United set for US$14bn Airbus A350 order

United set for US$14bn Airbus A350 order

Airbus is on the verge of securing an order for 45 of its A350-900 wide-body jetliners, a critical win after a run of deferrals by U.S. carriers, according to people familiar with the matter.

The order will likely be placed by United Continental to convert an earlier $12.6 billion deal for 35 of the bigger -1000 variant, based on current list prices.

The deal could be announced as soon as Wednesday and would be valued at $14 billion before discounts, according to the people, who asked not to be identified as the talks are private.

Airbus declined to comment on discussions with customers. United, which is seeking to renew its fleet of aging Boeing 747 and 777 wide-body planes, was unavailable to comment outside normal business hours.

The expanded order comes after American Airlines and Delta Air Lines both put off deliveries of the marquee Airbus jetliner amid concern about the risk of operating larger planes.

Chicago-based United has said it’s reviewing its A350 order after indefinitely postponing delivery of four jets originally due for delivery this year. Retaining United as a wide-body customer is crucial for Toulouse, France-based Airbus as it seeks to expand twin-aisle sales in Boeing’s home market.

Capacity squeeze

The deal would lift Airbus’s backlog for the 325-seat A350-900 to 673 aircraft, while narrowing the order book for the 366-seat -1000 to 177, based on the planemaker’s latest order and delivery tallies.

That underscores the pressure on bigger wide-body jets as carriers around the world rein in capacity expansion to ease pressure on fares.

United is the second-largest customer of the largest A350 model behind Qatar Airways Ltd., which recently scrapped orders for four -900 jets due to supplier delays.

Delta said in May it would defer 10 orders for the jet and instead take a stretched version of Airbus’s A320 single-aisle workhorse. Meanwhile, American has postponed deliveries of 22 jets.

United’s fleet strategy has been in flux since President Scott Kirby joined the company last year from American Airlines, where he had helped negotiate a purchase of the Airbus jetliner.

The original deal pre-dates the carrier’s 2010 merger with Continental Airlines and marked United’s first order for an Airbus widebody.

The next-generation jet is made of carbon-composite panel and is critical to Airbus’s efforts to compete with Chicago-based Boeing’s smaller 787 Dreamliner and the bigger 777X, the first twin-engine plane built to haul more than 400 passengers.

 

8 Comments

  • Jason Bird

    Speedbird

    7 Sep, 2017 01:31 pm

    This is a surprise as United management is packed full of Boeing sycophants... obviously Scott Kirby is rattling some cages. 
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  • FLX

    FLX1

    7 Sep, 2017 05:04 pm

    @Speedbird:
    "This is a surprise as United management ..."
    Not exactly.

    Ever since the pre-merger UA entity committed to the original firm order for 350 x25 in Dec2009, this order has survived the later merger with CO in 2010/11, top mgmt reshuffles(@ least twice) and numerous major shifts/U-turns in UA fleet strategy as a result, swapped 359 for 35K to replace UA's 744, UA initiated 35K delivery delay last yr...and now finally, swapping 35K back to 359.  The underlying fact is that today's UA hv no way to cancel their 350 order outright without incurring hefty penalty.

    In addition, ever since UA last yr started taking on more & more cheap but new built 77Ws as UA retired more 744s, anyone following UA widebody fleet development in recent yrs already knew the logic for UA to justify 35K has been evaporating rapidly.  In contrast, the 772ER fleet replacement had remained as an open question @ UA(oldest frame will be 25yrs old circa 2022 when the 1st 359 is due @ UA)....despite 359 is practically the same size as 772ER.

    To me, the real surprise is that UA added 10 more to their existing 350 x35 order.

    "United management is packed full of Boeing sycophants"
    But the 2 top guys @ UA mgmt, CEO Munoz and President Kirby, had no UA nor CO background and therefore impartial to A vs B and they are the ones who hv the ultimate sign-off on any aircraft order for UA.

    Munoz had no real airline industry experience prior to UA and Kirby ordered Boeings and kept the 350 order during his reign as President @ AA.
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  • kimshep

    kimshep

    7 Sep, 2017 02:04 pm

    Done deal - overnight.

    35 existing A350-1000 cancelled and converted to 35 A350-900 .. and an additional 10 A350-900 frames now a firm order of 45 frames.

    From the Airbus website:

    "United Airlines has increased the number of A350 XWB aircraft it will bring into its fleet, updating and expanding its previously existing order for 35 A350-1000 to 45 A350-900 widebody aircraft to replace older, less efficient aircraft, supporting future growth at the airline."

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  • FLX

    FLX1

    7 Sep, 2017 05:12 pm

    @kimshep:
    And the UA employee news letter also mentioned this re-worked 350 deal with Airbus includes:
    1.  Conversion rights back to 35K for any of the 359 x45 now on firm order.  Effectively an easy backdoor still exists for UA to go back to the 35K if necessary.
    2.  Options to take more 350 deliveries in the future @ favorable pricing beyond those on firm order now.
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  • kimshep

    kimshep

    7 Sep, 2017 06:02 pm

    Yep, saw the Employee Newsletter from Scott Kirby, FLX1. At least Kirby acknowledged the 'pushback' in delivery schedule, whereas the Airbus announcement simply details the 'new' delivery dates LOL.

    I think Speedbird's original comment is a little unfair, re the 'Boeing sycophants' allegation. Whilst the pre-merger UA had a reasonably balanced fleet, the Continental merger is what really skewed the fleet numbers to the Boeing side. Continental remained a pure Boeing convert right to the end. It's also noticeable that UA currently has some 97 Airbus 320's and approximately 63 Airbus A319's in their 750 strong fleet.

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  • Jason Bird

    Speedbird

    9 Sep, 2017 06:25 pm

    I should of clarified that I meant since the merger with Continental, UA management are packet full Boeing sycophants.. 
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  • Joe

    Joe

    7 Sep, 2017 10:04 pm

    United could own a gold plated A350 and I'd never subject myself to such an underwhelming experience. People actually pay to fly this carrier...the mind boggles.
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  • Russjking

    Russjking

    8 Sep, 2017 11:38 pm

    The A350 is my favourite as a passenger. Quiet, roomy, pleasant. 
    The A380 is also good from a passenger experience point of view. 
    I don't like the B777 as too noisy and feels cramped. 
    I select plane then airline when flying AU <> UK
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23 Jun, 2018 08:49 am

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