Associated Press | Airbus parent company EADS says net profit down 41 percent in 1st half, keeps full-year goals

July 29, 2011 § Leave a comment

By The Associated Press
Published: 29 July 2011

PARIS — Airbus parent company EADS NV said Friday its first-half earnings fell from a year earlier as the impact of the weakening U.S. dollar offset higher commercial and military jet sales and record orders for its new A320neo fuel-saving jet.

EADS says in a statement it made a net profit of €109 million ($155 million) in the first half compared to €185 million a year earlier. The earnings included financial charges to account for a drop in the value of the European plane maker’s commercial backlog, which fell €28 billion because of the weakening U.S. currency.

Despite this EADS said it is on track to achieve its targeted earnings for the full year, with higher sales and stable profitability compared to a year earlier.

The company has booked record sales for its A320neo, a revamped version of Airbus’ A320 single-aisle workhorse jet that it claims will save airlines 15 percent on their fuel bill. Airlines struggling to eke out savings showed a large demand for the jet at the Paris Air Show in June, and the jet’s success was underlined last week when U.S. carrier American Airlines announced an order for 260 of the Airbus planes alongside an order for 200 of rival Boeing Co’s jets.

The deal was a major coup for Europe’s Airbus, which will break Boeing’s exclusive grip on American’s fleet. Airbus hadn’t won an order from American since the 1980s.

The A320neo is equipped with new more fuel-efficient engines designed by Pratt & Whitney and CFM, a joint venture between General Electric and Safran. Airbus is ramping up production of the A320 at plants in Toulouse, France, Hamburg, Germany and Tianjin, China to meet the strong demand.

The large order from American Airlines added to the 1,000 A320neos already on order by other airlines and has led some industry analysts to speculate Airbus would have to ramp up capacity even further, perhaps by building an assembly plant in the U.S.

EADS CEO Louis Gallois said there is “no concrete project” to assemble planes in the US.

“Everything could be considered but for time being any element on that is speculation,” Gallois said in a conference call with reporters.

In the first half Airbus took in 640 net new orders and delivered 258 aircraft. The company targets gross orders of more than 1,000 this year, and to deliver between 520 and 530 aircraft.

Reuters | Defense firms brace for tighter US budgets-analysts

July 27, 2011 § Leave a comment

By David Alexander
Published: 26 July 2011

* Core performance flat for second year running

* Program cuts from 2009 beginning to be felt

* Some firms may feel impact of tighter ’12 defense budget

WASHINGTON, July 26 (Reuters) – With military spending stagnant and the Obama administration looking at billions of dollars in cuts, the U.S. defense industry faces belt-tightening and consolidation over the next few years as companies begin to feel the pain, analysts say.

Core performance among the top 105 defense contractors was flat for the second year in a row in 2010, Deloitte consulting firm reported last week, and new business booked by the companies was not enough to replace the revenue collected from completed contracts, suggesting another stagnant year in 2011.

“That’s an indicator of the status of the industry, which is treading water at this point,” said Tom Captain, Deloitte’s vice chairman for aerospace and defense.

Loren Thompson, a defense analyst at the Lexington Institute think tank, said the industry was fairly healthy following a decade of growth in U.S. defense budgets. But program cuts two years ago — like the termination of the Air Force’s F-22 fighter and the Navy’s future cruiser — were beginning to affect the bottom lines of some firms, he said.

“Most of the cuts that are being made to work forces are pre-emptive rather than a reaction to major budget reductions,” Thompson said. “However, the industry senses that tough times have begun and expects … conditions to progressively deteriorate for some time to come.”

Defense contractors may begin to feel the bite in 2012. President Barack Obama is asking for $689 billion in defense spending for the 2012 fiscal year, about $35 billion less than 2011 — the first significant reduction in years. Congress may cut the military budget back even more as lawmakers wrestle with record budget deficits.

“We are now at the point where 2012 is becoming the year of defense funding contraction,” said analyst Jim McAleese, of McAleese & Associates.

FIRMS ANTICIPATE DECLINE

While Obama has asked for an increase of more than $20 billion for the Pentagon’s base budget, that amount is more than offset by the $41 billion decline in war funding due to the U.S. withdrawal from Iraq.

Some defense firms have already begun to anticipate the decline. Lockheed Martin (LMT.N) announced a voluntary layoff program for about 6,500 employees last week, a move that followed a series of cutbacks over the past year.

