To boost profits by taking advantage of the surging demand for premium travel, American Airlines revealed on Monday that it had placed its most significant plane purchasing order in over a decade, purchasing 260 new jets from Airbus, Boeing, and Embraer.
The contract includes 90 Embraer E175 planes, 85 Airbus A321neos, and 85 Boeing 737 MAX 10s. Options and buy rights on an additional 193 aircraft are included.
Travel demand is back, according to Robert Isom, CEO of American Airlines, during an investor conference.
The deal is a massive win for Boeing, the aircraft manufacturer has been in the spotlight ever since an incident on January 5th, when a 737 MAX plane’s door plug blew out in flight, exposing terrified passengers to the outside air.
The MAX 10, the largest version of Boeing’s 737 MAX planes, has never been ordered by American Airlines.
The FAA in the US has not yet issued a statement regarding the plane’s certification. Following the incident on January 5th, the certification has come under renewed scrutiny.
The company expects to get its first MAX 10 aircraft in 2028. Options to upgrade to the MAX 8 or MAX 9 are also available to the Texan carrier for such orders.
On Monday, shares of American Airlines closed at $14.81, a decline of 5.4%.
There will likely be additional high-margin premium seats available on American’s domestic and short-haul foreign routes due to the purchase of the new plane.
Premium travel demand soared following the epidemic, which was good news for American, United, and Delta Air Lines (DAL.N).
The co-branded credit cards are another source of income growth for the business. The sale of miles to third-party partners has made the programs a cash generator for carriers.
After projecting a profit margin of 14% for this year, America anticipates a significant increase to 15%-18% in 2026, leading to over $3 billion in free cash flow.
