This is our quick take because we’re really busy.
- Don’t assume Airbus or Boeing will be the long-term exclusive supplier to the new United. Even though Continental’s Jeff Smisek is the new CEO and he’s from the Continental-exclusive-Boeing-customer company, the new United is to have a balanced mix of officers and United has been a major Airbus customer.
- United’s order for the Airbus A350 remains intact and the Continental crowd inherits this.
- There remains a United order for about 42 Airbus A320s, though UAL has repeatedly said it didn’t expect to take delivery of this order. We’ve never followed the logic, fully expecting UAL to renegotiate the purchase price at some point as part of a new order.
- UAL had planned to issue a Request for Proposal this year and place an order for its single-aisle fleet. This will likely be put on hold pending the consummation of the merger.
- Airbus had planned to offer UAL the A321RE (re-engine) to replace the carrier’s 94 Boeing 757s. Putting the RFP on hold doesn’t necessarily mean Airbus will put the A320RE program on hold.
- Bombardier and Pratt & Whitney were making a big pitch to sell the CSeries equipped with the GTF engine, for an order of 50+50. This will likely be on hold as well.
Here is the 44 page PDF presentation about the merger: CONTINENTALAIRL425-3
IIRC, UA took a write-down for the A32X order ($42 million if I’m not mistaken) so its not really on UA’s “order book” anymore.
The deposits for the A32X totalled $91m and the last news of them was in 2008. I am surprised that this hasn’t been sorted out during the A350 negotiations, however the order is still on the books…
As far the allegiance is concerned, I think that the size of the new company will alone ensure the best available pricing and they should just go for the most suitable, efficient product, rather than any particular brand.
UKair, I think the $91 million is incorrect. I’m rather sure it was $42 million.
I went with the figure given in their July 2008 filing:
“These commitments for the 42 aircraft are cancellable by the Company and such action would require the forfeiture of $91 million of advance deposits provided to the manufacturer for these purchase orders.”
Page 34, under ‘Commitments’.
Thanks for the link UKair….however, according to the filings:
” the Company recorded an impairment charge to decrease the carrying value of the advance deposits in the Company’s Consolidated Statements of Financial Position (Unaudited) to zero based on the Company’s belief that it is highly unlikely that it will take future delivery of these aircraft. These aircraft purchase orders are still included in the Company’s total commitment amount, as the Company has not formally terminated the orders. ”
As mentioned, they have already written the amount out. Now it could be Airbus is allowing UA to use those deposits on the XWB order…but I don’t know.
I wouldn’t be surprised if New United tried to renegotiate their deals on the basis of the more favorable previous contract: Continental or United.
Which leads to the interesting question of whether Continental got better terms out of Boeing with its exclusive arrangement or whether United did better by playing the suppliers off against each other. The combined enterprise will have the data to answer that question.
FWIW, the UAL A320 orders are still listed as outstanding on the Airbus Orders/Deliveries March data.
As I mentioned above, they aren’t formally terminated but the deposits are certainly written off UA’s books.
What UA will do with the A350 order? I don’t know but they will certainly keep their A32X’s as they are excellent planes and will fulfill their role perfectly well in the merged company. I don’t know why (or how) some people believe the A32X will be shed just because Smisek is going to be running the show.
As said earlier:
United Airlines is the leading part in the merger and the newly created airline will be named United Airlines. Thus, that company most probabely will continue with the current United Airlines policy of replacing their whole ageing Boeing fleet with new Airbus aircraft, too.
Why did they order the B787 then?
And it looks like it’s the Continental people who are really running the show (Thankfully). I’m of the opinion that this merger clearly favors Boeing.
According to a post on A.net, CO have 50+ firm an 90+ options on Boeing 737’s…..looks to me that will become the prevailing single-isle plane.