American Airlines Bets Billions on Greener Jets

Thu Jul 21, 2011 1:00am EDT

American Airlines yesterday announced what it says is the largest aircraft order in history -- and one that will make its fleet the nation's most fuel-efficient.

The massive new order -- 460 planes from Boeing and Airbus, with an option for 465 more -- is focused on bringing even more fuel efficiency to its business: The first shipment of aircraft will be 35 percent more fuel efficient than models they'll be replacing, while the second batch will boost efficiency another 15 percent to 20 percent.

"The environmental footprint improvement really comes from those fuel efficiency gains," said American Airlines Spokesman Ed Martelle. "If we're using less fuel, we're dumping less carbon into the atmosphere."

Jet fuel is responsible for 98 percent of American Airlines' direct carbon footprint, so it's no surprise that the company has focused its efforts and spending on fuel use. And they've had some significant successes: Since 2001, AA has cut its fuel consumption by 10 percent, with decreases every year since 2004.

The new jet order, reportedly valued at around $38 billion, will put a dent in the company's fuel consumption and also move American Airlines closer to its goal of improving its greenhouse gas intensity -- metric tons of carbon measured against passengers and cargo transported -- by 30 percent between 2005 and 2025. The company is lagging a bit on this goal, achieving just a 6.8 percent drop in greenhouse gas intensity between 2005 and 2010.

Here's a look at the order:

• 100 Boeing 737 Next Generation family aircraft, beginning in 2013
• 130 Airbus A320 family aircraft, beginning in 2013
• 100 Boeing 737s powered by CFM International's LEAP-X engine, beginning in 2017
• 130 A320 neos family aircraft (New Engine Option), beginning in 2017
• Deal includes options for another 465 Airbus A320 family and Boeing 737 family aircraft, beyond this initial order

The Boeing and Airbus aircraft entering American Airlines' fleet in 2013 will be 35 percent more efficient than the MD-80s they are replacing, while the re-engined 737 and A320 neos going into service after 2017 are expected to be at least 15 percent more fuel efficient than those. American plans to replace 240 MD-80s.

"If we replace all of those with just the existing 737s, the ones we have on order, we'll see a 35 percent improvement in fuel usage," he said. "Some of the Airbus models we've contracted for today also will share that kind of improvement. Where life gets interesting is in 2015, 2016, or 2017 when we start taking delivery of Airbus A320 neos. Those airplanes will be 15 to 20 percent more efficient than the 737s we're flying now."

Although the environmental benefits of the new aircraft will enhance American Airlines' environmental profile, it's the economics and price of jet fuel driving the deal's business case. The price of jet fuel was 52.5 percent higher last week than a year ago, according to the International Air Transport Association.

"When fuel prices were 75 cents a gallon, saving 5 percent meant nothing," said Mike Boyd, an aviation analyst with Boyd Group International. "When it's $4 a gallon, the savings are huge."

Image courtesy of American Airlines.

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