SEATTLE (Reuters) - Boeing Co.'s (NYSE:BA - news) smallest bird in the sky may get a boost from an unlikely source: the bankruptcy of one of its best customers.
At least two airlines have inquired about 35 106-seat 717 jetliners on order from bankrupt Trans World Airlines Inc. (AMEX:TWA - news), which may come back on the market if a proposed merger with American Airlines parent AMR Corp. (NYSE:AMR - news) gets done.
AirTran Holdings Inc. (AMEX:AAI - news), which like TWA ordered 50 of the airplanes, and Midwest Express Holdings Inc. (NYSE:MEH - news) have said they might snap up TWA's 717s, which might be available at attractive prices.
``That (pricing), I would say, is among a number of issues associated with the 717 right now,'' said AirTran spokesman Jim Brown. ``We are in informal discussions and the primary reason is simply because there may be more 717s available.''
Boeing has already delivered 15 717s to TWA and about 30 to AirTran.
Orlando, Fla.-based AirTran, which is replacing its aging fleet with the ultra-efficient 717, could use the extra new planes to accelerate that process or to expand operations, possibly at National Airport in Washington, D.C.
MIDWEST EXPRESS TO SPEND $1 BILLION
By April Midwest Express will decide on $1 billion worth of new orders for 20 100-seat jets to replace DC-9s and MD-80s at its main airline plus 20 regional jets for its Skyway Airlines unit, which had planned to buy the discontinued 44-seat Fairchild Dornier 428JET.
Spokeswoman Lisa Bailey said Midwest Express was considering the 717 and a competing model, the A318, from Boeing rival Airbus Industrie ARBU.UL.
``The 717s have availability in mid-2002 and the A318 in 2003,'' she said, noting the airline had enough fleet flexibility to go with either model.
AMR has not yet decided the fate of the 35 undelivered TWA 717s. If it abandons them, it could spell an opportunity for Midwest Express.
``That's a possibility. It depends what happens with the 717 program. If TWA cancels, Boeing may decide not to go with the program,'' Bailey said.
But 717 marketing director Rolf Sellge rejected any notion of canceling the 717, long-postulated by industry experts.
``There is a fair amount of energy on the part of leadership in sales on the 717 program to really put it on the map,'' Sellge said, adding that Boeing still hopes to land a large order from a major airline to solidify the program.
Boeing inherited the 717 in 1997 when it bought rival McDonnell Douglas, which originally launched it as the MD-95, successor to the DC-9. It is the only commercial jet still built at the old McDonnell Douglas plant in Long Beach, Calif.
Slow Sales For 100-Seaters
Aside from the TWA and AirTran deals, which were reportedly done at big discounts from the current list price of $35 million per plane, Boeing has secured only 53 more orders with leasing companies and small airlines.
The A318, not yet in production, had generated 161 orders by Dec. 31, 2000, according to Airbus's web site (http://www.airbus.com). It enters service this year.
With no similar models in production, the 717 has suffered by comparisons to the A318, the smallest member of the popular A320 family, sharing some features that lower operating costs.
But the short-haul 717 has demonstrated outstanding fuel efficiency in its brief operating history, and may yet win over some cost-conscious airlines.
``We have been very happy with the airplane,'' AirTran's Brown said. ``We thought we would get 18 percent fuel efficiency over the DC-9, but it has been closer to 24 percent.''
AirTran and two other carriers, including one Asian airline, have even inquired about stretching the 717 to seat a few more passengers, but Boeing wants to nail down the 100-seat market before it proceeds.
``There are 2,600 airplanes out there that need replacement, 35-plus-year-old DC-9s and 737-200s,'' Sellge said. ``Somebody is going to grab this market. To give up on an airplane like this would be nuts.''