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Five Firms Take Wing on Massive American Airlines Plane Purchase
21-07-2011
Tagged Under : American Airlines, Plane
Dallas-based AMR Corporation, owner of American Airlines, has made the largest aircraft order in history by agreeing to acquire a total of 460 planes from Airbus and Boeing in a transaction worth more than $38 billion. Five Am Law 200 firms have landed key roles on the record-setting deal.
As the fourth-largest U.S. airline, American is also the only major carrier in the country that has never filed for bankruptcy. Americans fleet, however, is among the industrys oldest–something that will change dramatically under the deal that will see the airline provided with new planes through 2025. In fact, according to news reports, Americans fleet is now expected to become the industrys youngest within five years.
American turned to Gibson, Dunn & Crutcher corporate partner Robert Little in Dallas and Debevoise & Plimpton aviation practice chair John Curry III in New York as cocounsel on its negotiations with Airbus.
Debevoise is a longtime legal adviser to American, having represented the airline in 9/11-related property damage and personal injury claims and on the acquisition and subsequent restructuring of assets from TWA in 2001.
American has also relied on Gibson Dunn in the past for litigation and regulatory work. But landing a major assignment for American on the corporate side is a departure for the firm.
“We reached out to them earlier this year and said wed love a shot to work on a transactional deal,” Little says. “And thankfully they realized they had some good folks in their own backyard, so we were able to get in there and seize the opportunity to prove ourselves, which I think we were able to do.”
“The aircraft are really the lifeblood of an airline,” Little says. “Most of these deals take six months to a year to negotiate, but we did this in about a month.”
Little says lawyers and teams of other airline personnel–including designers and strategic fleet planners–camped out in Gibson Dunns Dallas office over the past month to hammer out the dual accords with Airbus and Boeing. Lawyers and other executives from the two aircraft manufacturers stayed at The Ritz-Carlton in Dallas across from Gibson Dunns offices.
Besides its sheer size, AMRs plane purchase is noteworthy because it effectively ends Americans exclusive relationship with the worlds largest aerospace company, Chicago-based Boeing. As the second-largest maker of large commercial jets in the world behind Airbus, Boeing had enjoyed its position has being Americans sole provider of aircraft over the past two decades.
Little says American made the decision to bring Airbus into the negotiations over purchasing new planes in order to increase competition and extract some friendlier terms. Between them, Airbus and Boeing are providing some $13 billion in financing to help cover the cost of the deal.
The contract with Airbus calls for the Toulouse, France-based commercial aircraft manufacturer to provide American with 260 planes and gives the airline the option to acquire up to 360. All the planes ordered by American from Airbus are to be equipped with Sharklets, a fuel-saving wingtip device.
Assisting Little on the negotiations with Airbus was Gibson Dunn associate Travis Souza. American Airlines general counsel Gary Kennedy, associate general counsel Tim Skipworth and David Allen, and senior attorney Howard Rosenthal led an in-house team working on the transaction.
Vedder Price is known for its aviation practice, having counseled Australian financial services conglomerate Macquarie last year on its $1.99 billion purchase of 53 aircraft from AIGs aircraft leasing unit.
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