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United Continental Holdings Inc
Delta Air Lines Inc
United Continental Holdings Inc. (UAL) is negotiating only with Boeing Co. (BA) for an order of about 200 narrow-body jets after dropping discussions with Airbus SAS (EAD), two people familiar with the matter said.
Talks had been under way for at least six months about a mix of current-generation Boeing 737s or Airbus A320s plus variants with new, more-efficient engines, said the people, who declined to be identified because details aren’t public.
A United deal would cement ties to a longtime customer and build on Boeing’s victory over Airbus in winning a 100-plane purchase from Delta Air Lines Inc. (DAL) in August. Airbus and Boeing, split a 460-jet order with AMR Corp. (AAMRQ)’s American Airlines in July. The list value for 200 737s would be about $16.9 billion, based on the $84.4 million retail price of the 737-800.
“If United goes with Boeing for this order we see this as a helpful market-share gain,” Robert Stallard, an RBC Capital Markets analyst in New York, said in a note to investors. He has an outperform rating (BA) on Chicago-based Boeing.
Spokesmen for United, Boeing and Toulouse, France-based Airbus all declined to comment about the status of the latest negotiations.
Boeing slid 0.9 percent to $72.86 at the close in New York as U.S. stocks slumped, while Chicago-based United fell 0.3 percent to $22.85. Airbus parent European Aeronautic, Defence & Space Co. dropped 4.4 percent to 29.25 euros earlier in Paris.
Some of the planes in the 200-jet total may be options for future aircraft, said the people. The value of the order may rise once United settles on terms, because the 737-800 is less expensive than the so-called MAX model with upgraded engines. Airlines typically buy at a discount.
United, the world’s largest airline, is upgrading a single- aisle fleet that includes Boeing 757-200s, with an average age of 18.2 years, and 737-500s that average 16.6 years old. Boeing no longer makes either model.
Boeing aircraft account for more than three-fourths of the main fleet of 701 jets at United Continental, which was formed in 2010 in an all-stock merger between UAL Corp. and Continental Airlines Inc.
Continental had an exclusive relationship with Boeing dating back two decades. The new United is run by Jeff Smisek, who joined Continental in 1995 and was chief executive officer during the merger talks. United’s fleet management group is overseen by Gerry Laderman, senior vice president of finance and treasurer, who joined Continental in 1988.
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