Paris Air Show

American Airlines becomes the first US airline to order new Airbus plane

Key Points
  • American Airlines is ordering 50 new Airbus A321XLR planes.
  • The deal marks the first major U.S. carrier to purchase the European planes since their debut Monday.
  • American announced the deal at the Paris Air Show on Wednesday.
American Air strikes deal to buy new Airbus Jet: source

American Airlines has agreed to order 50 of Airbus' longest-range, single aisle aircraft, a big endorsement for the planes that Boeing's chief rival unveiled earlier this week.

The deal for the A321XLR jetliners, announced at the Paris Air Show on Wednesday, makes the Fort Worth-based airline the first major U.S. carrier to agree to buy the longest-range narrowbody plane Airbus now offers. Under the agreement, American will convert 30 of its orders for the smaller Airbus A321neo in favor of the longer-range model, and order an 20 additional A321XLRs.

The planes could replace some older aircraft like Boeing 757s. The new planes are aimed at longer routes where there aren't enough travelers to support the expense of operating a larger twin-aisle jet.

American's endorsement of the new Airbus planes comes as Boeing is mulling an all-new double-aisle plane targeting mid-range routes. Analysts had expected Boeing to unveil the new offering at the Paris Air Show. But hopes faded as the Chicago-based company has been hobbled by the crisis left by two fatal crashes of its best-selling 737 Max planes, which have been grounded since mid-March.

Boeing did win a surprise vote of confidence in the 737 Max during this year's air show with a 200-plane order from British Airways' parent International Consolidated Airlines Group, the first order for the beleaguered jets since they were grounded three months ago. IAG also ordered 14 Airbus XLR planes for its Iberia and Aer Lingus airlines.

Neither American Airlines nor Airbus would disclose the financial terms of the deal, but American Airlines president Robert Isom said the XLR will initially cost the airline more than the A321neo.

"My feeling is this aircraft certainly gives us much greater utility in the long run and at the end of the day will be worth quite bit more to us," Isom said in a video discussing the deal released by American Airlines.

The 321XLR is expected to open more routes between the U.S. and smaller, secondary cities in Europe. For example, American could fly it between Philadelphia and Basel, Switzerland. "This opportunity, with the enhancements being made to the XLR are really cool," said Isom.

Since Airbus announced plans for the plane on Monday, the company has racked up eight orders for more than 160 XLRs. Air Lease Corporation, which leases hundreds of airplanes to airlines around the world, placed the initial order for 27 XLRs. Air Lease CEO John Plueger told CNBC the plane is "a blockbuster."

American is the first U.S.-based airline to order the newest Airbus plane, but Denver-based Frontier Airlines will also be flying the XLR shortly after deliveries begin in 2023. Frontier's parent company, private equity firm, Indigo Partners placed an order for 50 XLR planes, with initial plans to put 18 of them into Frontier's fleet, and the others in its stable of discount carriers in Latin America and Europe.

After the Paris Air Show in June 2011 American Airlines announced a massive 460-plane order that included both Boeing planes and Airbus jets, American's first order from the European manufacturer in more than 20 years. The Airbus order included 260 planes, half of them for the neo, or new-engine option that provided more fuel efficiency.

A month later, Boeing unveiled the 737 Max, its fuel-saving update to the line of planes that had been flying since the 1960s.

— CNBC's Meghan Reeder also contributed to this report.