United Airlines bucks trend with big plane order

By Kyle Peterson

CHICAGO (Reuters) - United Airlines on Thursday said it has asked the two largest planemakers to bid on an order that could replace its widebody fleet, a move experts say could jump-start demand for new planes from embattled U.S. carriers as they wade through an economic recession.

If United, a unit of UAL Corp, places such an order, which amounts to about 150 planes, it would be its first since 1998. The U.S. airline industry currently lags its foreign rivals in fleet replenishment despite widespread concerns that older planes consume far more fuel than modern aircraft.

UAL's bid solicitation also gives hope to Boeing Co and Airbus, which have suffered as travel demand dries up in the recession and airlines cancel orders.

"We will begin more specific discussions with the manufacturers about a potential order that could be placed as early as the fall, with deliveries extended well into the future," UAL Chief Executive Glenn Tilton said in a statement.

Tilton said the airline has requested bids from Airbus and Boeing that could replace its entire widebody fleet. The top bid would win the whole order. The average age of United's fleet is 13 years.

"We will also be assessing appropriate replacement of our Boeing 757 fleet," he said.

Boeing said it welcomes the opportunity to bid on the UAL order. An Airbus spokeswoman said the time is right for airlines to replace their equipment.

"The economy will turn around, and air travel is a critical engine of our global economy," said Mary Anne Greczyn of Airbus Americas. "When that turnaround happens, the companies that have planned for it will benefit and will operate from a position of competitive strength."

United's current fleet of almost 400 aircraft consists mainly of Airbus A320 single-aisle planes for short and medium domestic routes and Boeing wide-body jets such as the 747 and 777 mini-jumbo for longer routes and international travel.

SPURRING DEMAND

Most airlines are shedding capacity to cope with a steep drop in demand, and many have deferred orders to conserve cash and in the absence of financing for final delivery payments.

The head of global airlines body IATA told Reuters earlier that plane orders could fall 30 percent in 2010.

In recent years, orders for new planes from U.S. carriers have lagged foreign rivals. Boeing said in its 2008 annual market outlook that North American airplane deliveries accounted for 29 percent of all deliveries. In the 1980s and 1990s, the North American share of orders was closer to 60 percent.

The balance tipped as economic growth overseas outpaced growth in the United States. The current economic recession underscored the order imbalance.

Damien Lassou, managing director with global consulting and technology services company Accenture, said a significant United plane order could spur rival U.S. airlines to update their own fleets.