Airbus Grabs Edge in Midsize Jets -- WSJ

Date : 06/20/2019 @ 8:02AM
Source : Dow Jones News
Stock : American Airlines Grp., Inc. (AAL)
Quote : 34.22  0.61 (1.81%) @ 12:43AM

Airbus Grabs Edge in Midsize Jets -- WSJ

American Airlines (NASDAQ:AAL)
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By Robert Wall and Andrew Tangel 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (June 20, 2019).

LE BOURGET, France -- American Airlines Group Inc. agreed to buy 50 long-range, single-aisle jets from Airbus SE -- a big order for a new plane that leaves rival Boeing Co. behind in a new race to dominate a potentially promising market for midsize aircraft.

Airbus unveiled its new A321XLR, a fuel-efficient, narrow-body jetliner capable of flying between Europe and the middle of America, on Monday. It has racked up a series of big orders for the aircraft this week at the Paris Air Show here.

Boeing has plans for a similar plane, but has been distracted by the grounding of its 737 MAX, after two deadly crashes. This week, Boeing executives said the company hasn't yet decided whether it will go ahead with a competitor to the A321XLR.

American's large purchase stands as an early endorsement for the Airbus plane from an important customer.

It also carries some symbolism. When American in 2011 planned to buy Airbus's fuel-efficient A320neo, it caught Boeing executives by surprise and prompted an acceleration of the design of the 737 MAX, which was a hit with airlines until its grounding earlier this year. American, in 2011, split its 460 plane orders between the two manufacturers.

American was long seen as a prime potential customer for the Boeing aircraft that is still on the drawing board. Airbus's early success with the XLR could chip away at any future Boeing sales to American and other airlines. The XLR is also expected to enter into service at airlines at least two years earlier than the Boeing rival.

Boeing shares fell after the order announcement, closing off 1.4% at $368.63.

American President Robert Isom said the XLR "creates opportunities for us." The company says the plane could potentially fly passengers from East Coast cities to Europe. Trans-Atlantic routes are among the world's most lucrative.

Airlines, when sizing up new, long-haul routes, have increasingly embraced using smaller jets such as Airbus's A320 and Boeing's 737 to serve smaller cities that don't warrant a big jet. The most recent iterations of those smaller jets have both been updated with superefficient engines, while their small size gives airlines more flexibility to fly passengers to more cities "point to point," in industry jargon, or without a layover.

American will convert 30 existing orders for other Airbus single-aisle planes to the new XLR and buy 20 on top of that, the Toulouse, France, manufacturer said Wednesday. American's first XLR is due for delivery in 2023.

Airbus is designing the XLR in part to enable airlines to fly trans-Atlantic routes with a single-aisle plane, rather than with more costly wide-bodies. The jet will have a range of 4,700 nautical miles. Midsize planes generally seat between 230 and 270 passengers.

Boeing's answer to the XLR would replace its out-of-production, midsize 757, as well as larger 767s. American and other big U.S. carriers, including United Continental Holdings Inc., have large, aging fleets of these jets that will need to be replaced.

Boeing has said its XLR competitor plane would be ready by 2025, but analysts say its 737 MAX crisis could delay the time line.

Airbus on Wednesday also won deals from Qantas Airways Ltd. for 36 of the midsize planes and from airline investor Indigo Partners, which is buying 50 for use by budget carrier Frontier Airlines Inc., Europe's Wizz Air Holdings PLC and JetSmart in Chile.

British Airways parent International Consolidated Airlines Group SA this week ordered the plane for its Aer Lingus and Spanish unit Iberia to fly to the U.S.

The orders come as new entrants are pushing into the trans-Atlantic market with new planes. JetBlue Airways Corp. this year laid out plans to fly from the East Coast to London using single-aisle jets.

Frontier Airlines Chief Executive Barry Biffle said the U.S. discount airline would consider trans-Atlantic service with the jet. Frontier will get 18 of the XLRs, he said, but sees room for 100 to 150 in its long-term fleet plan.

--Doug Cameron contributed to this article.

Write to Robert Wall at robert.wall@wsj.com and Andrew Tangel at Andrew.Tangel@wsj.com

 

(END) Dow Jones Newswires

June 20, 2019 02:47 ET (06:47 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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