American Airlines accelerates Boeing 757, 767 retirements due to coronavirus
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American Airlines is making good on its threat to retire some older jets early due to the novel coronavirus pandemic with its Boeing 757s and 767s now due to leave the fleet by the middle of next year.
The move by the Fort Worth, Texas-based carrier to retire the jets makes American the first U.S. carrier to finalize any fleet changes due to the outbreak. The decision was coupled with an up to 50% reduction in international flying, particularly to Europe, beginning March 12.
American will now retire its remaining 17 767-300ERs by May, and its 34 757-200s by “post-summer 2021 at the latest,” the airline’s CEO Doug Parker and president Robert Isom told employees in a letter late on Thursday.
The retirements “removes older, less fuel-efficient aircraft from our fleet sooner than originally planned and avoids unnecessary maintenance and fuel costs,” they said. Parker and Isom did not comment on American’s 20 Embraer E190s, which they have also said could be retired earlier than year-end.
The 767s were due to leave American’s fleet in 2021, and the 757s around the time Airbus A321XLR deliveries begin in 2025.
American is not the only carrier considering retiring older jets early as travel demand slumps. Alaska Airlines could begin retiring its Airbus A320 family fleet in 2021, and some of its old 737-700s and 737-900s. Delta Air Lines could accelerate the retirement of some 767s, as well as all of its McDonnell Douglas MD-88s and MD-90s.
At United Airlines, executives said Tuesday that they had no plans to retire any jets early. However, they emphasized that the carrier would not take delivery of new aircraft unless they are fully financed with debt in order to preserve liquidity.
While American is opting to retire some older jets, carriers can go the other way as well: holding onto to their fleet and putting off new aircraft deliveries. A move like this preserves the capital needed to buy new planes and can take advantage of the drop in global oil prices.
At a J.P. Morgan conference on Tuesday, no U.S. airline executive speaking said they planned to defer new aircraft deliveries, at least not yet.
After the 9/11 crisis in 2001, American accelerated the retirement of more than 100 aircraft, including Boeing 717s and Boeing 727s, by mid-2002. The carrier continued to take delivery of new jets, albeit at a slower pace, including 757s and Boeing 777-200s.
American Airlines accelerated the retirement of its 50 727s, plus TWA’s DC-9s and 30 717s following 9/11. This amounted to more than 100 older aircraft gone by mid-2002. https://t.co/G8AdAFf4LH (???? Aero Icarus on Flickr) pic.twitter.com/FYHPY80Ypo
— Edward Russell (@e_russell) March 12, 2020
One of the considerations airlines take into account when making these fleet decisions is the cost of retiring an aircraft. Older jets tend to be owned and can be parked at little cost, while newer aircraft are often financed to leased creating financial penalties for an early retirement.
Featured image by Nicolas Economou/NurPhoto via Getty Images.
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