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American Airlines Group Inc. is in talks with Airbus SE and Boeing Co. to order at least 100 narrowbody jets to replace some of the oldest aircraft in its fleet, according to people familiar with the matter.
The U.S. airline is considering Boeing’s 737 Max and Airbus’s A321neo to replace aging 737-800, A319 and A320 single-aisle models later this decade, said the people, who aren’t authorized to speak publicly about the discussions. The order may be worth around $6 billion, according to plane-value estimates by Bloomberg Intelligence.
The deal size could top 200 aircraft, including commitments for future purchases, two of the people said. American Airlines has about 255 workhorse jetliners in its fleet that are near the two-decade mark, where maintenance costs soar.
While the negotiations have been underway for several months, executives aren’t yet close to a final decision, the people said.
Read more: Boeing Struggling to Keep Pace with Airbus Through 2023 Despite June Deliveries
“We continually evaluate our fleet and our future aircraft requirements,” an American Airlines spokesperson said in response to Bloomberg queries. “We are talking to Boeing and Airbus about our narrowbody aircraft needs for the latter half of this decade and beyond.”
Representatives of Airbus and Boeing declined to comment.
American Airlines shares fell 2.3% at 10:12 a.m. in New York August 2, while Boeing declined 2% amid a broad equity market selloff. Airbus was little changed in Paris.
An order of that size by American Airlines would add to the trend of mega-deals as demand booms for narrowbody airliners. Indian dominant carrier IndiGo, European budget leader Ryanair Holdings Plc and United Airlines Holdings Inc. are among the carriers ordering hundreds of airplanes at a time in recent months. Airlines are seeking to lock in delivery slots as production rates at Boeing and Airbus lag behind pre-COVID-19 levels.
American Airlines is still taking the last of the 460 narrowbody jets it ordered from the plane-making duo in 2011, a landmark deal that convinced Boeing to move forward with the 737 Max. Including subsequent transactions, the airline is due to take 148 more single-aisle jets through 2027.
Read more: Boeing’s Main 737 Supplier, Union Forge Agreement to End Strike
Executives at the airline have begun to publicly discuss the possibility of longer-term orders in recent weeks but say they’re in no hurry given American Airlines’ relatively young fleet. The company expects to spend about $3.5 billion a year on aircraft through the end of the decade, Devon May, the airline’s chief financial officer, said during a July 20 earnings call.
“Look, we’re going to need aircraft,” said Robert Isom, chief executive officer of American Airlines, during a July town hall meeting. “At some point, I wouldn’t be surprised if we make a commitment to some narrowbody aircraft as we get past 2027.” The comment was first reported by the View from the Wing blog.
Isom also told employees he wasn’t worried that Indigo’s 500-jet order would preclude American Airlines from securing new planes when it wants them.
“I do expect that we get appropriate regard in terms of their attention,” he said in a video viewed by Bloomberg.
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