Continental Opts For Boeing Jets Airline May Sign An Agreement Making Boeing Its Sole Supplier

Continental Airlines has tentatively agreed to buy 40 big twin-engine jets from Boeing Co. valued at $4 billion, and will likely declare itself an exclusive customer of the aircraft maker, The Wall Street Journal reported Wednesday.

The agreement, which must be approved by Continental’s board, would pre-empt a fight for the order between Boeing and Europe’s Airbus Industrie. An agreement is likely to be announced within two weeks, the newspaper said.

In other developments Wednesday:

Boeing said that by the second quarter of next year, it will be producing a record 43 planes a month, compared with 29 a month currently.

However, the accelerated pace of production is not expected to trigger employment growth or building expansion at the Boeing-Spokane fabrication plant.

Boeing said it received a document detailing the European Union’s objections to Boeing’s planned $14 billion purchase of rival McDonnell Douglas Corp.

Boeing Chairman and Chief Executive Phil Condit said his company will continue to work with the EU to try to alleviate concerns about the acquisition, which would create the world’s largest aerospace and defense company.

Continental’s board will be asked to choose between a proposal for the jet purchase that includes the exclusive contract and one that does not. The board is likely to opt for the sole-supplier agreement since it provides steep discounts for the airline, said sources close to the talks not identified by the newspaper.

Boeing announced in December that production would increase to a record 40 planes per month by this year’s fourth quarter. The company’s previous record of 39.5 planes per month was set in 1992.

At 43 planes per month, Boeing intends to be producing 24 737s a month, five 747s and five 757s. The production of 767s is expected to hold steady at four per month through 1998, while the 777 rate will decline from seven to five per month by next March.

Diane Ressler, spokeswoman for Boeing’s floor panel, air duct and flight deck factory in Airway Heights, said that an increasing demand for components in the narrow-bodied airplanes likely will be offset by the reduction in wide-bodied 777s.

“It’s going to be a wash for us,” Ressler said. “There’s a whole lot more of our product that goes into a 777. If we needed to expand our product line, we have the floor space to do it within the existing facility.”

Boeing has been building up its Spokane factory for months. The operation employed 434 people at the end of 1995, but now has 555 employees, Ressler said.

, DataTimes