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American Will Honor TWA's Boeing Jet Order

March 20, 2001|From Times Staff and Wire Services

In a major boost to Boeing Co.'s 717 manufacturing operations in Long Beach, AMR Corp.'s American Airlines said Monday it will honor Trans World Airlines Inc.'s contract to purchase the 106-passenger airplanes even after it acquires the St. Louis-based airline.

The fate of the contract--one of the largest for the 717 program--had been uncertain. Analysts speculated that American would cancel TWA's orders after completing the merger, which would have dealt a severe blow to the last remaining commercial aircraft program in Southern California.

"The thing that's been missing has been a really top-name airline as a buyer of 717s," said Paul Nisbet, an analyst with JSA Research Inc. "We now have it."

Boeing inherited the 717, formerly known as the MD-95, in its 1997 acquisition of McDonnell Douglas Corp.

Some analysts had said American might not want the jet because of the extra costs of using different crews and maintenance teams to operate it.

But American spokesman Al Becker told Bloomberg News on Monday that it will accept at least 30 717 jets--15 now in TWA's fleet and another 15 of 35 remaining on order.

"We're very pleased," said John Thom, a Boeing spokesman. As American flies the plane it may "come to like it a lot and find a reason" to accept more, he said.

Becker said the carrier has no plans to take more 717s now, although it's "ruling nothing out" over the longer term. American hopes to complete the $4.2-billion TWA purchase next month.

American Airlines said it will drop a TWA order for competing Airbus Industrie A-318 and A-319 jets, valued at $1.8 billion. TWA was supposed to take delivery of 45 Airbus jets starting in 2003.

"It's one of the very few head-to-head encounters" where the 717 has defeated the A-318, Nisbet said. The small Boeing jet, on sale since 1995, has won 154 orders, including TWA's.

About 5,000 people work at Boeing's 717 facility in Long Beach. Shares of Boeing rose $2.27 to close at $56.02, and AMR shares rose 26 cents to close at $34.05, both on the New York Stock Exchange.

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