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United Drops $1.08 Billion of Airbus Orders in Jet Shift

By Mary Schlangenstein and Robert Wall
January 14, 2014 4:49 PM EST 59 Comments
An employee works on the Airbus A320 single-aisle passenger aircraft wing production line at the company's factory in Broughton, U.K.
Photographer: Paul Thomas/Bloomberg
An employee works on the Airbus A320 single-aisle passenger aircraft wing production line at the company's factory in Broughton, U.K.

United Continental Holdings Inc. (UAL), the world’s second-biggest airline, canceled orders for 12 Airbus SAS single-aisle planes valued at about $1.08 billion that the carrier said were no longer needed.

The move affects six Airbus A319s and six A320s, Christen David, a spokeswoman for Chicago-based United, said today by e-mail. The A319s have a list price of $85.8 million each, while the A320s retail for $93.9 million, according to an Airbus statement yesterday. Airlines typically buy at a discount.

“We are continually evaluating our fleet needs and making adjustments to our order book as appropriate,” David said in an e-mail, declining to elaborate on United’s strategy. The airline has 152 A319s and A320s.

Narrow-bodies are the workhorses of global aviation and are typically used on domestic routes. After once targeting the Airbus jets for removal, United said Nov. 19 it was upgrading them with new seats, larger overhead bins and satellite Wi-Fi, deferring $3 billion of capital expense needed for new jets.

The orders were canceled in December, David said. The change in United’s plans was reflected in Airbus’s website. Mary Anne Greczyn, a U.S. spokeswoman for Toulouse, France-based Airbus, didn’t immediately comment on the cancellations.

United rose 4.8 percent to $46.75 at the close in New York, leading advances by all nine carriers in the Bloomberg U.S. Airlines Index.

The airline’s last narrow-body order came in July 2012, when United agreed to buy 150 Boeing Co. (BA) 737s valued at $14.7 billion. The order consisted of 100 737 Max 9 jets -- the biggest, most-expensive version of Boeing’s revamped single-aisle plane -- and 50 737-900ERs.

The Max is about 13 percent more fuel efficient than current 737s and the 900ER 15 percent better than the Boeing 757-200s it will replace, the airline said at that time.

United has about 700 planes in its main jet fleet and said in November it will hold at about that number for the near future.

To contact the reporters on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net; Robert Wall in London at rwall6@bloomberg.net

To contact the editors responsible for this story: Ed Dufner at edufner@bloomberg.net; Benedikt Kammel at bkammel@bloomberg.net

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