Airbus SE is making a bold move in its quest to secure a major order from United Airlines Holdings Inc., as it seeks to convince customers to return some aircraft delivery slots that it could then offer to United. This rare opportunity could give Airbus a chance to steal a high-profile order away from its troubled competitor, Boeing Co.
Sources familiar with the matter have revealed that Airbus has been in discussions with jet leasing firms and airlines, exploring the possibility of buying back delivery slots for its popular A321neo single-aisle jets over the next few years. In parallel, United Airlines is also reportedly exploring options to potentially withdraw from its agreement with Boeing for hundreds of the long-delayed 737 Max 10 aircraft.
While both United and Airbus declined to comment, these discussions indicate that if Airbus can reclaim enough capacity, it will put together a proposal aimed at persuading United to switch at least partially from Boeing to Airbus. However, the complexity and tight supply in the market make the displacement of Boeing's order a challenging task. Additionally, United has a long-standing relationship with Boeing as its primary aircraft supplier. The airline had shown its trust in Boeing by becoming the launch customer for the 737 Max 10 and committing to purchase a significant number of these aircraft.
Despite the obstacles, securing a deal with United would be a significant victory for Airbus and its best-selling narrowbody aircraft. United CEO Scott Kirby's recent statement expressing that the airline has started to review its options has given Airbus reason for optimism. Although Kirby stopped short of canceling the Max 10 order, United dropped it from its fleet plans due to the uncertainty surrounding the delivery timeline.
However, canceling aircraft orders is uncommon, and United may ultimately seek better terms from Boeing instead of switching to Airbus. Typically, customers face hefty penalties for canceling orders, and both aircraft manufacturers have long wait lists for their narrowbody aircraft. Airbus has almost sold out A320-family delivery slots until the end of the decade. The A321neo, with its increased seating capacity of 180 to 240 passengers, has proved particularly popular among airlines looking to upgrade their fleet.
Boeing's 737 Max 10, which can accommodate up to 230 passengers, was projected to be delivered to United starting in 2020. But the extensive delays caused by the grounding of the entire Max fleet following two fatal crashes resulted in the first flight of the Max 10 happening only in mid-2021. United already operates A320-family aircraft and has pending orders for A321neos, which provides flexibility for a potential switch from the Max 10.
Boeing's recent quality control issues, highlighted by the mid-flight blowout of a fuselage panel on a 737 Max 9, have exacerbated the crisis the manufacturer is facing. Regulators, lawmakers, and customers are closely scrutinizing Boeing's processes. The Federal Aviation Administration grounded 171 Max 9s, leading United, the largest operator of the aircraft, to cancel numerous flights. While the FAA has allowed the planes to return to service following inspections, the impact of these incidents could extend to the yet-to-be-certified Max 10.
Notably, United's significant orders played a pivotal role in helping Boeing regain confidence in the 737 Max after the global grounding. Approximately one-quarter of the firm orders for the stretched Max 10 are held by United. However, with Boeing's quality lapses under intense scrutiny, there is now uncertainty regarding the certification timeline for both the Max 10 and the smaller Max 7 model.
The mounting criticism of Boeing has prompted Alaska Air Group Inc. CEO Ben Minicucci to state that the airline will wait for the Max 10 to be certified before evaluating its long-term strategic fleet plans. Southwest Airlines Co. has also announced that it no longer expects to receive the Max 7 this year as it awaits certification. Furthermore, American Airlines CEO Robert Isom expressed dissatisfaction with Boeing's ongoing issues and emphasized the need for the manufacturer to rectify the situation promptly.
While it remains to be seen if this situation presents a tangible opportunity for Airbus to secure a major order from United, these recent developments show that the European planemaker is determined to challenge Boeing and potentially disrupt its long-standing dominance in United's fleet.