American Airlines, or more accurately their predecessor US Airways, ordered 22 A350s in 2005. They were supposed to be the US launch customer of the aircraft type. Since then, the aviation industry has changed quite a bit. Delta merged with Northwest, United with Continental, Southwest with AirTran and US Airways with American. To add to the complexities of the issue, airfare prices have dropped. This, coupled with competition from ultra low cost carriers, has put airlines in a tough place. Although fuel prices are low, many airlines find themselves having difficulty with capital spending. American is no exception. With the airline meeting with Airbus execs, the questions is will American Airlines cancel A350 orders they made 12 years ago.
The Dilemma
The main argument presented by American Airlines’ president Robert Isom is that the subfleet of A350s would be very small. At 22 aircraft, they would be the smallest technological subfleet in American’s long haul network. Remember that 767s and 757s have commonality, as does the A330s American flies. This has pushed the airline to reconsider whether or not the A350 would make financial sense for the airline. After two deferrals, the first aircraft is slated to be delivered in 2020.
The 22 planes would replace the A330s and some of the 777s that are now getting to be close to 20 years old. Another issue is the amount of capital expenditure involved with the purchase. Although American got a very reasonable price for the aircraft, the cost of training, maintenance and other miscellaneous aspects push the cost of the A350 much higher.
Options for American
There are various options for American. The first, and probably most logical, is to expand the number of A350s it will be receiving. American Airlines could order some 10-20 more and have a large enough fleet to replace the A330s, 767s and some older 777s. The problem with this scenario is the cost involved with adding more orders. American is trying to avoid major spending, and this would not help. The other option that is on the table (although American’s CEO said was not) is canceling the order. This would involve penalties for canceling the order. Resulting costs may be enough to deter the airline from canceling, but I honestly think it’s very likely.
What if They Cancel the A350 Order?
My best guess is that American will exercise their options for 787s. The airline has some 42 on order, which are meant to replace some of the 767s and the A330-300s. American should have some 34 by the end of the year, and should finalize the deliveries by the start of the A350 deliveries. If American cancels the A350, I can see them expanding their 787 order to be able to fully replace the 767s and A330s. I would be very surprised if the airline ordered 787-10s, the largest variant. In a long term perspective, this could be a very reasonable decision.
Having fleet commonality, as well as a consistent product, would be something that would benefit the airline. The last possibility that could result if the airline cancels the order, is American adding orders for the A330neo. This would mean pilot training would be minimized, given the commonalities with the current fleet. The A330neo is an A330 with modern engines. This could give American the flexibility to add to its fleet, without the need for pilot training.
Landing Thoughts:
It makes me very sad to think that American may cancel the A350 orders they have. The aircraft offers passengers a very pleasant journey. American has many options as to how to proceed, but if they ultimately cancel the A350, they should commit to the 787. This would give the airline a way to ease the integration of flight crews from the merger (which has not happened). On a much longer run, American may be interested in ordering the 777X in order to replace the majority of the 777 fleet. Many of these aircraft are receiving interior facelifts, but their hardware is getting old. However, I believe that American could find a niche for the A350. They would be very well suited for flights from the East Coast to Europe. This could allow American to grow in Philadelphia, Charlotte, Miami and New York. The aircraft, similar to the 787, can help American open new routes, hopefully to new destinations. We will have to see what happens in the next few months.
What do you think? Should American Airlines cancel the A350? If so, what should they replace the aircraft with, A330neos or 787s? Let us know!
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H/T: Bloomberg
Images from: Airways Magazine, FlyAway Simulation, and Wikimedia.
Personally, I think they will drop the 350 and either push for a combined 787/777 order or a mixed 787 order to go with their 737 order. Boeing would be keen to get AA’s business by pushing “one brand, same maintenance and training.” Then again, with their 320 family order and the very slow selling 330 NEO, Airbus could indeed pull a wildcard with priority pricing and “one brand, same maintenance and training.”
But looking at AA’s existing order for the 787, their happiness with the 787 and the 777, I think they’ll push the 350 aside and stick with Boeing.
Im sure Airbus would let AA swap A350 slots, which in in very high demand, for A330neo slots, which are not in such high demand. Moreover, by most measures AA is the biggest airline in the world. They also continue to buy Airbus products. Airbus cant afford to push them too hard on this order or when the time comes for them to consider more Maxs vs. more Neos (right now they are ordering em pretty equally).
Hi Dan! Thanks for reading,
I agree with them letting AA switch to A330neos. I hadn’t given thought to the MAX vs NEO for narrowbodies. If Airbus does in fact give them a hard time, they will probably flock to Boeing and buy hundreds of MAX jets, which would be a major hit to Airbus. Do you think this is likely?
Best,
The Millennial Traveler
Just flew SQ A350s and was surprised at how quiet they were. The only “new” plane where I’ve noticed significant noise reduction. We were at far front of airplane (row 11- front row, go figure) and there was no forward galley, so away from all the usual noise. Very pleasant. That said SQ biz is meh. 15+ hour flight SIN-SFO and no PJs, and amenity kit was sad excuse. Really need a F cabin on such a long flight.
Hi Disqust101,
I haven’t had a chance to fly SQ, but I have heard lots of good things about them. I am surprised the amenity kit was that bad. I also would like to see them offer more First class seats on more aircraft, but most airlines are doing away with them. I think by the end of the next decade First will be all but a memory. 🙁
Best,
The Millennial Traveler