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United Splits 50-Jet Order Between Boeing, Airbus


By Andrea Rothman and Mary Schlangenstein

(Bloomberg) — United Airlines (UAUA) split an order for 50 long-range widebody jets valued at $10 billion between Boeing Co. and Airbus SAS as the U.S. carrier made its first aircraft purchase in 11 years.

UAL Corp.'s United will buy 25 A350s and 25 Boeing 787 Dreamliners, with deliveries scheduled from 2016 to 2019. The Chicago-based airline also holds future purchase rights for 50 of each jet.

A shrinking U.S. airline industry gave United, the third-largest U.S. carrier, more power in negotiating discounts from the planemakers. The new aircraft will replace Boeing 767s and 747s with more fuel-efficient models that have greater range and fewer seats.

"The order can be a major positive for United Airlines going forward for a variety of reasons," Helane Becker, an analyst at Jesup & Lamont Securities in New York, said in a note today. "The company gains flexibility at a minimal cost."

Becker raised her rating on UAL to "buy" from "hold."

Sharing the order gives Toulouse, France-based Airbus its first chance to sell widebody jets to United, which previously bought the largest, most-expensive aircraft from Boeing. Airbus, the biggest commercial-plane maker, also gets a boost as the global travel slump prompts other clients to defer purchases.

Airbus 'Coup'"Clearly it's an important breakthrough," said Zafar Khan, an analyst at Societe Generale in London. "It's quite a coup strategically." He has a "sell" rating on Airbus parent European Aeronautic Defence & Space Co.

UAL fell 1 cent to $9.82 at 9:44 a.m. New York time in Nasdaq Stock Market composite trading, while Chicago-based Boeing slid 56 cents, or 1 percent, to $55.26 on the New York Stock Exchange. EADS dropped 22 cents, or 1.8 percent, to 12.24 euros in Paris.

United has 111 Boeing widebody planes in its fleet, consisting of 52 777s, 24 747s, and 35 767s. The 747s and 767s will be retired as the airline takes delivery of the new jets.

"We're highly confident we timed this right," United President John Tague said in an interview. United has been "very well rewarded" for not ordering during a peak in the airline industry.

The carrier also has 96 Boeing 757s, a narrow-body plane, as well as 152 Airbus single-aisle planes, with a further 42 on order. United has said it will follow up today's order with one for single-aisle aircraft next year.

A350, DreamlinerThe A350 will be equipped with engines by Rolls-Royce Group Plc, the only engine supplier for that plane. United said its Boeing 787s will use engines built by General Electric Co. or Rolls-Royce.

The Dreamliner is running more than two years late after five delays since October 2007. It is the first airliner being built with mostly composite plastics, rather than aluminum, to save on fuel consumption.

Boeing aims to deliver the 787 to its first customer in the fourth quarter of 2010. The original goal was May 2008.

Airbus plans to start sending its A350s to airlines in 2013. Production on the first prototype began last week. United is the third U.S. carrier to order the A350 after US Airways Group Inc. and Hawaiian Airlines Inc.

United was part of Boeing until 1934, when the U.S. government forced the company to split off the airline operation. Boeing moved its headquarters to Chicago from Seattle in 2001, partly to be closer to U.S. airline customers.

To contact the reporters on this story: Andrea Rothman in Toulouse, France on aerothman@bloomberg.net and Mary Schlangenstein in Dallas at maryc.s@bloomberg.net.

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