AMR Corp. was supposed to have figured out by today which airplanes it wants to keep.
Since filing for Chapter 11 bankruptcy Nov. 29, the Fort Worth-based company, which operates American Airlines and American Eagle, has decided on about one-fifth of its 1,000-plus aircraft fleet.Newer Boeing 737-800, Boeing 777-200 and Bombardier CRJ-700 planes are keepers, while older MD-80s, Boeing 757-200s and Fokker 100s parked in New Mexico are not.As the 60-day court deadline for Section 1110 notices on aircraft approaches, American will be in U.S. Bankruptcy Court today asking to get out of leases on 18 aircraft. American has filed for extensions on more than 400 aircraft, including all 216 ERJ-145s it operates in its Eagle fleet, that will be presented to the court for signing in the next week, and it's likely to file more.If American does not tell the court that it wants to keep an aircraft, renegotiate its lease or abandon the lease within 60 days of bankruptcy, lenders can repossess the aircraft, Deutsche Bank analyst Michael Linenberg wrote in an investor note last week."While the repossession of in-service is not the preference of most financiers, it is generally even less desired by an airline given the risk of operational disruptions that the loss of more than a small number of aircraft can create," he said.Although some industry experts have said American will be much smaller when it emerges from bankruptcy, its fleet probably won't look much different than now."But American will be paying less for what they're flying right now," said Mike Boyd, an airline consultant at Boyd Group International.As of Sept. 30, American had 616 aircraft and 52 that it leased or owned but did not operate. American Eagle had 299 aircraft and 44 leased or owned but not operating.Analysts say that it makes sense for American to get rid of gas-guzzling MD-80s but that the carrier simply can't replace the 211 operating MD-80s fast enough.Instead, it is trying to renegotiate aircraft leases to cut interest payments and the length of leases so it can dump the older planes quickly when new planes ordered from Boeing and Airbus start arriving in 2013."What they are trying to do is time these leases with the MD-80s so they coincide with the deliveries they get with the large orders from Boeing and Airbus," said Bob Herbst, founder of AirlineFinancials.com.In July, the company announced plans to purchase 460 aircraft from Boeing and Airbus in the next decade as it retired aging MD-80s and Boeing 757s and 767s. The bankruptcy court has not approved American's fleet renewal plan but has allowed delivery of 32 Boeing 737-800s, scheduled for this year.The carrier has also filed renegotiated leases on a few 767s and 757s, and analysts expect to see more in coming days. The renegotiated leases are sealed per court order."If they can bring down a third of the debt cost on those airplanes, it's a home run," Boyd said.Andrea Ahles, 817-390-7631Twitter: @Sky_Talk
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