The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (
and Airbus are looking at another tussle for United Continental's potential order.
After losing half of American's order to Airbus earlier this year, Boeing recovered by scooping up Delta's order last month. Now
is mulling a potential order of 100 to 200 planes and Boeing wants to make sure that these end up on its order books.
An order for 200 single-aisle planes would be worth about $18 billion at Boeing and Airbus list prices. Given the improved business environment, airlines are increasingly trying to replace older aircraft with newer, more fuel-efficient versions to save costs.
Boeing competes in the commercial aircraft market with aerospace giant Airbus as well as
and Bombardier. The company also competes in the defense segment with large defense contractors such as
and BAE Systems.
We currently have a
, which is well above the current market price.
Boeing reports that it expects that 23,000 single-aisle aircraft will be delivered globally in the next 20 years at a value of almost $1.95 trillion. Single-aisle aircraft will account for 70% of all commercial airplane deliveries worldwide and nearly half of the value.
Considering this, it is especially important for Boeing to bag domestic orders from the U.S. airlines such as United. Boeing decided to outfit its 737 with newer, fuel-efficient engines as part of its efforts to attract orders from American Airlines back in July. Boeing also indicated previously that it was considering a full redesign of the 737.
While a redesign would take longer, it could provide greater fuel savings that would make it worthwhile. United Continental CEO Jeff Smisek told
in May that he would be willing to wait for a redesigned narrowbody.
Boeing is currently studying whether to proceed with the redesign, and said that it will make a decision by the end of the year. Given how much growth there is in the future and the importance of fuel economy on an airline, the redesign makes a lot of sense from a longer term standpoint.
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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.