Boeing and United Both Needed Aircraft Deal
CHICAGO (TheStreet) - Two historic Chicago companies came together Thursday to announce a major aircraft deal that fills important needs for both, as United (UAL) ordered 150 new Boeing (BA) 737 jets.
For Boeing, the order comes as the Farnborough Air Show, where aircraft makers flaunt new orders, is wrapping up. It means the company now has more than 1,200 orders and commitments from 18 customers for its newest jet, the 737 MAX, the latest product in the 737 line that, with the United sale, has now exceeded 10,000 orders.
United plans to take 100 B737 MAX 9 jets as well as 50 B737-900s, with deliveries to begin in 2018 and and 2013 respectively. The deal has a list price of $14.7 billion, but airlines always pay below the list price for new aircraft.
For United, the order means replacements for aging aircraft in its fleet of nearly 700 aircraft. The order comes at a relatively profitable time for the airline industry, which historically places aircraft orders in profitable times, and it enables United to keep pace with fleet renewal programs at competitors, particularly bankrupt American (AAMRQ.PK) , which in 2011 ordered 460 Airbus and Boeing jets, the largest aircraft order in history.
Delta(DAL) , meanwhile, has a fleet of 715 aircraft and has orders for 100 B737-900ERs as well as plans to lease 88 used Boeing 717s. Deliveries of both aircraft types will begin next year. Defying the industry's historic tendency, Delta has not moved quickly to spend a lot of money for new aircraft.
As usual in the case of large aircraft orders, Boeing vied with Airbus, although it appears Airbus was battling history. "We had extensive discussions with both Airbus and Boeing," said United CEO Jeff Smisek, on a conference call with reporters. "We've spent almost the past year in very extensive (discussions) with airframe and engine manufacturers." (The new planes will have CFM engines.)
Asked whether United now envisions an all-Boeing fleet, Smisek noted that the fleet currently includes 152 Airbus jets and that United has an order for 25 Airbus A350XWB jets. Predecessor Continental, where Smisek worked before a 2010 merger, was an all-Boeing carrier. United now has orders for 272 new aircraft expected to be delivered through 2022.