United confirms aircraft order talks with Airbus and Boeing

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United Airlines could place a significant aircraft order with Airbus or Boeing during the fourth quarter if the carrier determines it can garner a proper return on investment.

Today in a memo to employees United chief executive officer Glenn Tilton confirmed the carrier sent a request for proposal to Airbus and Boeing that could result in a significant number of aircraft for widebody fleet replacement, and the appropriate replacement of its 757 fleet.

United is in the midst of installations of new lie-flat seats on its Boeing 767 and 747 fleets. Reconfigurations for both types are scheduled for completion this year. The revamp of premium seats for United's 777 fleet starts late in 2009.

Tilton says the analysis United has conducted for more than a year "suggests that time [for an order] may be now, and we will begin discussions with the manufacturers about a potential order that could be placed as early as the fall, with deliveries extended well into the future".

Characterizing United's timing as "opportune" Tilton says this is a competitive environment for manufacturers, "and if the economics are compelling, the winner will place its new generation aircraft with one of the largest operators of twin-aisle aircraft in the world".

Giving a hint of how negotiations could progress with the rival manufacturers Tilton says: "In addition to earning a return, any aircraft order must be financed in a way that strengthens our balance sheet over the long term and does not impact our cash position."

Airbus confirmed to ATI it has received a request from United "for us to submit a proposal for meeting the airline's long-term, strategic need for aircraft".

United last year decided to shed 100 aircraft from its fleet by year-end 2009. Six were Boeing 747s and the remaining 94 were Boeing 737 classics.

Chicago-based United shrank its first quarter losses from $549 million to $382 million, and ended the quarter with $2.5 billion in cash.