McAleese said Lockheed’s action appeared aimed at reducing general and administration costs and trimming overhead, steps designed to make the firm more cost-competitive as well as contributing directly to the bottom line.

“The Lockheed thing is good corporate governance,” McAleese said, adding there was no sign yet of an industrywide trend toward reductions. “Lockheed is getting out ahead of everybody else.”

Lockheed, the Pentagon’s No. 1 defense supplier by sales, topped Wall Street quarterly profit estimates in results reported on Tuesday as sales rose in its fighter jet and military plane division.

McAleese said that due to the nature of defense contracts for big weapons platforms like Lockheed’s F-35 Joint Strike Fighter — the military’s most expensive military hardware purchase — the company was unlikely to feel the effects of any budget tightening for a year or two.

Purchases of hardware like aircraft carriers, strike fighters, transport planes and refueling aircraft are all “long-term in nature, so in any one given year it’s very hard for a recession or decrease in funding to have a … catastrophic effect on the industry,” Captain said.

Signs of a defense budget cuts are likely to show up first in the business activity of service firms, McAleese said, because the Pentagon contracts for services within the year the funding is appropriated.

Service firms doing business with the U.S. Army are likely to be hit first, he added, because the Army will be hardest squeezed by reduced funding for the wars in Iraq and Afghanistan.

Budget cutbacks will inevitably hurt second- and third-tier defense firms, leading to pressure for consolidation as some less-profitable companies seek to exit the market and others look to gain scale to remain competitive.

“The stronger ones, the ones that have a more diversified customer base, the ones that are highly cost efficient and the ones that already have scale are the ones that are going to … survive,” Captain said.

Analysts said defense firms seeking ways to grow despite tighter Pentagon budgets would look increasingly to foreign markets or expanding areas of the U.S. military budget.

“You’ll see quite a bit of effort being made in countries outside of the traditional Western alliance where sales of military weapons platforms are increasing,” Captain said. “That’s in the UAE, Saudi Arabia and India, in particular, and to some extent Japan and Brazil. India, for example, is going to be spending $80 billion over the next five years.”

Defense companies also will be looking at new growth areas, such as cybersecurity, unmanned vehicles, mission software and intelligence, surveillance and reconnaissance. (Editing by Peter Cooney)

Reuters | Defense firms brace for tighter US budgets-analysts

Washington Post | Boeing beats profit estimates, boosts 2011 earnings forecast

July 27, 2011 § Leave a comment

The U.S. aerospace and defense giant posted a net profit of $941 million and said that commercial aircraft as well as a strong core performance across the company's businesses had produced a banner April-June period. //Mike Clarke/AFP/Getty Images


By Susanna Ray
Published: 27 July 2011

July 27 (Bloomberg) — Boeing Co.’s second-quarter profit beat analysts’ estimates, buoyed by higher commercial sales, and increased its forecast for full-year earnings.

Net income rose 20 percent to $941 million, or $1.25 a share, from $787 million, or $1.06, a year earlier, Chicago- based Boeing said in a statement today. The average estimate of 22 analysts surveyed by Bloomberg was for 97 cents. Sales climbed 6 percent to $16.5 billion.

Boeing shipped 118 jets in the period, four more than a year earlier, which is important because the company gets much of a plane’s purchase price upon delivery. Net orders slid to 65 from 68 a year earlier. Military sales fell 4 percent to $7.69 billion.

The planemaker pared its full-year forecast for deliveries by five planes to a range of 485 to 495 airliners. Boeing boosted its full-year profit projection by 10 cents a share to a range of $3.90 to $4.10, with revenue unchanged at $68 billion to $71 billion.

Boeing gained $1.75, or 2.5 percent, to $71.91 at 7:46 a.m. before regular New York Stock Exchange composite trading.

The first composite-plastic 787 Dreamliner and 747-8 jumbo jet will still reach their initial customers by September, Boeing said. Deliveries should total 25 to 30 787s and 747-8s this year, Boeing said. The company previously said that total would be 25 to 40, split about evenly between the two models.

Washington Post | Boeing beats profit estimates, boosts 2011 earnings forecast

Associated Press | Lockheed Martin 2nd-quarter net income falls, raises 2011 earnings outlook

July 26, 2011 § Leave a comment

In this Oct. 26, 2010 file photo, a Lockheed Martin F-22 Raptor ascends over C-130H aircraft belonging to the 94th Airlift Wing at Dobbins Air Reserve Base, Ga., shortly after taking off from the company’s Marietta, Ga., facility on its delivery flight to Langley AFB, Va. Lockheed Martin Corp. reported Tuesday, July 26, 2011, second quarter 2011 net sales of $11.6 billion, compared to $11.3 billion in 2010. //Lockheed Martin Corp., file/Associated Press


By The Associated Press
Published: 26 July 2011

BETHESDA, Md. — Lockheed Martin Corp. said Tuesday that its second-quarter profit dropped 10 percent, burdened by a charge tied to some job cuts and a pension adjustment. But its results still topped analysts’ expectations.

