American Chases Delta to Provide

Cushy Seats, Onboard TV

By Mary Schlangenstein Dec 6, 2014 11:00 AM MT  

American Airlines Group Inc. (AAL) will spend $2 billion on new aircraft seats, in-flight entertainment and onboard power outlets as it chases its rivals led by Delta Air Lines Inc. in updating amenities for passengers.

The plan announced today marks a shift by the carrier to add a focus on changes that passengers will notice most. It’s also completing the basic work of meshing flight and airport operations with merger partner US Airways that has been under way during the first year of their combination.

The airline has produced record profits since the merger closed on Dec. 9, 2013, paid its first dividend since 1980 and announced a $1 billion share buyback plan. Those moves have assuaged bankruptcy creditors who ended up with stakes in the new American when it left court protection through the merger. The company’s improved financial condition will help pay for the aircraft changes. The airline’s shares have more than doubled in the past 12 months.

“In 2014, the team accomplished great things, and that gives us a lot of confidence,” Chief Executive Officer Doug Parker said in an interview. “What we are now in the position to do is to go take the product up to a level that is better than either airline had in place.”

Photographer: Brent Lewin/Bloomberg

Screens are illuminated in the economy-class cabin on board an American Airlines Group Inc. Boeing Co. 777-300ER aircraft in Hong Kong. All of American’s wide-body planes today have power in business and coach cabins, and about 89, or 58 percent, have seat-back screens in at least one cabin, the airline said.
 

By the end of this year, American will have received about 100 new aircraft while retiring older planes, swaps the carrier said will give it the youngest fleet among U.S.-based network airlines at 12.3 years. It will add 112 new planes next year, 84 in 2016 and about 300 more through 2022.

Customer ‘Enhancement’

“The act of replacing those aircraft with a brand new airplane is an enormous customer enhancement,” Parker said. They are nicer, they’re brighter and they’re more comfortable. It’s a much better flying experience.’’

All but a “handful” of American’s new aircraft will have seat-back video screens throughout. All of the planes in the carrier’s primary jet fleet now have Wi-Fi, with plans to expand to it to regional aircraft, said Joshua Freed, a spokesman.

Most of the changes announced by the Fort Worth, Texas-based carrier today involve larger aircraft used in international markets. Refurbishments already have begun on American’s Boeing Co. 777-200s and 767-300s, including in-seat entertainment or in-flight connectivity and lie-flat business class seats, with work to be finished in 2016.

Lie-flat business seats also will be added to its Boeing 757s used on international routes, while power ports and Wi-Fi will be extended throughout the plane. All of American’s wide-body planes today have power in business and coach cabins, and about 89, or 58 percent, have seat-back screens in at least one cabin, the airline said.

Delta’s Offerings

Delta has had seat-back entertainment systems on all cabins of its international fleet since 2013, said Paul Skrbec, a spokesman for the Atlanta-based airline. The carrier has standard power outlets at each seat in its BusinessElite cabin and in the first 10 rows of economy on all of its international widebodies.

United Continental Holdings Inc. (UAL) also has been upgrading its onboard power and entertainment options, with seat-back screens on most of its international aircraft, said Rahsaan Johnson, a spokesman. About 225 United planes have DirecTV, 190 have streaming for personal electronic devices and 185 have seat-back monitors in all cabins, he said.
 
Eighty-eight percent of United’s international fleet have seat-back monitors in all cabins and 80 percent have in-seat power in all cabins. The airline is installing equipment to support personal electronic devices in the aircraft that don’t have it now, Johnson said.

Current Equipment

At American, about 501, or 61 percent, of narrow-body aircraft used primarily on domestic routes today have power ports and about 74, or 9 percent, have seat-back screens in at least one cabin.
Among the renovations announced today, Airbus NV A319s, a mainstay of the US Airways domestic fleet, will get all-new seats and power outlets by the end of 2016. The airline also will add 24 economy seats that give more legroom for an extra charge.

Delta couldn’t provide a percentage breakdown for its narrow-body fleet for power and seat-back screens. All of its domestic aircraft with two-class cabins, including regional jets, have Wi-Fi, Skrbec said.
United has seat-back entertainment on 46 percent of its domestic fleet, or 237 planes, and plans to provide seat-back screens or personal device streaming in all domestic aircraft by the end of 2015. The airline also has in-seat power in at least one cabin on about 46 percent of the domestic fleet.

Easier Check-In

American announced other improvements as part of its $2 billion program, including new kiosks designed to reduce wait times at airport check-in counters worldwide by mid-2015 and 400 kiosks in gate areas for reprinting boarding passes and securing day-of-travel upgrades.

The airline will install 500 worktables with 12 power outlets each near gates at its major airports, refurbish its airport Admirals Club lounges and expand food offerings.

American will seek a single operating certificate from federal regulators and fully merge its loyalty programs in the first half of 2015, and plans to move to one passenger reservation system sometime in the second half. It also must reach combined labor contracts for the two airlines before the final integration.

To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net
To contact the editors responsible for this story: Ed Dufner at edufner@bloomberg.net Andrew Pollack, Stephen West