Bloomberg News

United Said to Discuss Buying Up to 200 Jets From Boeing, Airbus

November 29, 2011

Nov. 23 (Bloomberg) -- United Continental Holdings Inc. is in talks with Boeing Co. and Airbus SAS about ordering as many as 200 jets to refresh its fleet of single-aisle planes, two people with knowledge of the matter said.

The discussions cover current versions of Boeing’s 737 and Airbus’s A320 as well as new, more-efficient models with upgraded engines, said the people, who weren’t authorized to comment publicly. United, the world’s largest airline, expects to make a decision in the first quarter, the people said.

An order by Chicago-based United would cap a round of single-aisle plane purchases at the three biggest U.S. carriers. Delta Air Lines Inc. agreed in August to buy 100 Boeing 737s and AMR Corp.’s American Airlines ordered 460 jets in July, with 260 from Airbus and 200 from Boeing.

“The new re-engined narrow-bodies offer a real advantage, particularly to U.S. carriers that have older planes,” said Richard Aboulafia, vice president of consultant Teal Group in Fairfax, Virginia. “These carriers want to get in line before the early production slots fill up.”

United, created from the 2010 merger of United Airlines and Continental Airlines, flies a mixed single-aisle fleet. The old United operated Airbus and Boeing jets, while Continental was an exclusive customer for Chicago-based Boeing for two decades.

‘Ongoing Communications’

“We continue to have regular ongoing communications with the manufacturers,” Megan McCarthy, a United spokeswoman, said in an e-mail. She declined to discuss details of those talks.

Stefan Schaffrath, an Airbus spokesman, said the planemaker talks routinely with airlines and doesn’t comment on those discussions. Boeing’s Marc Birtel also declined to comment.

United has 550 single-aisle planes among the 710 aircraft in its main jet fleet, according to the airline’s latest annual report. Its 137 Boeing 757-200s are the oldest of the group, at an average age of 17.2 years, followed by 34 737-500s at 14.9 years, according to the filing. Boeing no longer makes either model.

The 737 is the world’s most widely flown jetliner, and the A320 is the top seller from Toulouse, France-based Airbus. Each will be available later this decade with new, more-efficient engines, in variants known as the 737 MAX and A320neo.

Boeing’s 737 has a maximum list price of $89.6 million, according to the planemaker’s website, which doesn’t give a figure for the MAX. The A320 retails for $85 million, with the neo version costing $6 million more. Airlines typically buy at a discount to those prices.

Airbus expects the A320neo to enter commercial service in 2015, and Boeing projects deliveries of the 737 MAX will start in 2017.

Reuters reported yesterday that Boeing and Airbus were vying to sell about 150 jets to United in a deal that might come this year.

--With assistance from Mary Schlangenstein in Dallas, Susanna Ray in Seattle and Rachel Layne in Boston. Editors: Ed Dufner, Benedikt Kammel

To contact the reporters on this story: Andrea Rothman in Paris at aerothman@bloomberg.net; Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net

To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net; Ed Dufner at edufner@bloomberg.net


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