The aerospace and defense contractor raised its 2011 earnings guidance to a range above Wall Street’s forecast. It also increased the low end of its revenue guidance, but reduced the high end of that outlook.

Lockheed’s stock rose $2.19, or 2.8 percent, to $81.49 in premarket trading.

For the quarter ended June 26, Lockheed reported net income of $742 million, or $2.14 per share, down from $824 million, or $2.22 per share, a year earlier.

The job cuts-related charge, which is tied to its aeronautics and space systems units, lowered earnings by 18 cents per share.

In June Lockheed said it planned to cut 1,200 employees in its space systems equipment division. Two weeks later the company said it planned to cut 1,500 additional jobs within its airplane-making business.

And last week the Bethesda, Md. company announced a voluntary layoff program for about 6,500 U.S.-based employees. The program will be offered to salaried employees in the corporate headquarters and enterprise business services organizations.

Lockheed employs about 126,000 people worldwide.

Lockheed said the pension adjustment reduced its quarterly earnings by 41 cents per share. The current quarter’s results also included a tax benefit of 26 cents per share.

Analysts surveyed by FactSet predicted adjusted earnings of $1.94 per share.

Revenue rose 2 percent to $11.55 billion from $11.28 billion on increased revenue at its aeronautics and electronic systems segments.

The performance beat Wall Street’s revenue estimate of $11.45 billion.

Lockheed now foresees 2011 earnings of $7.35 to $7.55 per share on revenue of $46 billion to $47 billion. The company’s previous guidance was for earnings between $6.95 and $7.25 per share, with revenue in a range of $45.75 billion to $47.25 billion.

Analysts expect full-year earnings of $7.27 per share on revenue of $46.68 billion.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Washington Post | Lockheed Martin 2nd-quarter net income falls, raises 2011 earnings outlook

Washington Post | Defense-industry career track looking less certain

July 26, 2011 § Leave a comment

By Marjorie Censer
Published: 25 July 2011

A job with a defense contractor was once a prized — and stable — position in the Washington region.

But top Pentagon officials have called on defense contractors to trim their costs and have made cuts to some large programs. The push for efficiency has rippled through the defense industry, prompting some firms to cut back their workforce and generating concerns that some of the industry’s most skilled employees and prospects will reconsider their career options.

“The apprehension in the sector is generalized right now — nobody really feels like they’re safe,” said Loren Thompson, a defense industry consultant at the Lexington Institute. “As a consequence, people across the industry are examining their options and considering what they might do instead of their current jobs.”

Bethesda-based Lockheed Martin last week announced “voluntary layoffs,” offering severance packages to 6,500 employees, about 2,000 of whom are based in the Washington region. That followed more cuts last month when the defense giant announced it would lay off about 1,500 employees in its aeronautics business and 1,200 in its space systems business. This year, Falls Church-based General Dynamics said it would lay off 112 employees, or about one-third of its Woodbridge workforce, after a Marine Corps vehicle program was canceled.

Last year, Raytheon consolidated four District-area offices into a new Dulles campus to save on real estate costs.

While the Pentagon’s cutbacks have been limited to a few programs, industry officials are concerned that defense spending is likely to be reined in further as congressional leaders debate how to lower the budget deficit.

“It’s clear that the relatively benign environment that defense companies have faced over the past decade is ending,” said Philip Finnegan, director of corporate analysis at Teal Group. “The deficit talks are just one element of an increasingly challenging environment.”

At the same time that some firms are cutting back, the industry overall continues to struggle to attract enough highly skilled workers with security clearances. Engineers, scientists and software designers exiting college may choose to avoid a career in the defense industry as the sector continues to cut back, said Marion C. Blakey, president and chief executive of the Aerospace Industries Association, an industry group.

“If you begin to see young talent with technical degrees going elsewhere, it’s a genuine problem for our country from a national security standpoint and an economic standpoint,” she said.

Catherine Barrett, 36, said she became worried in 2007 when she was a military and federal affairs manager at Maryland’s economic development office. She jumped into real estate consulting, before landing a job last year as a health care consultant.

