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Originally Posted by Dunkin
United is about to order 200 new NB jets, Delta needs to replace their 717s and 75/767 fleet, and SWA will be ordering more Max’s. These companies will be increasing their long term debt with these orders, AA already went through the process of updating their fleet in one large order years ago. AA’s gamble to replace the fleet in one large order vs spreading it out over the years backfired with COVID but all 3 legacies will most likely have similar debt levels in 5 years.
The issue there is that the AA fleet buy was earlier model engines. Of AAs 246 A321s only 33 of them are NEOs. Of their 303 737s only 41 are MAXs. That’s going to put them at a 15-20% fuel disadvantage over the newer engine models.
That plus the fact that the used aircraft market has cratered due to the COVID inspired bankruptcy’s and they may well be able to find good deals on late model used aircraft because of that. A lot of aircraft leasing agencies have planes sitting right now painted in colors of airlines that no longer exist. They are happy to get out from under or get someone to take out a new lease. And those same bankruptcy’s have left both Boeing and Airbus with a lot of aircraft already built that they now can’t deliver. These so-called ‘white tails’ are cluttering up their tarmac. And both aircraft manufacturers are getting rid of these at fire sale prices right now. For people with the right financing, it’s actually a pretty good time to buy aircraft.
That’s not to say anything bad about AA management. They couldn’t have predicted COVID.