Travelers wait in line to check in for United Airlines flights at O’Hare International Airport in Chicago, Illinois, US, in May 2009

United Airlines, the third-largest US carrier, will negotiate with Boeing Co. and Airbus SAS for an aircraft order that a person familiar with the situation said could call for 150 planes.

UAL Corp., the Chicago-based parent of United, is seeking a mix of widebody and narrowbody planes, John Leahy, chief operating officer of Airbus, confirmed Thursday in a telephone interview. Boeing has been invited to participate in the bidding, said Jim Condelles, a spokesman for the planemaker.

“We’re definitely working with United Airlines on their fleet replacement needs,” Leahy said.

An order for 150 aircraft, if split between small and large jets, may be valued at about US$20 billion, using median list prices from the planemakers. Tallying the cheapest planes, the bill could be $13 billion at list prices. Airlines often get reduced prices by negotiating with both of the world’s largest commercial-aircraft makers and then buying from one company.

Airbus and Boeing are suffering from slowing demand and order cancellations as the recession hammers air travel. Airbus, a Toulouse, France-based division of European Aeronautic, Defence & Space Co., is struggling to win the 300 jetliner contracts it has targeted for this year and faces an earnings squeeze from falling prices. At Chicago-based Boeing, cancellations have matched new orders this year.

‘Time to buy’

“If you want good prices, this is the time to buy,” said Chris Tarry, an independent airline analyst based in London. “It’s been ages since they ordered any planes. The question is, when are they going to be delivered? If you’re going to buy 150 planes, then you’re going to get a very good price, particularly for near-term deliveries.”

The average age of United’s planes is 13 years, according to the airline’s website. That compares with an average of 11 years for US major network carriers, according to figures compiled by Ascend, a London-based aviation data provider. The average age at AMR Corp.’s American Airlines is 16 years. Singapore Airlines Ltd., the world’s largest carrier by market value, has a fleet age of six years.

United intends to replace many of its 111 widebody planes and some of its 97 Boeing 757 single-aisle aircraft, the Wall Street Journal reported, citing people familiar with the situation. The carrier has hired Seabury Group LLC to help with negotiations, the newspaper added.

Previous Airbus order

United last placed an order for aircraft in May 2001, Ascend said, when the airline ordered two Airbus A319 planes.

Kevin Johnston, a London-based spokesman for United Airlines, said he couldn’t immediately comment on the carrier’s purchasing plans.

United emerged from bankruptcy protection in 2006. The airline’s stock has declined 86 percent in two years, valuing the carrier at $761 million, an amount that’s less than the price of four Boeing 747s. UAL’s first-quarter loss narrowed to $382 million, beating analysts’ estimates, as United trimmed capacity and benefited from falling jet fuel prices.

“They know they have an old fleet so they’re thinking let’s offer it up as a really nice big order in the bottom of a recession and get the manufacturers to bid aggressively,” said Nick Cunningham, an analyst at Evolution Securities Ltd.

Airlines are eliminating jobs, cutting routes and grounding planes to survive a global slowdown, particularly in high-margin business travel. Losses this year will be “substantially worse” than the estimate of $4.7 billion made in March by the International Air Transport Association, the trade group’s chief executive, Giovanni Bisignani, said Thursday.

United’s purchasing plan is reminiscent of US Airways, which bought planes on the cheap in the early 1990s, the London-based analyst said. “The manufacturers did come to regret it, so I think they need to be in real dire straits to make similar offers.”

Source: Bloomberg