Airline orders
6:20 pm
Wed July 20, 2011

Boeing promises fuel efficiency, snags new orders for 737s

American Airlines placed the largest aircraft order in history – 460 new planes. It split those orders between the European aircraft maker Airbus and Washington’s own Boeing. But whether or not it’s a good thing for the local aerospace company is all in how you look at it.

"They avoided a disaster," said aerospace industry analyst Richard Aboulafia.

Boeing has been the sole provider of airplanes for American Airlines since the 1980s and it nearly lost the entire order for new planes to its rival, Airbus. But after some eleventh hour negotiations, Boeing agreed to change strategies and offer American a more fuel-efficient model that re-engines the current 737.

In return, they snagged an order for 200 planes with options for another hundred. All of which are made at the Renton, Wash., plant.

Boeing on defensive

Boeing commercial airplane head Jim Albaugh said "it became very clear" that their customers wanted a more efficient plane now rather than wait for Boeing to build an all-new plane.

Avitas aerospace expert Adam Pilarski said Boeing needed to put the new engine on the 737 to defend itself from Airbus as well as new competitors in China and Russia.

Despite what some may say, it's a win for Boeing, said Aboulafia, an analyst with the Teal Group.

"I think this is one of those extremely rare moments when both sides can claim victory. Airbus, of course, breaking into a new market, key strategic win, but Boeing able to launch a new product that’s an effective, competitive response to a very aggressive newcomer.

Jobs for Washington

This order will lead to several hundred new jobs over the next three years, according to Boeing spokesman, Marc Birtel. He said:

"People are needed. Skilled machinists and enginieers are needed to support that effort and so there will be demand to add employees to that line."

Governor Chris Gregoire congratulated Boeing on its strategic maneuvering and willingness to meet the needs of American Airlines. But she said, "Washington State is a competitor and this is not the time to relax that competitive spirit."

The deal comes at a time when airlines continue to operate under thin pricing margins with old fleets and high fuel prices.

The Associated Press contributed to this report.