Saluki Dawg
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Continental to Delay Boeing Order Worth $2.5 Billion
Dow Jones Business News
Continental to Delay Boeing Order Worth $2.5 Billion
Monday July 14, 12:52 am ET
Continental Airlines will defer delivery of most of its Boeing Co. (NYSE:BA - News) order, valued at $2.5 billion, until at least 2008, an indication that major U.S. carriers may not return to buying large numbers of new airplanes until the end of the decade, Monday's Wall Street Journal reported.
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Houston-based Continental, the fifth-largest U.S. carrier, has decided to shrink its capacity further in both 2004 and 2005 because airline-industry prospects are so dismal, according to people familiar with the negotiations with Boeing. Business travel has remained depressed, and fares have stayed at historic lows because the main U.S. carriers continue to suffer from overcapacity and increased competition from low-cost rivals.
For Boeing, such a large deferral of orders is another blow in what has already been a dismal aviation market. For the most part, the company can replace the deliveries with other airline orders, but if Continental's move is the beginning of a trend, it could prove more serious.
Continental, which has permanently grounded 82 planes since 2001, has reached agreement with Boeing to delay delivery of 36 of the 56 737s it had on order for several years to 2008 and beyond, according to people familiar with the terms. The airline is still trying to negotiate deferral of all 11 757-300s it has on order at Boeing -- a move that could jeopardize Boeing's 757 production line.
Continental will still take delivery of four 737-800 aircraft in the fourth quarter of this year and 12 737s next year, and four are still scheduled for 2008, according to those familiar with the plan. Those planes will be used to retire older 737-300s and Boeing MD-80 jets. All other deliveries for 2005-2007 are being deferred, according to the agreement.
A Continental spokeswoman declined to comment. A Boeing spokesman declined to comment on any negotiations with Continental, but said the company is "working with many customers to get through this difficult time."
Wall Street Journal Staff Reporters Scott McCartney and J. Lynn Lunsford contributed to this report.
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Dow Jones Business News
Continental to Delay Boeing Order Worth $2.5 Billion
Monday July 14, 12:52 am ET
Continental Airlines will defer delivery of most of its Boeing Co. (NYSE:BA - News) order, valued at $2.5 billion, until at least 2008, an indication that major U.S. carriers may not return to buying large numbers of new airplanes until the end of the decade, Monday's Wall Street Journal reported.
ADVERTISEMENT
Houston-based Continental, the fifth-largest U.S. carrier, has decided to shrink its capacity further in both 2004 and 2005 because airline-industry prospects are so dismal, according to people familiar with the negotiations with Boeing. Business travel has remained depressed, and fares have stayed at historic lows because the main U.S. carriers continue to suffer from overcapacity and increased competition from low-cost rivals.
For Boeing, such a large deferral of orders is another blow in what has already been a dismal aviation market. For the most part, the company can replace the deliveries with other airline orders, but if Continental's move is the beginning of a trend, it could prove more serious.
Continental, which has permanently grounded 82 planes since 2001, has reached agreement with Boeing to delay delivery of 36 of the 56 737s it had on order for several years to 2008 and beyond, according to people familiar with the terms. The airline is still trying to negotiate deferral of all 11 757-300s it has on order at Boeing -- a move that could jeopardize Boeing's 757 production line.
Continental will still take delivery of four 737-800 aircraft in the fourth quarter of this year and 12 737s next year, and four are still scheduled for 2008, according to those familiar with the plan. Those planes will be used to retire older 737-300s and Boeing MD-80 jets. All other deliveries for 2005-2007 are being deferred, according to the agreement.
A Continental spokeswoman declined to comment. A Boeing spokesman declined to comment on any negotiations with Continental, but said the company is "working with many customers to get through this difficult time."
Wall Street Journal Staff Reporters Scott McCartney and J. Lynn Lunsford contributed to this report.
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