American Airlines is Making a Big Mistake With its Boeing 767s

Early in the year American Airlines CEO Doug Parker described his airline’s Boeing 767-300s as a poor customer experience.

It’s certainly true that business class on the plane — while fully flat with direct aisle access — is uncompetitive. It’s a narrow, uncomfortable seat that feels like a coffin. The Thompson Vantage seat is one that many airlines have used for their 767s, but United is putting their Polaris seat in their 767s (which is marginally better) and Delta is putting suites with doors in their 767-400s.

American Boeing 767 Business Class

However it’s actually a good plane as-is,

  • In coach where passengers have more room than on American’s other aircraft. They haven’t densified the planes so passengers get at least 31 to 32 inches of space from seat back to seat back compared to the airline’s new standard of 30 inches and with a 2-3-2 configuration in economy there are very few middle seats.

  • In business class when flying the plane on the right routes so it’s far better than what American offers on many cross country flights. They’re putting 3-cabin Airbus A321Ts on Boston – Los Angeles but also flying domestic narrowbodies, they could replace those narrowbodies with 767s and have all flat business class on the route. The plane could fly certain European or South Aemrica routes where there isn’t non-stop competition, and it’s a better experience than the 737 MAX to Brazil.

However I understand that American has begun to retire 767s — specifically ships 381 and 389 are leaving the fleet. Used Boeing 767s are popular for cargo.

It’s amazing to me that American would rather retire their 767s than fly them — if not to experiment on European or South American routes they would work for transcons from their Miami or New York JFK hubs (the plan has been for 767s to go to the East Coast to retire). They could fly Chicago – West Coast, or Hawaii routes.

The planes aren’t that costly to operate especially with fuel prices dropping. Instead they’re taking new 787s while they fly 787s Chicago – Cancun and Dallas – Anchorage.

American Boeing 787-8

American’s stock has been a poor performer. They’re supposed to be making $3 billion to $7 billion every year (and “never lose money again”) but even then this isn’t a growth company so you shouldn’t expect AAL to be more than a trading stock. And in fact American isn’t even making money flying passengers, their profit is coming entirely from selling frequent flyer miles.

If they can’t generate a higher return with these 767s than shipping them off for cargo they shouldn’t be in this business. They’re selling 767s and buying new 787s, yet will maintain this is a shrewd financial move.

I’d love to see the airline keep these planes and invest in them, the way that Delta is. However without new seats and even with slow Panasonic internet they could be productively deployed to attract premium business on domestic routes at least.

American Airlines has an opportunity to grow the airline and improve the customer experience, but aren’t taking it. Instead they’re going to show restraint in growing the number of seats in the fleet (even while they add seats to planes) which may be all they can do to appease Wall Street analysts — management can’t get creative or aggressive with an underperforming stock. But that’s a status quo strategy, not a strategy to grow the value of the business.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. @George they have plenty of cycles left, blame AA’s techops, who have been slowing down the operation IMHO intentionally while they have been unable to secure a new contract

  2. It seems like you would criticize AA no matter what they do. If they had announced that they are delaying the retirement of the 767s then you have been jumping on them for it as well. Have they ever done anything right?

  3. All stocks are trading stocks, growth stocks in particular as they consistently lag broad indexes.

    You’re larger point is correct. American management is inept, but probably no less than its board.

    Hopefully it goes under and it’s assets end up being better deployed by more skilled managers.

  4. Don’t these frames require heavy maintenance after X hours? Maybe they rather take new 787s than do the heavy maintenance. I know UA was having that issue with some 757s.

  5. 767 should still be viable, AA has poor resource management and continues to underwhelm. Thinking that throwing resources (planes and raises) at this is an incomplete strategy, some may say it’s no strategy at all.

  6. When they upgrade the fleet they get to take impairment charges for the old fleet. They may just be taking this impairment into earnings while earnings are strong enough to absorb it without incident, versus leaving it until a recession where the earnings weakness might make financing much more expensive.

