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American delays some of its Dreamliner orders

American Airlines says it will delay five of its Dreamliner aircraft orders as international demand is not growing as fast as initially expected.
American Airlines says it will delay five of its Dreamliner aircraft orders as international demand is not growing as fast as initially expected. Star-Telegram

American Airlines told investors it is delaying a few of its Boeing 787 Dreamliner orders in 2016.

“While [international] demand is still growing it’s not growing as fast as supply,” said American president Scott Kirby.

The Fort Worth-based carrier said it amended its delivery agreement with Boeing to defer four 787 aircraft deliveries from 2016 to 2017 and one 787 aircraft from 2017 to 2018. The delay is not related to production issues with the new lie-flat seats being installed on the Dreamliners for its business class, the company said. Earlier this year, Boeing parked two of American’s 787 aircraft in the desert as it waited for the delivery of the new seats.

Here’s a few other tidbits from the company’s earnings conference call with investors this morning.

-Lower fuel prices boosted American’s profits tremendously in the first quarter. American said it spent $1.9 billion for fuel in the first quarter, which was $1.4 billion lower than what the airline paid in the first quarter of 2014.

Chief financial officer Derek Kerr said the airline expects to save $4.35 billion in fuel costs alone for 2015.

-American is facing stiff competition from Southwest Airlines and its new service out of Dallas Love Field. It has softened revenues on markets out of DFW, the company said.

However, the carrier has no plans to cut capacity at DFW, Kirby said. With the lower fares, there are more customers buying tickets so on many of these routes, Kirby said the airline is up-gauging to larger aircraft.

When asked if he thought the lower fares on routes out of North Texas were promotional or permanent, Kirby said he thinks this may be the new normal for fares in the area.

“I tend to think we’re near the clearing price where we’re pricing to the demand that there is today,” Kirby said.

-American chief executive Doug Parker further explained his decision to take all of his executive compensation in the form of company stock instead of a mix of cash and equity.

“It seems to me my compensation should be paid in the same currency that we ask our shareholders to accept,” Parker said. “I wouldn’t be doing this if I thought we were in the same old airline business, because it’s not.”

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