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United goes jet shopping with Boeing and Airbus

Jun 04, 2009, (APR, By Joshua Freed) - United Airlines confirmed Thursday that it will seek bids from airplane makers Boeing Co. and rival Airbus for a major jet order that could be placed as soon as this fall.


June 4, 2009
By Carey Fredericks

Jun 04, 2009, (APR, By Joshua Freed) – United Airlines confirmed Thursday that it will seek bids from airplane makers Boeing Co. and rival Airbus for a major jet order that could be placed as soon as this fall.

The third-largest U.S. airline said it will look for proposals to replace its widebody fleet over several years, as well as its Boeing 757s.

Unlike other carriers that have at least kept their toes in the new-jet pool, United has held back on ordering new airplanes. It has been shrinking to try to match the flying it does with remaining demand, and it's working on eliminating its Boeing 737 fleet altogether.

Glenn Tilton, chairman and chief executive of Chicago-based United, told employees in a message Thursday that the company has had ongoing discussions with Boeing (NYSE:BA) and Airbus over several years, but decided to hold off on new planes “until we believe we can generate a return on our investment.''

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“The analysis we have conducted for more than a year suggests that time may be now,'' Tilton said.

France-based Airbus is the world's biggest commercial airplane maker, followed by Chicago-based Boeing. Both have been grappling with slumping orders for passenger and cargo jets due to the global economic downturn, which has sapped demand for air travel. Tight credit markets also have made it more difficult for airlines to secure financing for new planes. Boeing has said it expects to provide up to $1 billion in financing this year and perhaps a little more than that in 2010.

United currently operates a mix of Boeing and Airbus planes, although all of its Airbus aircraft are A319s and A320s, a smaller plane generally used for domestic routes. All its big planes are Boeings.

Boeing spokesman Todd Blecher said the company welcomes the opportunity to participate in United's aircraft replacement program, but said he could not provide further details.

Airbus spokeswoman Mary Anne Greczyn said “we look forward to working with United to understand their needs and help find ways Airbus can help meet them.''

The potential order was the subject of a story in Thursday's Wall Street Journal.

Boeing said on Thursday that it only got 20 new orders in May, down from 67 in May 2008. It said it expects to make deliveries scheduled for this year, but some customers have requested deferrals starting in 2010 and continuing into 2011.

Shares of United parent UAL Corp. fell 18 cents, or 3.4 per cent, to US$5.11 in Thursday trading on the Nasdaq market. Boeing shares rose 82 cents to US$49.19 on the New York Stock Exchange.