On American’s earnings call this morning the airline tried to get ahead of disappointing financial performance both in absolute terms and relative to its largest competitors by announcing new aircraft deferments (reducing, or pushing into the future, capital expenses) and making other changes to their fleet in order to reduce the amount of product (seats) they sell.
- Some routes don’t make sense in light of higher fuel prices.
- Investors punish capacity growth because more seats mean lower fares. Of course an individual airline may make money with more seats, but when all airlines do it fares fall, so there’s a collective action problem. Since large investors generally own all airlines they attempt to enforce capacity discipline across the industry.
American is making the following changes to its fleet plan,
- Deferring delivery of 22 Airbus A321neos. American will take 17 A321neos in 2019, 15 in 2020, and 18 in 2021 while the deferred aircraft are expected to be delivered “beginning in 2024.” Any deliveries that far out are speculative at best.
- Early retirement for Hawaii 757s. American will retire the 10 Phoenix-based Hawaii Boeing 757s in 2019 instead of 2020, replacing them with A321neos (ETOPS-certified)
- Delay retirement of Embraer E190s. 14 E-190s will retire in 2020 instead of 2019.
- Adding 8 leased A319s. At the end of February I wrote that American was shopping the used market for Airbus A319s.
- Retiring fewer 737-800s. In March we learned that American planned to retire 45 of their 76 Boeing 737-800 Classics over the next two years, however I wrote that American’s previous deferment of some of their 737 MAX orders would mean that Classics would stay longer in the fleet (and go through Project Oasis interior conversion to look like 737 MAXs). American is retiring 15 fewer 737-800s in 2020 than planned.
American Airlines Airbus A319