Nov. 1 (Bloomberg) -- United Continental Holdings Inc. is in talks with Airbus SAS about buying A350-1000 jets, a step toward the first U.S. purchase for the planemaker’s largest twin-engine model, people familiar with talks said.
The world’s biggest airline is considering the 350-seat plane to replace older Boeing Co. 747s, said the people, who asked not to be identified because the talks are private. United already has agreed to buy 25 of the mid-sized A350-900 variant under a 2009 deal that included 25 of Boeing’s 787 Dreamliners.
A United order would help Toulouse, France-based Airbus in its effort to loosen Boeing’s grip on the market for large twin-aisle aircraft. Airbus had suffered cancellations and a four-year A350-1000 order drought until July. United has said it’s also looking at what Boeing will offer as a successor to its 777, the Chicago-based planemaker’s biggest two-engine model.
“This will be a big wake-up call for Boeing,” said Richard Aboulafia, vice president of Fairfax, Virginia-based consultant Teal Group. “There’s a big market emerging for the next-generation of the 777-300ER, and so far, Airbus is the only manufacturer with a firmly-launched new product.”
Airbus is promising the A350-1000’s first delivery by 2017 and promotes it as 25 percent more efficient than a 777-300ER, partly because it uses more lightweight composite materials. That timeline may give Airbus a head start of three years over a 777 replacement, because Boeing hasn’t committed to a schedule beyond saying the new plane would be in service by decade’s end.
A competition with Boeing would depend partly on how soon Airbus can free up delivery slots for the A350-1000 and how fast Boeing can develop the jet dubbed the 777-X, said two of the people. The A350-1000’s list price is $320.6 million, while a 777-X probably would command more than the 777-300ER’s $315 million. Jet buyers usually get discounts.
Airbus declined to comment, saying discussions with potential buyers are private. Christen David, a spokeswoman for Chicago-based United, said: “We continuously have discussions with our aircraft manufacturers.”
Boeing is “engaging with our customers to define” the 777-X and when it might become available, Karen Crabtree, a spokeswoman, said by e-mail.
“While we haven’t set a firm timeline or launched the program, we’ve consistently talked about a potential market entry around the end of the decade,” she said.
The A350-1000 went on sale in 2006 and was originally promised for 2015. Airbus delayed the airliner two years ago to add a more powerful Rolls-Royce Group Plc engine and work on the landing gear and wing. Airbus has won 88 orders for the plane, compared with 352 for the A350-900, which is undergoing final assembly and is due to enter service in late 2014.
The aircraft hasn’t been without critics. Qatar Airways and Emirates, the largest A350 customers, have said they are still not content with the design. Etihad Airways pared its order of the A350-1000 to 12 this year, less than half the number it originally agreed to take on. The jet won a vote of confidence in July from Cathay Pacific Airways Ltd., which added 26 to its fleet at the Farnborough air show in England.
Airbus parent European Aeronautic, Defence & Space Co. rose 0.3 percent to 27.50 euros at the close in Paris, the highest since Sept. 12. Boeing gained 0.5 percent to $70.79 at the close in New York, while United added 1.4 percent to $19.48.
United’s main jet fleet totaled 701 planes at the end of 2011, according to a regulatory filing. Airbus’s share was only 22 percent, and none of the aircraft in service were the wide-bodies that typically provide planemakers with their highest profit margins.
The carrier hasn’t bought twin-aisle planes since its creation in the 2010 merger between former United parent UAL Corp. and Continental Airlines Inc. Chief Executive Officer Jeff Smisek was part of the leadership team at Continental in the 1990s when it transitioned to an all-Boeing lineup.
Boeing planes accounted for 55 percent of the 2,349 wide-body jets on order worldwide at the end of September, according to data compiled by Bloomberg. Airbus had 54 percent of the single-aisle backlog for the two companies, the data show.
Shrinking Boeing’s lead at United would be a second U.S. coup for Airbus. In 2011, AMR Corp.’s American Airlines ended its recent all-Boeing history by splitting a single-aisle jet order. Airbus won the deal thanks to a more fuel efficient version of its A320 aircraft, pressuring Boeing to follow suit and offer its own upgrade on the best-selling 737 model.
United’s A350-900 order came before the merger, so a new deal would expand Airbus’s foothold at the airline and may pave the way for an eventual purchase of A380 double-decker aircraft. Senior vice president for finance, Gerry Laderman, said in an August interview that the airline couldn’t “dismiss the potential” of such a large jet, given the size of its network.