United Bucks Trend With Big Plane Order - Report

The prospect of a bumper plane order battle brightened a depressed outlook for plane manufacturers Thursday as United Airlines was reported to be seeking 150 jets despite fresh warnings of industry losses.

The Wall Street Journal reported that United had asked Boeing and Airbus to put forward competing bids for up to 150 new airliners, contrasting with many who are axing or delaying purchases.

The deal could be worth more than USD$10 billion for the two aircraft makers, the newspaper said, adding that United sent a formal request to Boeing and Airbus on Tuesday.

Airbus declined comment but shares in parent EADS initially rose more than 2 percent before trimming gains.

Most airlines are shedding capacity to cope with a steep fall in demand and many have deferred orders to conserve cash and in the absence of financing for final delivery payments.

The head of global airlines body IATA said earlier that new plane orders could fall 30 percent in 2010.

The possible contest echoes an epic battle between Boeing and Airbus, then a relative newcomer to the US market, in 1992 at the cusp of another economic and industry recession.

The battle saw United break its reliance on Boeing and opt for dozens of Airbus aircraft for domestic routes. That sparked a rethink that helped push the US planemaker into modernizing its 737 short-haul plane, now the world's most sold aircraft.

United's current fleet of almost 400 aircraft mainly consists of the Airbus A320 single-aisle family for short and medium domestic routes and Boeing wide-body jets such as the 747 and 777 for longer routes and international travel.

It has however placed orders for 25 Airbus A330-200s -- the model involved in the Air France crash earlier this week -- and 22 of the same planemaker's future mid-sized wide-body A350.

Most US airlines, with relatively frail finances, held back from joining in a boom in plane orders that reached its zenith last year, but many are running fuel-guzzling fleets.

United's order request focuses on replacing many of its 111-plane wide-body fleet, as well as some of its 97 aging Boeing 757 narrow-body planes, the Wall Street Journal said.

United could sign a major order later in the year if Boeing or Airbus agree to certain conditions, the paper said, citing people familiar with the matter.

However, the financing arranged by the manufacturer that does not eat into United's cash would be the most crucial, these people told the paper.

A Fitch credit analyst said last month the airlines facing the greatest risk of covenant breach that could potentially lead to a liquidity crisis were US Airways, American Airlines and United Airlines.

Such a scenario would only unfold if revenues continued to worsen in the summer and there were no signs of US recovery by late this year, Fitch Ratings analyst Bill Warlick said in early May.

However a Standard & Poor's analyst said most airlines have enough cash to limp through the downturn.