The “writing was already on the wall,” Barrett said. “I wanted to try to get ahead of the game and look at other markets.”

Some defense contractors are beefing up their lobbying efforts to head off more cuts.

The Arlington-based U.S. operations of BAE Systems named Erin Moseley, former president of District consulting firm Principled Strategic, to head its government affairs shop. She will focus on making connections with military officials early in the budgeting process, said Linda Hudson, president and chief executive of BAE’s U.S. unit.

“In this uncertain environment where we are fiscally constrained, this early customer involvement, early customer relationship is crucial,” Hudson said. “If you want to influence or be responsive to what the customer needs, you need to . . . get involved very early with the appropriate people in the Pentagon.”A job with a defense contractor was once a prized — and stable — position in the Washington region.

But top Pentagon officials have called on defense contractors to trim their costs and have made cuts to some large programs. The push for efficiency has rippled through the defense industry, prompting some firms to cut back their workforce and generating concerns that some of the industry’s most skilled employees and prospects will reconsider their career options.

“The apprehension in the sector is generalized right now — nobody really feels like they’re safe,” said Loren Thompson, a defense industry consultant at the Lexington Institute. “As a consequence, people across the industry are examining their options and considering what they might do instead of their current jobs.”

Bethesda-based Lockheed Martin last week announced “voluntary layoffs,” offering severance packages to 6,500 employees, about 2,000 of whom are based in the Washington region. That followed more cuts last month when the defense giant announced it would lay off about 1,500 employees in its aeronautics business and 1,200 in its space systems business. This year, Falls Church-based General Dynamics said it would lay off 112 employees, or about one-third of its Woodbridge workforce, after a Marine Corps vehicle program was canceled.

Last year, Raytheon consolidated four District-area offices into a new Dulles campus to save on real estate costs.

While the Pentagon’s cutbacks have been limited to a few programs, industry officials are concerned that defense spending is likely to be reined in further as congressional leaders debate how to lower the budget deficit.

“It’s clear that the relatively benign environment that defense companies have faced over the past decade is ending,” said Philip Finnegan, director of corporate analysis at Teal Group. “The deficit talks are just one element of an increasingly challenging environment.”

At the same time that some firms are cutting back, the industry overall continues to struggle to attract enough highly skilled workers with security clearances. Engineers, scientists and software designers exiting college may choose to avoid a career in the defense industry as the sector continues to cut back, said Marion C. Blakey, president and chief executive of the Aerospace Industries Association, an industry group.

“If you begin to see young talent with technical degrees going elsewhere, it’s a genuine problem for our country from a national security standpoint and an economic standpoint,” she said.

Catherine Barrett, 36, said she became worried in 2007 when she was a military and federal affairs manager at Maryland’s economic development office. She jumped into real estate consulting, before landing a job last year as a health care consultant.

The “writing was already on the wall,” Barrett said. “I wanted to try to get ahead of the game and look at other markets.”

Some defense contractors are beefing up their lobbying efforts to head off more cuts.

The Arlington-based U.S. operations of BAE Systems named Erin Moseley, former president of District consulting firm Principled Strategic, to head its government affairs shop. She will focus on making connections with military officials early in the budgeting process, said Linda Hudson, president and chief executive of BAE’s U.S. unit.

“In this uncertain environment where we are fiscally constrained, this early customer involvement, early customer relationship is crucial,” Hudson said. “If you want to influence or be responsive to what the customer needs, you need to . . . get involved very early with the appropriate people in the Pentagon.”A job with a defense contractor was once a prized — and stable — position in the Washington region.

But top Pentagon officials have called on defense contractors to trim their costs and have made cuts to some large programs. The push for efficiency has rippled through the defense industry, prompting some firms to cut back their workforce and generating concerns that some of the industry’s most skilled employees and prospects will reconsider their career options.

“The apprehension in the sector is generalized right now — nobody really feels like they’re safe,” said Loren Thompson, a defense industry consultant at the Lexington Institute. “As a consequence, people across the industry are examining their options and considering what they might do instead of their current jobs.”

Bethesda-based Lockheed Martin last week announced “voluntary layoffs,” offering severance packages to 6,500 employees, about 2,000 of whom are based in the Washington region. That followed more cuts last month when the defense giant announced it would lay off about 1,500 employees in its aeronautics business and 1,200 in its space systems business. This year, Falls Church-based General Dynamics said it would lay off 112 employees, or about one-third of its Woodbridge workforce, after a Marine Corps vehicle program was canceled.

