United cites limited cancellation rights in widebody order

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United Airlines has limited flexibility to cancel orders it firmed with Airbus and Boeing during the first quarter, but the carrier sees no disadvantage in that specific limitation on its widebody fleet going forward.

During the first quarter United firmed up orders for 25 A350 XWBs and 25 Boeing 787s after a highly competitive order campaign the carrier conducted in 2009.

Today in a discussion about first quarter earnings of parent company UAL, United CFO Kathryn Mikells in response to a query about the structure of the orders said the company "has a fair amount of flexibility with regard to deferral rights. We clearly have plenty of flexibility to upsize the order".

Mikells explains United does not necessarily have the flexibility to "quote, unquote" cancel the order, "nor would we consider that to be advantageous to us".

United has "several years before those deliveries", says Mikells, which gives the carrier time to further strengthen its balance sheet.

The carrier should start taking delivery of the aircraft in the 2016 timeframe.

United's management is shunning any comment about its specific role in industry consolidation as its talks with US Airways have officially ended.

Attention is now being turned to a merger between Continental and United. It's unclear how such a tie-up could affect a combined carrier's fleet plan going forward. Continental is an all-Boeing operator with 11 787-8s and 14 787-9s on order. All of United's 787 orders are for the -8 version.

United expects to make a decision on its narrowbody replacement by year-end while Continental has 35 Next Generation 737s on order, according to Flightglobal's ACAS database.