George S. May Business Blog

United Airlines to spend $10 billion on new planes

2009 has been a rough year for the airlines. People don’t have the extra money to spend on travel and as a result almost every airline has seen a drop in their sales. So, as a means of coping with the depressed economy United Airlines has decided to partake in a bit of retail-therapy.

United Airlines is currently seeking bids for a 150-jet order. The airline, to date, has asked for a quote from the two largest plane makers, Boeing Co. and AirBus. UAL, Boeing and Airbus all declined to comment.

United has not ordered new aircraft in over 10 years. The average age of its fleet is 13 years, which actually is less than most other foreign rivals.

While this is pretty astonishing, it must be said that the $10 billion price-tag may save United in the long run as gas efficiency has been a main area of focus for plane makers in the past decade.

United could sign the major order as early as the fall if Boeing or Airbus agree to certain conditions. However, the deal will also be fairly reliant upon working out a financing deal that does not eat into United’s cash.

Here’s a little tid-bit of information that some may find interesting. It seems that history is trying to repeat itself:

“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.

United’s current fleet of almost 400 aircraft mainly consists of the Airbus A320 single-aisle family 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.”

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