Last year, Raytheon consolidated four District-area offices into a new Dulles campus to save on real estate costs.

While the Pentagon’s cutbacks have been limited to a few programs, industry officials are concerned that defense spending is likely to be reined in further as congressional leaders debate how to lower the budget deficit.

“It’s clear that the relatively benign environment that defense companies have faced over the past decade is ending,” said Philip Finnegan, director of corporate analysis at Teal Group. “The deficit talks are just one element of an increasingly challenging environment.”

At the same time that some firms are cutting back, the industry overall continues to struggle to attract enough highly skilled workers with security clearances. Engineers, scientists and software designers exiting college may choose to avoid a career in the defense industry as the sector continues to cut back, said Marion C. Blakey, president and chief executive of the Aerospace Industries Association, an industry group.

“If you begin to see young talent with technical degrees going elsewhere, it’s a genuine problem for our country from a national security standpoint and an economic standpoint,” she said.

Catherine Barrett, 36, said she became worried in 2007 when she was a military and federal affairs manager at Maryland’s economic development office. She jumped into real estate consulting, before landing a job last year as a health care consultant.

The “writing was already on the wall,” Barrett said. “I wanted to try to get ahead of the game and look at other markets.”

Some defense contractors are beefing up their lobbying efforts to head off more cuts.

The Arlington-based U.S. operations of BAE Systems named Erin Moseley, former president of District consulting firm Principled Strategic, to head its government affairs shop. She will focus on making connections with military officials early in the budgeting process, said Linda Hudson, president and chief executive of BAE’s U.S. unit.

“In this uncertain environment where we are fiscally constrained, this early customer involvement, early customer relationship is crucial,” Hudson said. “If you want to influence or be responsive to what the customer needs, you need to . . . get involved very early with the appropriate people in the Pentagon.”

Washington Post | Defense-industry career track looking less certain

Reuters | Aerospace execs say mergers key to growth: survey

July 25, 2011 § Leave a comment

Reporting by Karen Jacobs; Editing by Phil Berlowitz
Published: 22 July 2011

(Reuters) – Many aerospace and defense companies plan to use the cash on their balance sheets to acquire companies and expand into new markets as U.S. defense spending comes under pressure, a survey of executives by audit and advisory firm KPMG found.

In the survey of 100 senior aerospace and defense executives in June. two-thirds said they expected their companies to be involved as a buyer in a merger or acquisition deal in the next two years.

Martin Phillips, global head of KPMG’s aerospace and defense practice, said companies want M&A and joint ventures that will get them to adjacent markets and product lines, with a focus on international expansion.

“Is there going to be massive industry consolidation? Probably not,” Phillips said.

He said he expects larger companies facing dwindling U.S. defense contracts and flatter sales to aggressively buy smaller players that have high-demand products and services.

Global defense spending is under pressure as the United States and other nations look to reduce budget deficits. The Pentagon, the world’s biggest weapons buyer, has promised that the defense industry will not be immune from budget cuts.

Avionics supplier Rockwell Collins (COL.N) on Friday turned in quarterly earnings that disappointed and cut its full-year sales outlook, citing U.S. government funding delays and defense program terminations.

“Traditional sources of revenue are going to be lean over the next two to five years,” KPMG’s Phillips said.

Half of the 100 aerospace and defense executives surveyed said revenue and employment levels would stay flat or fall next year. When asked when their companies’ U.S. staffing might return to pre-recession levels, 63 percent said 2013 or later, while 6 percent responded “never.”

Reuters | Aerospace execs say mergers key to growth: survey

New York Times | Jet Order by American Is a Coup for Boeing’s Rival

July 25, 2011 § Leave a comment

The interior of a newly configured American Airlines Boeing 737. The airline placed an order for 200 of the single-aisle 737s. //Darrel Byers/Reuters

By Nicola Clark
Published: 20 July 2011

PARIS — American Airlines announced on Wednesday a record order for 460 single-aisle planes from Airbus and Boeing in a deal worth more than $38 billion. The order breaks the longstanding monopoly that Boeing has had with the airline and forced a significant shift in the company’s strategy.

American, based in Fort Worth, Tex., said that it planned to acquire 260 of the Airbus A320 aircraft and 200 Boeing 737s — half of which will be equipped with a new, more fuel-efficient engine. The move is a clear commitment by Boeing to revamp its best-selling 737 with new engines rather than develop an all-new version of the plane — a strategy that until now it had said most of its customers preferred.

