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Boeing Likely to Obtain 100-Plane Order From AirTran
Monday June 30, 5:22 pm ET
By J. Lynn Lunsford and Nicole Harris, Staff Reporters of The Wall Street Journal
DALLAS -- Boeing Co. (NYSE
:BA - News) has emerged as the likely winner in a competition to snag a 100-airplane order from AirTran Airways .
According to people familiar with the deal, Boeing edged out rival Airbus to supply the rapidly growing low-cost carrier with 100 of its single-aisle Boeing 737s that the airline plans to use for longer-haul routes.
The deal is worth about $6 billion at list prices. It includes 50 firm orders for 737-700s and 737-800s, as well as options for another 50 more.
Spokesmen for the airline and the manufacturers declined to comment on the pending decision. AirTran spokesman Tad Hutcheson said the carrier's board of directors was meeting to finalize the decision Monday night in preparation for a Tuesday announcement in Atlanta.
The order is expected to be one of the biggest of the year and was considered by both Boeing and Airbus to be a "must-win."
For Boeing, it meant retaining its position as the sole supplier for AirTran. Airbus, on the other hand, was hoping to make serious inroads into another low- cost carrier in the U.S. So far, JetBlue Airways Corp. (NasdaqNM:JBLU - News) is the only low- cost carrier in the U.S. to fly a fleet of Airbus A320s; the rest rely on the Southwest Airlines Co. (NYSE
:LUV - News) model of operating Boeing's workhorse 737s.
Mr. Hutcheson said AirTran planned to add longer-haul planes to its fleet in order to compete more effectively against other carriers. "We need to be able to fly anywhere we want to go ... we need the flexibility of the range and we need additional capacity," he added.
For AirTran, the new jets will further the discount carrier's growth strategy, helping it to compete vigorously with rivals Delta Air Lines Inc. (NYSE
- News) and other low-fare carriers such as Southwest Airlines.
AirTran needs the bigger jets to operate longer-haul routes such as coast-to- coast flying. The carrier recently launched service from its Atlanta hub to West Coast cities such as Denver, Las Vegas and Los Angeles. But the carrier's Boeing 717s, with about 117 seats, can't fly such long routes. AirTran, is currently leasing two Airbus 320 jets from Wichita, Kansas-based Ryan International Airlines to operate flights between Los Angeles and Atlanta.
AirTran is one of the few U.S. carriers making money. The airline is benefiting from its lower costs as well as consumers eager to purchase cheaper plane tickets amid a slow economy.
The company posted first-quarter net income of $2 million, or three cents a share, compared with a year-earlier net loss of $3 million, or four cents a share. Revenue jumped 31% to $208 million from $159.3 million.
-By J. Lynn Lunsford and Nicole Harris; The Wall Street Journal; 214-951-7113
I work for Southwest, but the views expressed are my own and do not necessarily represent those of Southwest.