Continental May Buy Only Boeing Airline Considers Exclusive Deal
Continental Airlines may join American Airlines and Delta Air Lines in signing an exclusive agreement with Boeing as its sole aircraft provider.
Chairman Gordon Bethune, a former Boeing Commercial Airplane Group vice president, told the Wall Street Journal he has asked Boeing for a proposal on an exclusive long-term deal like those Boeing signed with the other two airlines.
Two-thirds of the Houston-based carrier’s 321-airplane fleet already is made up of Boeing jets; the others are made by McDonnell Douglas.
In the short term, Continental is looking to replace 27 aging DC-10s and to increase its widebody fleet so it can expand overseas, with an order that could total 40 jets.
Boeing is offering its 767 and larger 777 widebodies. Bethune said the new stretched 767-400, which Delta ordered and which seats about 245, seems to be a logical fit for his needs. Continental already has five 777s on order and five more under option.
Airbus Industrie, Boeing’s European competitor, has been promoting its 256-seat A330 to Continental. Bethune and several airline executives have visited Airbus in Toulouse, France, and say the A330 could fit the bill, too.
Airbus has harshly criticized the Boeing contracts with American and Delta as being unwise for airlines, saying they then have no competitive bids for future purchases. Boeing reportedly is giving the airlines discounts and model and delivery flexibility.
American said it would buy 103 jets worth up to $6.5 billion, while Delta ordered 106 planes worth $6.7 billion. Both placed options for hundreds more over the next 20 years.
Paul Nisbet, aerospace analyst with JSA Securities in Newport, R.I., said this latest proposal “must be giving Airbus fits.” He said Airbus, which has vowed it will capture 50 percent of the aircraft market in the years ahead, is having a hard time getting there when it can’t get major airlines in the United States to place large orders.
Airbus is believed to have the nod on an order for widebodies from Northwest Airlines, but that deal has not been signed. An earlier order for 120 smaller planes for US Airways has been stalled by the airline’s problems in getting labor concessions from its unions. United Airlines has ordered single-aisle Airbus jets but still has major holdings in Boeing widebodies, including the 777.
Neither Continental nor Boeing could be reached for comment on when such a deal might be completed. The proposed agreement was described by analysts as not surprising, considering Bethune’s Boeing ties and the future financial edge it might give Continental.
Bethune and Continental President Greg Brenneman have led their airline in a dramatic turnaround after it emerged from bankruptcy in 1995. It has more than $1 billion in cash to use for aircraft purchases.