American Airlines did a brave thing today with its amr-aircraft from Airbus (260+365) and Boeing (200+100).  If you are a fleet planner at United, Delta or Southwest, your stomach just took a very unpleasant turn. The US domestic fleet (except at US Airways and Continental) tends to the aged side. These airlines missed out the last order wave because of poor financials plus a soft demand.  However the cost of fuel and rising MRO costs are forcing hands – they cannot wait much longer and must renew fleets. This is what Airbus and Boeing have been waiting for – the coming feeding frenzy.

Well its here now. But American was not only brave, it was strategic too – it has bottled up just about every production slot Airbus and Boeing could have.  Boeing has the P-8 line which can be harnessed (it will have to) to increase 737 production to reach a goal of 60 per month.  Airbus has a China factory but that won’t be used for this frenzy we think – it is much more likely that Airbus will now go ahead with its Alabama factory, originally planned for the tanker. This will allow Airbus to also reach about 60 planes per month.

There will clearly be a lag before we see 120 single aisle planes coming out of factories every month – 2016 or maybe even 2017.

US airline fleet planners must be choking to realize it will be closer to 2020 before they can hope to get their hands on new more fuel efficient airplanes.  American has a lock on delivery slots for 737NGs and REs – plus Airbus’ neo production is surely stretched into the mists of 2018 by now.  This strategic move by American could mean it operates the most fuel efficient, and quietest, fleet for years before the US competition catches up.

The pressure on Airbus and Boeing to hire will be prodigious. Supply of the skills required is limited and the pool they are going to shop in is the USA. This is possibly the happiest day at aerospace unions in decades. There is going to be mountains of work and labor rates are going to be higher – Airbus and Boeing demand will ensure this.  Unions will know that the other airlines will be part of the feeding frenzy within months so they are going to be busy for years. Throw in the myriad parts suppliers and you can only imagine the limited supply of skilled labor  – its time to get work in aerospace again! This is an industry that forgets slumps faster than a sardine forgets the last circle it swam. Its all sunshine and morning in America today.

As much as Boeing celebrates yet another 737 rebirth (we cannot see the Boeing board turning down the RE now) they have to be fuming – they lost exclusivity at American and worst of all, Airbus has not only won a foothold at American, this foothold is now probably a beach head in Alabama.  In fact, this American order could be seen as a loss for Boeing – they could and should have had it all, but for the dithering on NSA vs. RE.

There is even more to consider. If airlines cannot get their hands on the “neo “versions of single aisle planes, what are they to do? Ryanair is toying with COMAC and now may just take the plunge.  Others will likely follow that lead. There is also IRKUT’s promising MC-21 on the upper end to consider.  At the lower end, the American order has to be excellent news for Bombardier which now represents not only the new technology (and the original disruption creator of the feeding frenzy) – it crucially has production capacity and delivery slots. Delta and Southwest are now surely going to revisit the CS as an option.

American’s order is a tectonic plate shifter.