American Airlines Group Inc. is currently in talks with both Airbus SE and Boeing Co. to potentially order over 100 narrowbody jets, which would help replace some of the oldest aircraft in their existing fleet. People familiar with the matter have revealed that American Airlines is considering Boeing's 737 Max and Airbus's A321neo as potential replacements for their aging 737-800, A319, and A320 single-aisle models, with the aircraft deliveries expected to take place late in this decade. The estimated value of this potential order is around $6 billion, according to Bloomberg Intelligence's plane-value estimates.
It is also speculated that the actual deal size could exceed 200 aircraft, including commitments for future purchases. Currently, American Airlines has approximately 255 aging workhorse jetliners in its fleet, which are nearing the two-decade mark, where maintenance costs significantly increase.
Although these negotiations have been ongoing for several months, the executives involved are not yet close to making a final decision, as stated by the people familiar with the matter.
In response to queries from Bloomberg, an American Airlines spokesman stated, "We continually evaluate our fleet and our future aircraft requirements. We are talking to Boeing and Airbus about our narrowbody aircraft needs for the latter half of this decade and beyond."
Representatives of both Airbus and Boeing declined to comment on the matter.
The potential order by American Airlines would contribute to the recent trend of mega-deals in the aviation industry, as demand for narrowbody airliners continues to soar. Other major carriers such as IndiGo, Ryanair, and United Airlines have also been placing significant orders for hundreds of aircraft at a time. Airlines are seeking to secure delivery slots due to the slower production rates at Boeing and Airbus following the impact of the COVID-19 pandemic.
American Airlines is still in the process of receiving the final deliveries from its landmark 2011 deal, which included 460 narrowbody jets. This deal played a crucial role in persuading Boeing to move forward with the 737 Max. With subsequent transactions, American Airlines is expected to receive an additional 148 single-aisle aircraft through 2027.
While the airline's executives have recently started discussing the possibility of longer-term orders, they emphasize that there is no rush as their fleet is relatively young. During an earnings call on July 20, Devon May, the airline's CFO, stated that American Airlines anticipates spending approximately $3.5 billion annually on aircraft until the end of the decade.
American Airlines CEO, Robert Isom, mentioned during a town hall meeting that the company will eventually need to acquire new aircraft beyond 2027, adding, "At some point, I wouldn't be surprised if we make a commitment to some narrowbody aircraft as we get past 2027." Isom reassured employees that he is not concerned about IndiGo's recent 500-jet order affecting American Airlines' ability to secure new planes when they require them, stating, "I do expect that we get appropriate regard in terms of their attention."