October 24, 2019 / 3:19 PM / a month ago

American, Spirit eye more Mobile deliveries to avoid Airbus tariffs

CHICAGO (Reuters) - American Airlines Group (AAL.O) and Spirit Airlines (SAVE.N) executives said on Thursday they were working with Airbus SE (AIR.PA) to mitigate the impact of U.S. tariffs on European-made aircraft, including having more planes delivered from Mobile, Alabama.

FILE PHOTO: A logo of low cost carrier Spirit Airlines is pictured on an Airbus plane in Colomiers near Toulouse, France, November 6, 2018. REUTERS/Regis Duvignau

Airbus’ U.S. plant is not subject to a 10% tariff recently announced by Washington following a long-running trade dispute.

“We’ll do everything we can to talk to Airbus to try to get them out of Mobile (...) instead of Hamburg,” American Chief Financial Officer Derek Kerr said on a conference call.

American, one of the largest customers of the A320 family, expects 21 deliveries over the next two years, with nine already scheduled out of Airbus’ plant in Mobile.

But six orders are due to come from Hamburg and the origin of another six have yet to be determined, Kerr said.

U.S. airlines have said the tariffs should not be applied to prior aircraft orders, the bill for which they have warned would fall on U.S. citizens, and have called on authorities to work out a resolution.

“I don’t think you should assume that if it’s not mitigated, that American Airlines would be where (the cost) is borne,” American Chief Executive Doug Parker said. “Having said that, what we really hope is that it never gets to that point.”

U.S. budget carrier Spirit, which became the first U.S. airline to pick European planes following the tariff with a provisional order for 100 Airbus A320neo-family jets unveiled on Wednesday, also said it was hoping for a resolution “over time.”

“Until then, it does remain a concern,” Spirit Chief Financial Officer Scott Haralson said on a conference call.

Spirit’s remaining Airbus deliveries for 2019 and nine firm orders for 2020 will come from Mobile, while two are due from Hamburg and the remainder are still to be determined, Haralson said.

Reporting by Tracy Rucinski; Editing by Sonya Hepinstall

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