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United to Buy A350-1000s Jets

Zacks Equity Research

United Airlines – an arm of United Continental Holdings Inc. (UAL) – placed the purchase order for 35 jets with Airbus for an undisclosed amount. Per the agreement, Airbus will convert United's existing order of 25 A350-900s into A350-1000s as well as deliver 10 new A350-1000s. The delivery of the airplanes will commence in 2018.

The A350-1000 aircraft – the largest member of the A350 WXB family – not only offers more seating capacity but is also highly fuel efficient. Built with superior materials such as composites, titanium and aluminum alloys, these jets are fitted with the technologically advanced Rolls-Royce Trent engine. This makes the aircraft lighter and burn about 20% less fuel per seat, in comparison to other large wide-body planes.

To render extra customer comfort, the cabins are designed with more headroom, bigger panoramic windows and spacious overhead storage. United will use these aircraft to replace the older, less efficient jets that are currently operating in long-haul high-demand regions.

United, over the last few months, has been concentrating on upgrading its fleet structure. The airline also entered into a deal with The Boeing Company (BA) to buy 10 of its 787-10 aircraft, in addition to converting 10 existing 787 orders to the newer variety. This brings United’s total order of 787 Dreamliner to 65. In May, United agreed to buy 30 Embraer SA’s (ERJ) 175 regional jets. The deal, estimated at about $4 billion, also has the option of 40 additional purchases.  

With a newer fleet comprising modern, fuel-friendly and high-tech airplanes, United will be able to spread its operational wings to more markets, both domestic and international. The carrier, with the help of additional features such as launch of novel and innovative on-board products and services, aims to take the level of customer service to great heights. We believe that these initiatives will enhance the performance level of the company by trimming its maintenance and operating costs plus offering smooth air travel for flyers.

United Continental, which operates in the airline industry with the likes of Delta Air Lines (DAL), currently retains a Zacks Rank #3 (Hold) rating.

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