Monday, April 23, 2012

United Continental Nears Deal With Boeing for Planes

April 23, 2012, 6:05 p.m. ET
The Wall Street Journal

United Continental Holdings Inc. UAL -0.26% will soon finalize a deal with Boeing Co. BA -0.94% for more than 100 of its 737 single-aisle jetliners, according to a person familiar with the matter.

If completed, the deal would mark a significant win for Boeing, which last year placed far behind its European rival Airbus in landing orders for small airliners.

Airbus won more than 1,000 orders for its A320 family of planes last year, while Boeing won roughly half that number. Airbus was very successful with a promised update of the A320, dubbed the Neo, for new engine option. The Neo's success prompted Boeing to abandon plans for an all-new successor to the 737 and instead update it. United will buy Boeing's updated 737 MAX model, according to the person familiar with the talks.

Officials at United and Airbus declined to comment.

The near completion of the talks was reported by Bloomberg News earlier Monday.

A deal with United would be notable in part because the airline currently flies both Boeing 737s and Airbus A320s, as a result of the merger in 2010 of United and Continental Airlines that created what is now the world's largest airline.

While the carrier could have gone with either manufacturer, industry officials had widely expected United to select Boeing planes, in part because the current management comes largely from Continental, which flew only Boeing planes. The Wall Street Journal reported in January that United was likely to select Boeing planes.

But a win was far from secure. Airbus, a unit of European Aeronautic Defence & Space Co., EAD.FR -4.36% shocked Boeing last summer by landing a giant order for A320s from AMR Corp.'s American Airlines, which for years had bought only Boeing planes. AMR is now going through Chapter 11 bankruptcy reorganization, but executives have said the still plan to buy both Airbus A320s and Boeing 737s, as announced.

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