How American Airlines won the lottery.
By Holman W. Jenkins, Jr.
Even the crickets lapsed into silence after a column last year puzzling over whether an aircraft bubble was in the making. They didn't stir last month when a low-cost Indian carrier inked the biggest plane order in history at the Paris air show. India is a fast growing market. It can probably use the planes.
But the bubble thesis perhaps deserves a tad more respect after this week's American Airlines deal.
American operates mostly in the slow-growing U.S. market. Its parent, AMR, reported a $286 million loss last quarter and hasn't earned a profit since 2007. Yet American this week topped India for history's biggest order—460 jets, so big it had to be split between Boeing and Airbus.
American President Tom Horton said the company was excited by the idea of "moving big, moving fast," but he didn't conceal that the main variable turning a routine fleet upgrade into a "transformational deal" was the money Airbus and Boeing put on the table.
AMR walked away with a big goofy grin on its face. Airbus and Boeing will fully finance the first 230 planes, to the tune of $13 billion, leasing them back to American so the carrier won't have to tax its own weak balance sheet. Think about it this way: Two rival banks get together and offer you a "no-doc" mortgage for 115% of the value of your home.