  7. I much prefer the 767 with its 2-3-2 coach configuration when traveling as a couple. Actually, the 2-2-2 first class angle flat was better for a couple on those overnight flights back from Hawaii.

    First world problems.

  8. I agree the 767 is a great domestic aircraft. Large and spacious J compared to regular domestic first class and much better economy experience with 2-3-2. It just feels nice flying domestic in a wide body. It would be nice if they would re-invest in them like Delta is, but even still I would rather keep them around.

  9. I have a lot of “backseat driver” issues with american’s fleet and route strategy; in general I think aircraft are underutilized (eg 777-300 rotation via JFK includes ~12hrs on the ground between GRU arrival and LON departure when they could add a morning flight towards Asia, the west coast or a long trans-Atlantic). For THIS decision however, there are more factors to take into consideration: 1) the 767 market is HOT right now – cargo operators like Prime are trying to find aircraft to convert and literally can’t, so they probably got a price well above book 2) from a fuel efficiency, maintenance and reconfiguration cost perspective to make the aircraft competitive, I would swap a 767 for a 787, 3) They may not need the capacity of both aircraft and if an aircraft order is firmed they need to take delivery one way or the other

  10. I like the 767 on AA, both up front and the back. The 2-3-2 is comfortable and the direct aisle access up front is my favorite way to fly: both a window and the direct aisle access. Don’t mind not having IFE, just give me a private seat to myself.

  11. I believe 100% correct and couldn’t agree more on everything Gary. Even if every frame is due for a heavy check, the dreamliners are so much more expensive that I cant imagine the 76 doesn’t come out a winner in urrent fuel environment. In my view an upgrade over the bouncy bounce of the 321T for those of us who can never get up front.

    United was rumored to be thinking about a NEW order for 76’s buying them cheap and helping keep the now military only production line open. So point the finger at AA tech as inferior to Delta if they cant keep them running.

  12. I fly AA767’s often from MIA-SJU and SJU-PHL. I agree they are more comfortable both in business and coach but their reability and safety concerns me the most. I have had multiple delays and a real scare with an emergency landing at MIA back in September.

  13. How many 2-3-2 widebody aircraft are being built these days?

    I’m pretty sure the answer is zero. Which explains why these aircraft are being retired: they don’t really make economic sense. Add in the fact that they’re old and tired. The bin sizes aren’t even modern. I’m sure they could be refurbished, but AA has determined that doesn’t make economic sense (no doubt due to the configuration). The idea that you can do the math — without the numbers — better than they can do the math is, um, silly.

  14. My last flight was on AA. And it will LAST fight period! Space for legs is unbelievable – in isle seat, I had to turn sideways and put my legs in isle to be comfortable (except when others used isle). I wii now drive or take a train – am dne being crammed in a tube !!
    Who agrees with me.

  15. I’m not a fan of AA but I think this might not be a “bad” management decision. I think they are thinking long term by selling most of the fleet and keeping the rest for cargo. Airlines get more revenue from cargo than pax “or passengers”. If you look at Air Freighter companies such as Fedex, UPS, and Amazon, they all have purchased “or leased” B767’s in the past 5yrs. These are pax B767s converted to freighter B767’s. Amazon has recently purchased 12 or 16 B767 Freighters. From “USPS mail, livestock, International pkgs, to Hazmat, you get more revenue from cargo and this might be the reason for the fleet sell off.

    The other aspect is fuel efficiency. On the International and long-haul routes, the B787’s are more fuel efficient and they out perform the B767’s. And then there’s “parts and maintenance”, look at AA Fleet as a whole, there are too many aircraft types and ground equipment that AA can sell off and save. AA can’t fill a lot of these seats in some cites so they fly as fuel cans. If AA sells off the B767s and stick with connecting narrow bodies (MD88’s, MD90’s, CRJ700, and CRJ900’s), they’ll eventual save in the long term. I hate to sound like a numbers guy but, fuel efficiency and downsizing is where AA needs to go.

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