World Business

United Looks at Boeing’s ‘Paper Plane’ and Likes What It Sees

This article was sourced from Bloomberg Technology. Article by Julie Johnsson.

United Airlines has taken a close look at an all-new jetliner that Boeing Co.engineers are developing for trans-Atlantic flying, and it likes what it sees.

“What we’ve seen so far is very, very interesting to us,” Andrew Levy, United’s chief financial officer, said in an interview Tuesday. “We certainly hope Boeing launches the airplane. We think there is a need for it.”

An endorsement from United, a large Boeing customer, would go a long way toward making the business case for so-called middle-of-market jetliners. Boeing has honed its design to seat between 225 and 260 passengers, while working to bring production costs in line with prices that airlines are willing to pay.

“I wouldn’t be surprised if there is a decision to offer by this year,” John Plueger, chief executive officer and co-founder of Air Lease Corp., said in an interview. “That might be a bit early, a bit aggressive. But that would not surprise me.”

United had been among the skeptics of the jets that Boeing has been developing for years to fill the gap in its product line-up between the largest narrow-body 737 models and smallest 787 Dreamliners. While Boeing is designing a twin-aisle aircraft with the range to fly from London to New York, budget carriers are shifting more mid-range flying to relatively inexpensive narrow-body jets such as Airbus Group SE’s A321neo.

United Convinced

After delving deeper into the Boeing design, “we’re convinced, we get it. We understand the economics,” Levy said in an interview at the ISTAT annual conference in San Diego. “We thought a twin made no sense, but we walked through it and had our questions answered. From what we’ve seen, we like it. But it’s a paper airplane. Hopefully they’ll launch it.”

Two Models

Boeing envisions two models to fill the overlapping market segments served by its out-of-production 757 narrow body and 767 wide body, which were developed jointly in the late 1970s and early 1980s.

“One will be bigger and fly not quite as far, one will be smaller and fly farther,” Randy Tinseth, a Boeing marketing vice president, said in an interview. “To some extent you address the single-aisle market, to some extent you address the wide-body market and to some extent you are stimulating growth where no one has been before. And that has been a fascinating part of the whole project.”

United Continental Holdings Inc. eventually will need to replace the 128 Boeing 757 and 767 jetliners in its fleet, and has studied Airbus’s A321neo as a possible substitute for the aging narrow-body, Levy said.

“The 767 replacement that is available now is bigger than we’d like,” he said. “The 757 replacement that is available now is the A321, which is a great airplane. It can do 90 percent, maybe 95 percent of what we’d like it to do. But the other 5 to 10 percent is really critical.”

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