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American Airlines makes historic $40 billion plane order

posted 20 Jul 2011, 09:34 by Sam Mbale   [ updated 20 Jul 2011, 09:42 ]
 AMR Corp, parent of American Airlines, says it is ordering a combined 460 new planes valued at $40 billion (USD) from Boeing and Airbus.

UNITED STATES AMERICAN AIRLINES - AMR Corp, parent of American Airlines, said on Wednesday (July 20) it would buy 460 narrowbody planes in a historic deal that gives Europe's Airbus a new toehold in U.S. markets and forces Boeing Co to put a new engine in its best-selling airplane.

The order, which AMR says is the largest in aviation history, is valued at nearly $40 billion (USD) and calls for American to buy 200 Boeing 737s and 260 Airbus A320s. The deal comes after tense haggling as American Airlines played the world's two largest plane makers off each other.

Boeing salvaged its portion of the order by offering to put a new engine in its best-selling 737, retreating from a more ambitious plan to completely redesign the plane.

American Airlines last ordered Airbus planes in the late 1980s. In its gusto to poach a key Boeing customer, Airbus essentially forced Boeing to re-engine its 737 rather than proceed directly to a redesigned version, which would have taken longer to bring to market.

Boeing has been putting off the decision on how to upgrade its 737 for more than year. Airbus dominated the Paris Air Show last month with orders for the A320neo, putting pressure on Boeing to respond, and the contest for American's business has brought the battle over strategy between the world's leading planemakers to a head.