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
UAL's bid solicitation also gives hope to Boeing Co
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.
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.
That could trigger buying from the others, Lassou said. At least they will have to react.
Lassou added that United, AMR Corp's
He said companies that make strategic investments during the recession could reap benefits once the economy rebounds.
United Airlines is exactly trying to do that, trying to leverage buying power in a buyer's market, Lassou said.
So they will probably get good conditions, good price, good support, and that could give significant edge to United Airlines when the market starts growing, he said.
The possible contest at United echoes an epic battle between Boeing and Airbus, then a relative newcomer to the U.S. market, in 1992 at the cusp of another economic and industry recession.
The battle saw United break its reliance on Boeing and opt for dozens of Airbus aircraft for domestic routes. That sparked a rethink that helped push the U.S. planemaker into modernizing its 737 short-haul plane, now the world's most-sold aircraft.
Boeing shares were up 3.2 percent at $49.93 in early afternoon on the New York Stock Exchange, while UAL was down 3.78 percent at $5.09. Shares of Airbus parent EADS were up 1.26 percent.
(Additional reporting by Tim Hepher in Paris, Ajay Kamalakaran and Esha Dey in Bangalore, David Chance in Kuala Lumpur and Karen Jacobs in Atlanta; Editing by David Cowell and Gunna Dickson)