July 14, 2011 / 9:27 AM / 6 years ago

Boeing wants to please American Airlines-executive

WASHINGTON (Reuters) - Boeing Co (BA.N) will do whatever American Airlines, one of its most loyal U.S. customers, wants it to do as the carrier gears up for a big aircraft order, the head of Boeing’s commercial airplanes division said on Wednesday.

American Airlines, a unit of AMR Corp. AMR.N, is in talks with plane makers on an order for more than 250 narrow-body jets. The order could be split between Boeing and its top rival Airbus EAD.PA, a move that would allow the European challenger to gain ground on U.S.-based Boeing’s home turf.

Some experts say pressure from American could force Boeing to decide more quickly whether to redesign its best-selling 737 plane or to upgrade it with just a new engine. Airbus is putting a new engine in its competing A320 and has raked in impressive orders for the upgraded model.

“We’re in talks with that customer, and I‘m not going to comment on the things we’re discussing,” Jim Albaugh, chief executive of Boeing Commercial Airplanes, told Reuters after a speech in Washington D.C. “We’re going to do whatever American wants us to do, and they’re an important customer to us, and we’ll see what the outcome is.”

In his prepared remarks to the National Aeronautic Association, Albaugh said Boeing would not be rushed into a decision. Boeing has been assessing its ability to redesign the 737 and has said it hopes to give clearer direction on the program by the end of the year.

A redesigned plane would take longer to bring to market, but would provide greater fuel efficiency.

“We’re going about that in a very measured way,” Albaugh said. “We’re going to do precisely what our customers want us to do. We’re going to take our time and be responsive to competition and responsive to what our customers want us to do.”

But as Boeing agonizes over this choice, EADS unit Airbus is making inroads into the market with its upcoming A320neo. At last month’s Paris Air Show, Airbus racked up firm orders for almost $50 billion of neos, including orders from U.S. carriers JetBlue Airways (JBLU.O) and Republic Airways Holdings RJET.O.

    The Airbus competes with Boeing for narrow-body jet sales estimated at $1.7 trillion over the next 20 years. Boeing has unfilled orders for 2,109 737s on its books and has taken net orders for 104 of the planes this year.

    Sources close to discussions say American is deep in talks with Boeing and Airbus, and its board of directors could be presented with options when it meets next week ahead of the company’s quarter earnings release, which is on Wednesday. American Airlines has declined to comment on future orders.

    Even a small American Airlines order for Airbus planes would mark a significant shift in loyalty by the airline, which flies an all-Boeing mainline fleet.

    “If, in fact, American did a split order, questions would be asked,” said Craig Jenks, who heads Airline/Aircraft Projects Inc consulting firm in New York. “Investors and analysts with a Boeing orientation would be concerned.”

    Boeing shares were up 54 cents at $72.47 on the New York Stock Exchange. (Reporting by Malathi Nayak and Karen Jacobs. Editing by Steve Orlofsky and Robert MacMillan)

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