The deal, which American described as the largest commercial aircraft deal in history, also includes options and purchase rights for as many as 465 additional planes through 2025.

The airline said Airbus and Boeing had provided a combined $13 billion in financing through lease transactions, which it said would fully cover the cost of the first 230 deliveries, set to begin in 2013. American said it expected to begin receiving its first Airbus and Boeing aircraft equipped with the more advanced engines starting in 2017.

“Today’s announcement paves the way for us to achieve important milestones in our company’s future, giving us the ability to replace our narrow-body fleet and finance it responsibly,” said Gerard Arpey, the chairman and chief executive of American and its parent company, AMR. “With today’s news, we expect to have the youngest and most fuel-efficient fleet among our peers in the U.S. industry within five years.”

The order represents a coup for Boeing’s European rival, Airbus, which has not sold new planes to American in more than two decades. American retired its last Airbus jets — a handful of A300 widebodies — in 2009.

“Not only have they sold jets to American, but they have forced Boeing’s hand into pushing for a re-engined 737,” said Saj Ahmad, an analyst at FBE Aerospace in London.

Of the 260 Airbus jets on order, 130 will be for the A320neo, an upgraded version of its A320, which Airbus expects to bring to market beginning in 2016. Airbus has been promising fuel savings with the A320neo of as much as 15 percent over current engines. The new plane is also expected to run more quietly, cost less to operate and be able to fly farther or carry heavier loads while emitting less greenhouse gases.

“This is significant for Airbus, but even more significant for Boeing,” said Howard Wheeldon, senior strategist at BGC Partners, a London brokerage. Boeing, he said, had been “chastened” by the market response to the A320neo, “which is making better headway than anyone had expected.”

Mr. Ahmad of FBE Aerospace agreed. “Boeing has said for months it wouldn’t rush to a decision. But now that they have had to react to this deal, they, too, will capture new swathes of orders.”

Airbus has said it expects to spend around $1.5 billion on the enhancements, and Boeing has placed the costs of fitting a new engine to the 737 within that range. Analysts had estimated that developing an all-new replacement for the 737 would probably have cost Boeing as much as $12 billion.

The 737s and A320s, each of which typically seats 150 to 180 passengers, have formed the backbone of the air travel system for decades. More than 10,000 of them shuttle passengers between large airports.

Boeing predicted last month that North American carriers would purchase more than 7,500 new airplanes between now and 2030, valued at $760 billion. Nearly three-quarters of those are expected to be single-aisle jets. Boeing currently holds a 51 percent share of the North American market, according to Ascend, an aviation consultancy based in London.

As recently as last month, Boeing had appeared reluctant to commit to a significant redesign of the 737 as it faced delays with the 787 Dreamliner. The company, based in Chicago, indicated at the Paris Air Show in June that it did not expect to make a decision until the end of this year on whether to revamp the 737 with new engines or to develop an entirely new single-aisle jet for delivery around the beginning of the next decade.

American trails Delta, United and Southwest among United States carriers in terms of number of passengers.

The new orders will help American update a fleet of more than 600 planes which, with an average age of 15 years, is one of the oldest among the six top United States airlines. Its stable of single-aisle workhorses includes more than 200 McDonnell-Douglas MD-80s, which average more than 20 years of age and went out of production in 1999.

Analysts noted that American’s move also places its competitors under pressure to update their fleets. Delta is also in talks with Boeing and Airbus and has said it aims to place an order by the end of the year. Southwest Airlines and United are also considering orders, according to industry executives.

“If fuel stays high, and AMR can start pricing fares based on operating aircraft with new-generation engines, everyone might need to respond,” Richard Aboulafia, an aviation analyst for the Teal Group, wrote in a note to clients.

Thomas Horton, AMR’s president, told analysts in a conference call that he expected the new aircraft would eventually reduce American’s overall fuel bill by 15 percent.

The effect of fuel on AMR’s bottom line was clear in the company’s second-quarter results, which were also announced on Wednesday. American paid an average of $3.12 a gallon for jet fuel in the quarter, up 32 percent from an average of $2.37 a gallon in the period a year earlier — an increase of $524 million. That fuel bill increase more than offset a $440 million gain in revenue, to $6.1 billion.

AMR reported a net loss of $286 million, compared with an $11 million loss a year earlier.

New York Times | Jet Order by American Is a Coup for Boeing’s Rival

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