United Airlines is on a jet shopping spree, seeking dueling proposals from Boeing and Airbus to replace the biggest jets that make up nearly half of its fleet.

If United really takes delivery, the planes will rejuvenate its fleet and signal that the airline may be aiming to stick around for the long-term after years of appearing to be mostly interested in merging with another carrier.
United confirmed on Thursday that it will seek proposals from Boeing Co. and rival Airbus, with an eye toward placing a major jet order as soon as this fall.
Unlike other carriers that have at least kept their toes in the new-jet pool, United has held back on ordering new airplanes. It has been shrinking to try to match the flying it does with remaining demand, and it's gradually eliminating its Boeing 737 fleet altogether.
“Their business plan seemed to revolve around either being purchased or going gently off into the sunset,” said aerospace analyst Richard Aboulafia of the Teal Group. The jet order suggests they're planning on sticking around for a while.
United Chairman and Chief executive Glenn Tilton has been vocal about saying the airline industry, including United, would benefit from mergers.
Tilton told employees in a message on Thursday that it has had ongoing discussions with Boeing and Airbus over several years, but decided to hold off on new planes “until we believe we can generate a return on our investment.”
“The analysis we have conducted for more than a year suggests that time may be now,” Tilton said.
The proposals Chicago-based United is seeking would cover potential replacements for 208 United aircraft, out of a fleet that numbers roughly 390. The proposals include its so-called widebody planes, the Boeing 747, 767, and 777. United said it is also looking into replacements for its Boeing 757.
United currently operates a mix of Boeing and Airbus planes, although all of its Airbus aircraft are A319s and A320s, a smaller plane generally used for domestic routes. All its big planes are Boeings.
Even if an order is placed this fall, delivery would take years. Tilton told employees that deliveries would stretch “well into the future.”
“This program will define our fleet strategy for the next 25 years,” he said.
Tilton told employees that any new planes “must be financed in a way that strengthens our balance sheet over the long term and does not impact our cash position.”
Standard & Poor's airline debt analyst Philip Baggaley said United's “debt burden is substantial, although not the highest of the large airlines.” The purchase, if it really happens, would add significant debt, he said. But that won't come for years, and United would also benefit from lower operating costs of the newer planes, he said.
He also said tighter environmental regulations such as a cap-and-trade plan could put airlines who are getting newer fleets at an advantage to competitors with older planes.
Even if United ends up placing an order, deferring delivery is easy to do, Aboulafia said, although outright cancellations are rare.
“Orders are about as firm as Jell-O,” he said.
France-based Airbus is the world's biggest commercial airplane maker, followed by Chicago-based Boeing Co. Both have been grappling with slumping orders for passenger and cargo jets due to the global economic downturn, which has sapped demand for air travel. Tight credit markets also have made it more difficult for airlines to secure financing for new planes. Boeing has said it expects to provide up to $1 billion in financing this year and perhaps a little more than that in 2010.
Boeing said on Thursday that it only got 20 new orders in May, down from 67 in May 2008. It said it expects to make deliveries scheduled for this year, but some customers have requested deferrals starting in 2010 and continuing into 2011.
Shares of United parent UAL Corp. fell 17 cents, or 3.2 percent, to close at $5.12, while Boeing shares rose $2.20, or 4.6 percent, to close at $50.57.
(Source: AP)