The Chicago Tribune reports that United is close to finalizing a deal with either Airbus or Boeing to augment its long-haul fleet. UA plans to place a firm order for 25 jets with an option for up to 75 more. The decision between the 787 and A350 may come down to which company offers the deepest price cut.
Analysts think that Airbus likely holds the edge if United’s decision comes down to money, since it has a reputation for striking aggressive deals. Boeing has argued that Airbus can afford to undercut pricing because it is illegally subsidized by European governments, an argument supported by World Trade Organization judges in a preliminary ruling this fall.
United also plans to update its narrow-body fleet and will hold a separate bidding competition for this next year. In total, both orders could bring 150 new jets to United.
Don’t hold your breath for an announcement, however. Jean Medina, a United spokeswoman, said. "We are not working toward a specific time frame. We are working toward getting the right deal for the company."
I am pleased that UA is in the market for new aircraft, especially during this depressed time in the airplane manufacturing business, and am confident UA will get a very good deal on whatever they decide to order.
Even though United’s long-haul fleet is all Boeing right now and Boeing and United share Chicago as a hometown, I predict that UA will go with Airbus, for the reason outlined in the quoted paragraph above.
Both companies seem to be desperate for business right now and if Airbus can offer UA a better deal, why should UA be concerned about alleged illegal subsidies? Especially when Boeing plays the same game with defense contracts. In addition, I have lost a lot of confidence in Boeing after their two-year delay on the 787. Perhaps UA has as well. Maybe a few more cancellations and Airbus orders will help Boeing get their act together.
Again, I do not expect an imminent announcement, but I am hopeful that in the next few months UA will come to an agreement with either company. It would be a vote of confidence for the long-term viability of UA.