Newspaper article THE JOURNAL RECORD

American May Buck Industry on Replacing Aging Fleet

Newspaper article THE JOURNAL RECORD

American May Buck Industry on Replacing Aging Fleet

Article excerpt

Fort Worth Star-Telegram FORT WORTH _ American Air- lines, which has a reputation for making decisions that buck industry trends, faces what its Chairman Robert Crandall called "one of the more difficult decisions we will face in the next several years" _ how to replace its aging fleet of McDonnell Douglas DC-10s. Many industry experts have long assumed that American will follow rival United Airlines' lead and place a order for the all-new Boeing 777. American is expected to place an order this summer that will total between $3.5 billion and $7 billion for DC-10 replacements. But Crandall _ during its annual shareholders' meet- ing of Amercan& Airlines' parent& company, AMR& Corp. _ hinted& strongly that Ameri- can is again prepar- ing to go its own way. Although many carriers _ including American _ are replacing older planes with larger aircraft, Crandall said Ameri- can is not yet comfortable with buying the 350-seat 777 to replace its 300-seat DC-10. He said American may make no decision at all this summer. Boeing is promoting its new 777 as the ideal replacement for the DC-10 and Lockheed L-1011. Although they are smaller than Boe- ing's more glamorous 747, the DC-10 and its nearly identical competitor, theL- 1011, have been successful because they are better suited to flying between major U.S. cities than the 747. Few domestic routes produce enough demand to justify using the larger 747, which costs more to operate. The 747 was designed more for long- range international routes _ especially across the Pacific _ while the DC-10 and the L-1011 were designed to fly longer domestic routes and shorter international routes _ like those over the North Atlantic. The oldest of American's DC-10s is approaching 15 years of service and will be retired this decade. To have ready replacements, the carrier must place an order relatively soon. "The important point to keep in mind is that no airline ever wants to have airplanes that are too big," Crandall said. "You can go broke if your airplanes are too big. You cannot go broke if your airplanes are too small." Peak seasonal demand on a particular route may require a larger aircraft, but the average year-round demand may not. Crandall said the rule of thumb used in determining which plane to buy is that "the larger plane will have lower set- mile costs and higher plane-mile costs. Which effectively means that a larger airplane has a larger fixed cost. The cost of simply flying it with nobody on it is higher than the cost of flying a smaller airplane with nobody on it," he said. So, if American, or any carrier, buys a big airplane, "you want to be sure that you've got lots of passengers to go on it on the average flight," Crandall said. …
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