American Airlines (AAL) Signs Deal To Buy As Many As 220 New Fuel-Efficient Aircraft From Bombardier (BBB.D), Embraer (ERJ) For $6B

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The U.S. Justice Department cleared the American Airlines-US Airways merger for takeoff in November.

American Airlines Group Inc. (NASDAQ:AAL) made agreements on Thursday with Embraer SA (ADR) (NYSE:ERJ) and Bombardier Inc. (TSE:BBD.B) to buy between 90 and 220 aircraft in a deal worth between $1 billion and $6 billion.

The deal includes a firm order of 60 E175 jets from Embraer and 30 CRJ900 NextGen aircraft from Bombardier with the option to increase the purchase to 150 and 70, respectively.

The move from 50-seat regional jets to 75- and 100-seat aircraft is a statement on intent from the airline as it moves toward a more fuel- efficient fleet. The new aircraft represent a 50 percent to 100 percent increase on current passenger numbers for regional-sized jets, but will save 5 percent on fuel, around $500,000 per year for the CRJ900.

The purchase is in line with other major airlines such as Delta Air Lines, Inc. (NYSE:DAL) and Deutsche Lufthansa AG (ETR:LHA), which have also switched to the slightly larger Embraer and Bombardier regionals to save on fuel. 

“It’s been an exciting week for American Airlines,” said Kenji Hashimoto, American Airlines senior vice president – regional carriers. “Now that we’ve closed our merger with US Airways, we can deliver a top-tier regional product that offers a First Class cabin, Main Cabin Extra and in-flight Wi-Fi – important elements of an improved flying experience for our customers. These new regional jets are also a big win for our employees at our wholly owned subsidiary, and will greatly improve economic efficiencies by lowering operating costs.”

US Airways bought the Texas-based carrier in a transaction that was concluded in November 2013, nine months after the combination was announced in February 2013. The delay was the result of a lawsuit filed by the U.S. Justice Department and several state attorney generals in August, who argued that the merger would mean less competition and higher prices.

The deal comes after the airline ordered 360 aircraft and took an option for 465 from Airbus, which is owned by EADS NV (EPA:EAD) and The Boeing Company (NYSE:BA), with the long-term goal of replacing their MD-80, 757-200 and 767-200 jets, which will gradually be retired. American Airlines claims this is the biggest order made in aviation history. 

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