United Airlines orders more Airbus A350s but drops largest model

PARIS (Reuters) – United Airlines has ordered 10 extra Airbus (AIR.PA) A350 jetliners, ditching the largest model, the A350-1000, in favor of the smaller and more popular A350-900 whilst delaying deliveries to save cash, the companies said on Wednesday.

United Airlines will now take 45 A350-900 aircraft instead of 35 of the upcoming A350-1000, which is in flight trials before the first delivery later this year.

The move is a double-edged result for Airbus, sacrificing what had been seen as a key endorsement for its A350-1000 but preserving a place in the wide-body fleet at United after a review that had raised doubts over the A350’s future at the airline.

United Airline’s finance chief Andrew Levy told a Cowen and Co conference that the 325-seat A350-900 was a “better fit” for United’s network.

The aircraft will be used to replace United’s Boeing 777-200ER jets, which start to reach 25 years of age in 2022.

Industry sources said United could still opt for the A350-1000 or other types if its fleet needs evolve.

“We have many more options that we can exercise at similar attractive economics,” Levy said.

The A350 order was held over from United Airlines’ fleet plans before it merged in 2010 with Continental Airlines, which had previously had an exclusive relationship with Boeing.

Industry analysts said the A350-1000 risked being crowded out of the world’s largest airline, which had also placed significant orders for the competing Boeing 777-300ER.

However, the airline also plans to delay taking delivery of A350s, a decision that typically results in negotiations with the planemaker to reduce extra costs for the airline.

United Continental Holdings (UAL.N), the airline’s parent group, said it had deferred its A350 deliveries to late 2022 through 2027, lowering near-term capital spending by $1 billion.

The revised deal is worth another $1.5 billion for Airbus at list prices. The 366-seat A350-1000 has a catalog price of $359.3 million, compared with $311.2 million for the A350-900.

Aircraft are typically sold at discounts.

The A350-1000 was launched to compete with the older Boeing 777-300ER, whose production is slowing as a result. But Airbus has also struggled to preserve momentum at the top of its twin-engined range after Boeing fought back with the larger 777X.

Orders for the A350-1000 peaked in July at 212 units, when they represented a quarter of all cumulative orders for the A350 family. The latest reshuffle reduces that percentage to a five-year low of 20.6 percent, a Reuters analysis shows.

Read originally published story at: reuters.com

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