American orders 260 new planes, says it will grow first class

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American Airlines flight 718, a Boeing 737 Max, takes of from Miami International Airport on its way to New York on December 29, 2020 in Miami, Florida.Joe Raedle | Getty Images

American Airlines said Monday it is ordering 260 new narrow-body jets, including dozens of Boeing's long-delayed 737 Max 10.

The order includes 85 of Boeing's 737 Max 10 planes and 85 of the Airbus A321neo, aircraft it says will help it upgauge on domestic and short-haul international routes. The Fort Worth, Texas-based airline is also ordering 90 Embraer E175 planes.

American's order is a vote of confidence for Boeing, which is struggling with a series of production flaws and certifications of new planes that have taken years longer than originally expected. Scott Kirby, CEO of rival carrier United Airlines, said earlier this year that his airline has been weighing fleet plans without its Max 10s because of the delays.

American's CFO Devon May said the airline has additional Airbus options for new aircraft as well as financial protections with Boeing, and the ability to take already-certified models if the Max 10 certification is further delayed.

"We don't in any way want to be harmed financially through any of these aircraft orders," May told reporters on Monday.

May said American currently expects the Max 10 deliveries to start in 2028.

He noted the Max 10, the largest of the Max family, wouldn't have lie-flat seats, but would be configured like some of the airline's A321neo aircraft, with about around 190 seats and about 20 first-class seats up front.

American said it would also convert orders for 30 Boeing 737 Max 8 planes, a model that is already a staple of its fleet, into the larger 737 Max 10s. The order includes purchase options for another 193 planes from the three manufacturers.

Boeing is facing additional scrutiny from the Federal Aviation Administration after a door plug blew out midair during an Alaska Airlines flight in January. That flight was operated on a Boeing 737 Max 9.

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American is planning to grow its first class on some of its narrow-body planes, the carrier also said Monday alongside its first investor day in more than six years. Starting in 2025, it will retrofit its older Airbus A319 and A320 planes to increase the number of first-class seats from eight to 12 and 12 to 16, respectively.

The airline is planning to retire its fleet of 50-seat, single-class regional jets in favor of the two-class planes, with in-seat power and satellite Wi-Fi by the end of the decade. The planes will be operated by American's wholly-owned regional airlines.

The aircraft orders are included in American's previous capital expenditure targets.

Airlines have been grappling with high demand for first class and other premium seats as more customers rack up points with credit cards and appear willing to shell out for more space on board.

American said on Monday that it expects about 80% of its revenue this year to come from "premium content," meaning products beyond the cheapest tickets, and its loyalty program, up from a 70% share in 2017.

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American orders 260 new planes, says it will grow first class

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