787 Area Code

How Airbus Courted Boeing Customer American Airlines

AMR Corp. (AMR) Chief Executive Officer Gerard Arpey kept a secret in April as analysts questioned why his turnaround strategies haven’t produced an annual profit at the parent of American Airlines since 2007.

“Gerard, I’m normally not the type to go around quoting Einstein,” JPMorgan Chase & Co. (JPM) ’s Jamie Baker told the CEO on a conference call. “But I’m pretty sure he was the one that said that insanity is defined by doing the same thing over and over, but expecting different results.”

Arpey’s reply focused on stronger controls on online ticket sales. Left under wraps was “Project Apollo,” American’s code name for last week’s plan to buy 460 fuel-saving Boeing Co. (BA) and Airbus SAS planes with a list value of $38.5 billion, based on average prices.

The biggest order in industry history came together in part because of Airbus’s persistence in wooing American, even after the airline had flown an all-Boeing fleet since 2009. And as Boeing deferred a decision on a successor for its top-selling 737, Airbus got a jump on pitching the A320neo with upgraded engines.

“They kept talking to us,” Vasu Raja, American’s managing director for corporate planning, said in an interview. “As they developed their new-engine option, they were talking with us. They were very aggressive.”

AMR had to take aggressive steps on its own. Operating costs at Fort Worth , Texas-based American are the highest among its domestic peers, with a fuel-guzzling fleet that averaged 15 years of age in 2010. Hours before Baker’s April 20 urging to Arpey for decisive action to revive the third-largest U.S. airline, AMR posted its 12th loss in 14 quarters.

“I’m quite confident the market would reward you for some really fresh thinking,” Baker told the CEO on the call.

Investors and analysts including the New York-based Baker have yet to conclude that the July 20 jet order fills the bill. While Boeing rose 1.1 percent and Airbus parent European Aeronautic Defence & Space Co. jumped 4.6 percent through yesterday from July 19, AMR tumbled 16 percent.

“AMR is free to use terms like ‘turbocharge’ and ‘transformational’” to describe the deal, Baker, who recommends buying the shares, wrote in a note last week. “But we cannot reconcile spending incremental capital while failing to earn returns on its existing capital base.”

Airbus was the first of the planemakers to put a proposal on paper, as far back as March, and the first to offer to let American cut expenses by leasing jets instead of buying them outright, two people familiar with the discussions said.

787 Load Test - GT40s.com

Mike, as far as I knew in a previous existence the stiffness (E) of CF was a function of how thick it was and it had no known fatigue life. This may have changed in the last few years. Points of impact reduce it to cracking and producing shards of CF everywhere. When JJ Lehto smacked the F1GTR into the wall at the 1997 Le Mans(fell asleep) the tub was very badly cracked at the front left and Gordon Murray retired it. Once CF goes beyond its stress limit and cracks it's done. As in, the whole piece is done. There's no repairing it. Very different than most metals. Many years ago I saw equivalent stress testing down at the Boeing plant in Seattle with metal wings and it was a different approach - stress the wing beyond it's limits and see what results. Many times the wing would spring back to normal after looking like a pretzel. In contrast, CF would be reduced to a pile of broken pieces on the floor...but I'm guessing that's not a test Boeing wants to run, and certainly would not want the media to have access to. My last company made extremely precise sensors for the singular purpose of detecting flaws (including stress induced cracks) in CF. The US Air Force bought our sensing equipment, as did Boeing and Airbus, as our tech vastly surpassed any other sensing technology. When you look at CF that has been stressed to the point of cracking, it looks like a piece of balsa wood that's been run over by a truck. That's definitely not a wing you want to have holding up you and your family at 30,000 feet. The Control, Flap, and Speedbrake surfaces are never subject to the same bending that the main wing is. Clearly they are subject to their own fatigue tests and the attachments are tolerant of 'normal' wing bending. Look at a loaded 747-400 with 170 tons at the start of a trip and the wings are almost anhedral and drooping down and at the other end of the trip 15 hours later with only 6 tons remaining the wing tips are riding high and easily seen from the flight deck. The wing has probably 20 to 25feet movement at the tip but everything usually stays attached.

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