(Refiles to add dropped name of Airbus sales chief)
* United orders 25 Boeing 787s and 25 Airbus A350s
* Planes to cut fuel costs and emissions by a third
* $10 billion deal is bright spot in depressed aero market
(Adds comment from Boeing CFO, updates share price)
By Kyle Peterson and Tim Hepher
CHICAGO/PARIS, Dec 8 (Reuters) - Taking advantage of down
market prices, United Airlines said on Tuesday it placed a $10
billion-plus order for 50 wide-bodied jetliners divided between
and Boeing Co , in a bid to slash fuel
costs and emissions.
United, a unit of UAL Corp
, has letters of intent
to order 25 of Boeing's 787 Dreamliners and the same number of
A350 planes from its European rival Airbus, part of EADS,
following a six-month contest. The carrier also has future
purchase rights for 50 of each aircraft.
The third-largest U.S. airline said its order capitalizes
on lower prices as Boeing and Airbus grapple with an economic
downturn that has led to airline capacity cuts, weaker orders
and cancellations. The order also marks one of the biggest
aircraft deals since the start of the recession, as well as a
bounce in U.S. plane investment after years of industry
"We obviously thought the current environment was an
opportunity for us," United Airlines President John Tague told
"We resisted the pressure during the up cycle to buy during
the 'while supplies last' market environment and had the
patience to wait until we saw this opportunity. We feel very
rewarded by that," he said.
United did not give many details on its order financing but
said it obtained financing from both manufacturers.
The carrier said it expects to take delivery of the
aircraft between 2016 and 2019. When that happens, it will
retire its international Boeing 747s and 767s.
"This order was analyzed in the context of replacement for
our 767 and 747 fleet," Tague said. The new planes are smaller
than the ones they replace and therefore represent a reduction
in average seat count by about 19 percent, the carrier said.
Additionally, the newer aircraft will reduce United's fuel
costs and carbon emissions by about 33 percent compared with
the retired aircraft and cut lifetime maintenance costs by
about 40 percent per available seat mile.
United indicated it had not yet decided whether to choose
Rolls-Royce Group Plc
or General Electric Co
engines for the 787s. Rolls is sole engine supplier on the
The order prompted Helane Becker, airline analyst at Jesup
& Lamont, to upgrade UAL shares to "buy" from "hold." UAL
shares were up 10 cents at 9.93 on Nasdaq in afternoon trade.
"We believe the order can be a major positive for United
Airlines going forward for a variety of reasons," she said in a
note. "The company gains flexibility at a minimum cost."
Other experts were less impressed.
"I just see it as kind of an overdue beginning of a
reinvestment," said airline consultant Robert Mann, noting that
rival U.S. airlines are already updating their fleets.
Richard Aboulafia, aerospace analyst at The Teal Group,
agreed the order was overdue.
"All this is signs of an airline that is doing the bare
minimum necessary to continue flying international routes in 10
years," he said.
The Boeing 787 Dreamliner and Airbus A350 together make up
the next generation of lightweight composite-built jets being
developed by the world's two large airliner manufacturers.
They are designed to address a promising market for
aircraft built with tough but lightweight materials to save
fuel and carrying 200 to 300 passengers over long distances on
Planemakers see a market for thousands of such aircraft
once the airline industry recovers from recession.
United, which shares roots with Boeing, so far uses Airbus
planes only for its short-haul and medium-haul fleet.
Amid lower plane orders due to the recession, the deal --
worth $10.1 billion at list prices -- could kick-start a
replacement cycle for less-efficient planes, said Airbus sales
chief John Leahy.
The Boeing part of the order will be a confidence boost to
the 787 Dreamliner project, coming ahead of its first maiden
flight which has been overshadowed by delays.
Boeing Chief Financial Officer James Bell said on an
analyst call on Tuesday that Boeing still expects the 787 to
fly in 2009. Meanwhile, Airbus will start building the A350
Separately, Ireland's Ryanair Holdings Plc
was likely to shelve plans to buy 200 Boeing aircraft because
the U.S. plane maker wants to change delivery conditions.
Boeing shares were down 36 cents at $55.46 on the New York
Stock Exchange. EADS shares were down 1.41 percent in Paris
(Reporting by Kyle Peterson and Tim Hepher; Additional
reporting by Deepa Seetharaman, editing by Marcel Michelson,
David Holmes and Matthew Lewis)