Airlines Need New Planes, but the Supply Chain Has Other Ideas
American Airlines has about 20 Airbus A320s on order at today’s low price of around $45 million, while United Airlines inked a five-year deal to buy Boeing 737-300s for about $23 million. So, as a result, many carriers are trying out the new planes.
But that’s where the supply chain and industry consolidation come in.
“With less competition, the market will become more efficient,” said Greg Sprehett, vice president and chief operating officer at American Airlines. “You’ll see a lot of airlines looking to save a few dollars on a plane by buying out a rival.” He said that’s why he’s so bullish on the new Boeing 737 Max. “The market will be more competitive, and we believe the Max is the right plane at the right time.”
Pair with Southwest
American is also looking into partnerships or buying aircraft with its new competitors Southwest and JetBlue.
At the end of the day, Sprehett said only one airline will have the right plane at the right time. And the airlines, he said, must think ahead, not wait for the next airplane after the next.
“If you buy something now, and if you don’t invest ahead of time, you can go broke in a hurry,” he said. “You have to think like the industry. You have to be nimble.”
The best solution for airline companies is going to be to have a good, strong aircraft supply chain with partnerships from Airbus, Boeing or other aircraft manufacturers, he said.
“The last three airlines I’ve worked with all had such a good supply chain,” Sprehett said. “These are the biggest players in their industry. They have the capability to be nimble, and they’re going to be nimble.”
‘Worst airline’
The airlines have not been helped by the bankruptcy of US Airways, which is now being taken over by