United Puts Final Touches On Major 737 Order

May 4, 2012

Bookmark and Share

United Airlines is putting the finishing touches to an order for at least 100 Boeing 737 narrow-body jets potentially worth USD$10 billion at list prices, industry sources said on Thursday.

The order could increase to 200 if United exercises about 100 options to buy other narrow-bodies. The deal will feature mainly Boeing's upcoming 737 MAX, an upgraded, fuel-efficient version of the company's best-selling 737, said the sources who are close to the negotiations.

The sources declined to be identified because the negotiations are private and the deal is not yet final.

The order will also include some of the current model of the 737, the Next-Generation, they said. The sources said the two sides were still deciding the number of Next Generation 737s that will be part of the order.

The deal could be completed in the next few weeks, and the number of firm orders is still subject to change, the sources said.

A spokeswoman for United's parent, United Continental Holdings, declined to comment as did a Boeing spokesman.

TOUGH COMPETITION

Negotiations for this order have been underway since last year with both Boeing and its European rival Airbus bidding. Industry watchers had expected the number of firm orders to be closer to 200, and that the order could be split between the two plane makers.

The MAX lists for about USD$100 million, depending on the model. But customers often negotiate prices well below list.

Boeing and Airbus, the world's two largest plane makers, are competing for customers for the next versions of their best-selling narrow-bodies.

The 737 MAX, due to enter service in 2017, battles the Airbus A320neo, due to enter service in 2015. Both planes promise double-digit fuel savings.

Narrow-body jets are the industry's workhorse, feeding the big hubs or operating quick turnarounds for low-cost carriers.

Boeing, which hopes to overtake Airbus in orders this year, has taken more than 1,000 orders and provisional orders for the MAX. Airbus had taken 1,289 firm orders and 266 provisional orders for the neo as at the end of March.

On Wednesday, Boeing unveiled a new wingtip device that gives operators of the MAX fuel savings of 1.5 percent on top of the 10-12 percent savings the company says it can deliver by putting new engines in the 737.

Last month, Boeing unveiled several design choices meant to lower weight and wind-resistance for the MAX. The plane maker said it had decided on an 8-inch nose gear extension to give ground clearance for a larger engine fan.

Southwest Airlines will be the first operator of the MAX, but Boeing won its first provisional order from American Airlines last year.

(Reuters)