Why AA Ditched Its A350 Order in Favor of the Dreamliner
In case you missed the news Friday night, American Airlines and Boeing announced that the world's largest airline would be buying an additional 47 Dreamliners. This massive order is valued at $12.3 billion at list price, but — as with all aircraft purchases — the airline will likely only pay a fraction of that.
As part of this order announcement, AA also stated that it'd cancelled its Airbus A350 order. In all, this announcement is a huge win for Boeing and a sharp blow to Airbus. But, the question many might be asking is "why?"
Could this decision be American Airlines taking an "America First" or "Buy American" stance? Is the airline afraid that an escalating trade war could make Airbus aircraft more expensive? Or, could it be that the Dreamliner provides better reliability and passenger comfort?
All of those may or may not be factors, but they certainly aren't the primary factor. The simple answer to why AA ditched the A350 and ordered more Dreamliners is: simplicity.
And you don't have to take my word for it, American Airlines released an internal podcast last night after the announcement was made public speaking to the reason behind the change. "America First," tariffs, passenger experience... none of that came up in the podcast. Instead, phrases like "[avoiding] adding complexity to the fleet" and "from a commonality standpoint and an operations standpoint" were the reasons given by AA's Chief Financial Officer Derek Kerr.
https://soundcloud.com/american-airlines-internal-news/13-apr-6-2018-decisions-to-make-with-our-fleet-derek-kerr
From a fleet planning perspective, American Airlines management is currently obsessed with one thing: operational simplicity. That's why AA is about to spend a lot of money on its "Project Oasis" — AA's euphemism for reducing seat pitch in economy on its Boeing 737 and Airbus A321s.
AA's goal is clear: the airline wants to have the exact same number of seats on each of its aircraft types. Rather than having 304 Boeing 737-800s with 160 seats and another 100 Boeing 737 MAX with the exact same fuselage but 172 seats, AA would much rather have 400+ Boeing 737s with 172 seats that it could use interchangeably. Ditto with its fleet of 219 Airbus A321s. That way, if a 737 MAX has a mechanical problem, AA can swap in a 737-800 without having to potentially bump 12 passengers.
In addition, AA wants to reduce its total number of sub-fleets. As of Media & Investor Day in late September, AA reported having 52 different aircraft configurations, and that management wanted to drop this number to 30. With that being the goal, bringing on a new aircraft type (such as the A350) just doesn't make sense, but doubling down on the Dreamliner definitely does.
As of late January, AA's widebody fleet schedule looked like this:
| MAINLINE | YE2017 | YE2018 | YE2019 | YE2020 |
|---|---|---|---|---|
A330-200 | 15 | 15 | 15 | 15 |
A330-300 | 9 | 9 | 9 | — |
A350 | — | — | — | 2 |
B767-300 | 24 | 24 | 24 | 24 |
B777-200ER | 47 | 47 | 47 | 47 |
B777-300ER | 20 | 20 | 20 | 20 |
B787-8 | 20 | 20 | 20 | 20 |
B787-9 | 14 | 20 | 22 | 22 |
TOTAL | 149 | 155 | 157 | 150 |
Hopefully we will get a full update of this schedule soon. However, from what we know so far, here's the plan for each of these:
- A330-200 (15 aircraft in current fleet): Maintain fleet
- A330-300 (9): Retire in 2020
- A350: order cancelled
- B767-300 (24): Retire by 2022
- B777-200 (47): Replacing some older aircraft, but maintain the remainder
- B777-300 (20): Maintain fleet
- B787-8 (20): More than doubling the fleet starting in 2020
- B787-9 (15): More than doubling the fleet starting in 2023
As you can see, the choice to double down on the Dreamliner instead of the taking delivery of A350 or ordering A330neo aircraft simplifies AA's fleet significantly. By the end of 2022, the current plan would mean AA would have just five types of widebodies: Airbus 330-200, Boeing 777-200, Boeing 777-300, Boeing 787-8 and Boeing 787-9.
But it could get even simpler than that. In the details of yesterday's massive order, AA also has options to buy more Dreamliners. The airline could do so as replacements for its A330-200s, leaving an all-Boeing widebody fleet.
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| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
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Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.