American Airlines Group Inc. agreed to buy 260 short-haul aircraft that include a huge deal for Boeing Co. 737 Max jets, a key endorsement of the planemaker as it works through a crisis of confidence following a near-catastrophic accident in January.

The order includes 85 Boeing Max 10 aircraft, 85 A321neo planes from Airbus SE and 90 Embraer SA E175 regional jets, American said Monday in a statement. The carrier also has options to order 193 more planes. The aircraft will feed American’s plans to increase service in North America and to nearby international markets and increase the number of premium seats it offers.

It’s the first major deal for Boeing’s marquee 737 Max since the issue on an airborne Alaska Airlines jet earlier this year left the planemaker in crisis. Orders by blue-chip buyers like American often influence other customers. 

For American, the purchase is a bet that the yet-to-debut Max 10, the largest-ever 737 model, will clear final regulatory hurdles to beginning flights over the next two years. As part of the order, the carrier also changed 30 existing orders for Max 8 aircraft to the larger Max 10. Rival United Airlines Holdings Inc. has pulled the Max 10 from its near-term plans, citing uncertainty over when it will receive the plane.

American is confident that Boeing will be able to deliver a certified Max 10 by 2028, when the airline is supposed to begin receiving the planes, American Chief Executive Officer Robert Isom told CNBC in an interview.

With the agreements, American secures valuable production slots in a constrained market for new aircraft, with both planemakers largely sold out of single-aisle jets through the end of the decade. The order will allow American to replace some of its oldest fuel-guzzling single-aisle aircraft with more-efficient models with more premium seats.

“As we look into the next decade, American will have a steady stream of new aircraft alongside a balanced level of capital investment,” Chief Financial Officer Devon May said in the statement. 

American said it expects to remain within its previously announced guidance for capacity and less than $3.5 billion a year from 2025 through 2030 for aircraft capital spending.  

Boeing is still working through a major crisis in the wake of the near-catastrophic accident on a 737 Max 9 in January. US regulators on Feb. 28 gave the company 90 days to devise a plan to fix what the Federal Aviation Administration called “systemic” quality-control issues.

“We deeply appreciate American Airlines’ trust in Boeing and its confidence in the 737 Max family,” Stan Deal, the head of Boeing Commercial Airplanes, said in the statement. “American’s selection of the 737-10 will provide even greater efficiency, commonality and flexibility for its global network and operations.”

Read more: Boeing Gets 90-Day FAA Ultimatum to Fix Its Quality Woes

American fell 4.2% at 12:55 p.m. in New York while Boeing reversed earlier losses to gain 0.5%. Airbus rose 1.8% in Paris. 

The agreements include options and purchase rights for an additional 75 A321s, 75 Max 10s and 43 Embraer E175s, American said. 

American’s existing fleets of A319s and A320s averaged 19.7 and 22.7 years, respectively, at the end of 2023. Its 303 Boeing 737-800s averaged 14 years. Including the new order and existing wide-body deals, the airline now has 440 aircraft on order with deliveries extending into the next decade, American said. 

The airline is continuing to carve down what’s been industry-leading debt, and said separately Monday it will decline to $41 billion by the end of this year and to $39 billion by December 2025. American’s debt ballooned to more than $50 billion in 2021, largely because of aircraft purchases it committed to in a massive 2011 order. The carrier is 75% of the way to meeting its goal to reduce debt by $15 billion.

The carrier also sees free cash flow growing to about $2 billion this year to more than $3 billion in 2026, according to materials prepared for an investor update meeting. Adjusted earnings excluding the impact of net special items before net interest and other nonoperating expenses, taxes, depreciation, amortization and aircraft rent will go from 14% this year to as much as 18% in 2026 and beyond.

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