IB Net Payout Yields Model

AMR Takes a Flyer by Ordering Historical Amount of Planes

Wednesday morning, AMR Corp (AMR), the parent company of American Airlines, announced the greatly anticipated orders for 460 planes and options for 465 more. While the market focused on the shift of a US airline from a Boeing (BA)-only focus to Airbus, everybody seems to have missed the announcement last week that American Airlines was going to sell/lease back up to 35 Boeing planes with AerCap Holdings (AER).
Clearly it's justified to focus on not only the historical size of the order from American (some estimates are close to $40B) but also the shift in plane manufacturers. While the analysts call the order a split, the additional options clearly favor Airbus in a major way. If all the options are taken, Airbus will receive around 65% of the orders. Considering that fact, the media was generous to BA executives to only focus on a split of the orders instead of a major shift towards Airbus.

Read the full article at SeekingAlpha.com. 

Disclosure: Long AER in client and personal accounts. Please review the disclaimer page for more details. 


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