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Sat, Aug 16, 2008

American Airlines Speeds Replacement Of MD-80s

Commits To More Boeing 737-800s

The gas guzzlers' gotta go. American Airlines announced Wednesday it has accelerated its fleet renewal plan, by beginning the replacement process for a portion of its aging fleet of MD-82 and MD-83 twinjets with more efficient Boeing 737-800s.

Following approval by the Boards of Direcors at American and parent company AMR, the airline notified Boeing of its intent to begin pulling forward the delivery of 47 737-800s under a previously existing purchase commitment. American initiated this process by notifying Boeing that American will take delivery in early 2009 of three of these aircraft previously scheduled for delivery in 2016.

The airline intends to continue pulling forward deliveries of the other aircraft from their current 2013-2016 delivery schedules into the 2009-2012 timeframe... but cautioned that any decisions to accelerate aircraft deliveries will depend on future economic and industry conditions, and the financial health of the beleaguered airline.

"We believe that beginning to replace some of our MD-80s in a measured way makes economic sense and represents prudent and strategic reinvestment in our business that will bring long-term benefits to shareholders, customers and employees," said AMR Chairman and CEO Gerard Arpey. "Our existing agreement with Boeing gives us ample flexibility for our long-term fleet plan. While the MD-80 remains an excellent aircraft that serves us and our customers well, the new 737s will be a great addition to our fleet that will lower our operational costs, boost the fuel efficiency of our fleet and also bolster our efforts to lower emissions and noise levels."

Arpey added the revised contract includes the right to purchase additional 737s on short notice, well beyond the 47 committed aircraft. The agreement also includes the provision for possible orders for Boeing's 787 Dreamliner down the line.

American estimates the 737 consumes 25 percent less fuel per available seat mile than an MD-80. The airline's goal is to improve the fuel efficiency of its fleet by more than 20 percent by 2020.

"Strengthening our balance sheet remains a high priority and an important element of building a stronger financial foundation under our Turnaround Plan," Arpey said. "Our announcement today shows that we are taking action to strike the right balance between reinvestment in the business and the need for continued financial improvement. As we continue to improve our financial performance we will have more flexibility to reinvest in the business for the future." 

FMI: www.aa.com

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