US to offer insurance for $15bn of new planes
- by admin
NEW YORK—In a major shake-up of its financial regulatory system, American Airlines is offering a $15 billion life insurance policy for its new airplanes, which will be sold at a discount to its traditional business-class and business class customers, and will also be offered as an option for new business class passengers.
American is rolling out the new policy at the beginning of 2019, which covers all of the company’s business jets, according to the airline’s CEO, Gary Smith.
The policy will be offered to its most expensive jets, which make up 90% of the 737 MAX and 125% of all business jets.
In addition, American plans to offer a limited policy to passengers on its new 777X jetliners, which are expected to make the same price as their standard business class fares.
The new policy will start at $1.6 million, a savings of $5,000 on the average cost of an average passenger on a regular business class ticket.
The company is also making the policy available to a small number of passengers who buy their own flights and use it for a limited time.
American says it is the first airline in the United States to offer such a policy.
The decision to offer the policy was made by the U.S. Commodity Futures Trading Commission, which regulates the trading of insurance.
The Federal Aviation Administration said on Thursday that American had not made a final determination on whether the policy should be approved.
The regulator said it was not clear how much the new life insurance would cost to insure, but the agency has said that the policy would cost roughly $3.8 billion a year.
It has not yet announced when the policy will go into effect.
American Airlines, the largest carrier in the world, is also introducing a $1,000-per-year credit for new customers, with the first customers eligible being the first to buy a new aircraft.
The carrier will offer a $100 credit for first-time customers who buy a plane in 2019 and receive a $50 credit for a second purchase in 2020.
“Our plan is to deliver more value for our customers, which is why we are introducing a new credit for the first time,” Smith said in a statement.
“The credit will help ensure that our customers get the value and quality of a new airplane, and that they will be able to use it on time and at cost when they come to the airport.
We expect to receive more than 6 million first-day customers this year, and more than 2.5 million first round passengers in 2019.
This new credit will allow us to continue offering affordable new premium options to our customers.”
American Airlines has been under pressure from airlines and some analysts to lower the prices of its business jets amid a global downturn.
The airline has said it would likely lose as much as $2 billion in revenue if it can’t meet its targets to meet its $150 billion revenue goal for 2019 and beyond.
American’s announcement of the life insurance plan comes on the heels of a separate announcement by the Federal Reserve Bank of New York that it will start offering a new discount to airline tickets in 2018.
The Fed announced plans to add another $100 to ticket prices for the 2019 calendar year.
The price cut will go to all domestic flights between New York and New Orleans, and it will go on for the remainder of the year.
NEW YORK—In a major shake-up of its financial regulatory system, American Airlines is offering a $15 billion life insurance policy…
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