Continental goes Boeing

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Ramon Lopez/WASINGTON DC

CONTINENTAL Airlines has become the third US major to enter into a long-term, sole-supplier pact with Boeing, following the signature of a letter of intent (LoI) for up to 35 widebodied aircraft to satisfy its future fleet requirements. The estimated value of the deal is more than $3 billion.

The Houston, Texas-based airline on 10 June signed the LoI for the purchase of five Boeing 777-200s and 30 Boeing 767-400ERs. Continental becomes the second airline to select the new 767-400 model, which it chose in preference to Airbus Industrie's A330-200. The deal includes options for an undisclosed number of additional 777s and 767s.

The new 777 order is in addition to the five General Electric GE90-powered 777s which Continental ordered in 1993, while the 767-400ER buy adds to its 1993 firm order for 18 GE CF6-80C2-powered 767s. The airline says that it has not yet "-addressed the engine selection issue", although industry sources expect that it will remain with GE.

The 777s will be delivered between September 1998 and May 1999, while the 30 767-400ERs are due between mid-2000 and the end of 2004. The aircraft will replace the fifth-largest US carrier's ageing fleet of 37 McDonnell Douglas (MDC) DC10-10-30s.

Boeing's sole-supplier agreements with Continental, Delta Air Lines and American Airlines have emerged as a focal point of anti-trust concerns in the European Commission's review of Boeing's proposed $14 million acquisition of MDC. Airbus officials have also publicly criticised the Boeing deals.

The order is subject to final negotiations. The deal requires Continental to purchase Boeing turbofan aircraft (aside from regional jets) over the next 20 years, subject to certain conditions. The US carrier may substitute certain aircraft on order with Boeing.

American Airlines has now confirmed its order with Boeing for seven 777-200IGWs (increased gross weight), for delivery between early 1999 and 2000. The airline selected the 777 as part of its $6.6 million exclusive deal with Boeing in November 1996.