing lets AMR, which has lost $6.9 billion since the end of 2000, delay deliveries for as long as seven years, the airline said. The planes originally were set to be delivered from 2006 through 2010. American’s action includes all except two aircraft planned from Boeing in the period.

American is trying to cut costs to stem losses and compete with low-cost carriers as industry capacity exceeds demand and holds down ticket prices.

“They clearly are not in a position where they want to be adding capacity or taking on the obligations for new airplanes,” said Daniel Kasper, an airline economist with consulting firm LECG Inc. in Cambridge, Mass.

The delay “will substantially enhance our ability to restructure our finances,” American Chief Financial Officer James Beer said. Beer said earlier this month that the two companies were close to an agreement on the delays, which include 47 Boeing 737-800s and seven 777s.

Major U.S. airlines have stepped up cost-cutting efforts this year amid record fuel prices and growing competition from low-cost rivals such as Southwest Airlines Co.

The 10 largest U.S. airlines are expected to report combined losses of as much as $8 billion this year, after more than $20 billion in losses since 2001, according to the Air Transport Assn. trade group. UAL Corp.’s United Airlines and US Airways Group Inc. are in bankruptcy protection, and Delta Air Lines Inc. this month won $1 billion in wage and benefit concessions from pilots as it tries to avoid a filing.

The agreement with American was expected and is included in Boeing’s financial forecasts, said Nicolaas Groenveld- Meijer, a spokesman for the Chicago-based aircraft maker.

“Fortunately for Boeing, the two aircraft that are involved here are the bestselling ones that they have,” said Paul Nisbet, analyst for JSA Research in Newport, R.I. “They’ll not have a great deal of difficulty over that period of finding buyers.”

Commercial aircraft deliveries at Boeing fell 47% from 527 in 2001 to 281 in 2003, partly because of order cancellations and delays by U.S. airlines hurt since the September 2001 terrorist attacks. Boeing said last month that it expected deliveries to rise 12% to 320 next year from a forecast of 285 this year because of demand from airlines outside the U.S., especially in Asia.

AMR shares fell 14 cents to $8.76 while Boeing rose 20 cents to $53.97, both on the New York Stock Exchange.