Boeing Offers United Airlines Sweetheart Deal on New Acquisitions
Jackie Reddy March 10, 2016
As United Airlines prepares to receive 65 new 737-700 aircraft from Boeing, it has been revealed that the manufacturer has given the carrier a deep discount on its order.
It seems that United Airlines has benefitted from a considerable discount on the purchase of 25 737-700 airliners from aircraft manufacturer Boeing.
United confirmed earlier this week that this latest order was in addition to the 40 737-700s that it purchased back in January. While neither Boeing nor United was able to offer comment on the deal, the list price for a single 737-700 is approximately $80.6 million and at market price, 65 of these aircraft would cost United an estimated $5.24 billion.
While the figures of the deal have not been made public, analysts say that it is unlikely that the carrier paid the full purchase price for their consignment.
Airways News senior business analyst Vinay Bhaskara told Business Insider that it’s probable that United paid between $20 to $25 million per aircraft while Forbes contributor Scott Hamilton reported that the deal was worth $22 million. This equates to a 73% discount on the total list price of the order.
The reason behind this, industry analysts believe, is that the aircraft manufacturer is facing serious competition from Bombardier’s C-Series jets.
While Bombardier has just taken an order from Air Canada, it seems that the manufacturer still needs backing from a large carrier in order to establish supremacy over its competitors.
It is believed that Bombardier can’t compete with this hefty discount, which allows Boeing to undercut the Quebec-based company, depriving it of the opportunity to edge ahead of the aircraft manufacturing giant.
Additionally, it is thought that while the 737-700 is nearing the end of its production cycle, Boeing still needs to sustain production of the craft through to 2019 when it will be succeeded by the 737Max.
Analysts believe that the fact that Boeing’s 737-700 production line has long been paid off has also allowed the manufacturer to further sweeten the deal with United.
[Photo: Wikipedia]
