Boeing Said to Win $8.4 Billion United Order for 100 Jets
Boeing Co. is set to win an order this week from United Continental Holdings Inc. (UAL) for 100 of the planemaker’s 737 jets in a transaction that may be valued at about $8.4 billion, people familiar with the matter said.
The accord includes options for as many as 100 more jets and will be announced July 12 in Chicago, where both companies are based, said two of the people, who asked not to be identified because details aren’t public. The order will include the upgraded 737 Max model, the people said.
A deal later this week would be a boost for Boeing as it promotes the Max at the Farnborough International Air Show outside London. The company wasn’t offering the jet at the June 2011 expo in Paris, where Airbus SAS routed Boeing with sales and commitments for its revamped single-aisle A320neo.
“It’s one of many positives for Boeing,” said Ray Neidl, a Maxim Group LLC analyst who covers Boeing and United. “We all knew for a long time the airlines were starving for a more fuel- efficient narrowbody. Now that one’s available in the next few years, airlines are falling over themselves to get them.”
Boeing opened the air show today by announcing a $7.2 billion order for 75 single-aisle 737 Max aircraft from Air Lease Corp. (AL), the first such purchase by a lessor. General Electric Co. (GE)’s jet-leasing unit also is poised to purchase 100 737s, people familiar with that transaction said.
United’s mix of Max jets and current 737s will determine the list value of its order. The 737-8, the top-selling existing model, retails for $84.4 million, and the Max 8, the equivalent new plane, is $95.5 million, according to Boeing’s website.
The order is United’s first since the 2010 merger creating the carrier from former United parent UAL Corp. and Continental Airlines Inc. Boeing was Continental’s exclusive plane supplier for two decades, and the accord deepens ties between the world’s largest airline and the biggest aerospace company.
United declined to comment, said Christen David, a spokeswoman. A Boeing spokesman, Tim Bader, said the company had no comment.
United held talks over about six months on a possible mixed order of current and new-model 737s and A320s before opting to stay with Boeing, people familiar with those discussions said in April.
The U.S. planemaker is trying to reclaim the top spot in commercial production lost to Airbus in 2003. Toulouse, France- based Airbus had record orders of 1,419 aircraft in 2011, while Boeing’s tally was 805. Airbus won 95 percent of narrow-body sales at the Paris show, and has said 2012 orders may fall by half as an initial flurry of A320neo purchases wanes.
United’s order will make it the last of the four biggest U.S. carriers to announce single-aisle jet purchases in less than a year.
Delta Air Lines Inc. agreed in August to acquire 100 737s, a month after AMR Corp.’s American Airlines split a record order for 460 jets between Boeing and Airbus. Southwest Airlines Co. agreed in December to buy 208 737s in an order that was the first for the Max.
Narrow-body jets made up 78 percent, or 545 planes, of United’s 701 mainline planes, according to its latest annual report. Boeing 757-200s are the oldest of United’s single-aisle jets, with an average age of 18.2 years, followed by 737-500s that average 16.6 years old. Both models are out of production.
Separately, United said today it plans a special livery for the Boeing 787 Dreamliners it will begin receiving in September, with a gold line running along the fuselage. United, the first North American carrier to receive the composite-plastic plane, expects to start flying five of the jets this year.
The airline has firm orders for 50 Dreamliners with deliveries through 2019.