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United places order for 200 Boeing jets, giving two troubled jets a vote of confidence

New York

United Airlines placed a massive order for at least 200 Boeing planes on Tuesday, split between two models that have been plagued by recent problems: the 737 Max and the 787 Dreamliner.

It is a crucial vote of confidence for Boeing, which took tens of billions of dollars in financial losses due to the problems with the two planes. The Federal Aviation Administration grounded the 737 Max for 20 months starting in March 2019, halting deliveries of the jets, following two fatal crashes that killed 346 people. The 787 was not grounded, but the FAA halted deliveries for about a year due to quality control issues.

Even beyond those problems, Boeing has been losing competition to European rival Airbus on new orders, particularly for single-aisle jets like the 737 Max. It has fared better in competition for widebody aircraft orders, but has faced problems there as well, with delays for a new model of the 777, 777X and a halt in 787 deliveries.

Although neither United ( UAL ) nor Boeing ( BA ) would disclose pricing details, the list price of the jets is more than $37 billion. Even with the deep discounts typical of such purchases, the order is likely to amount to tens of billions of dollars in sales that Boeing ( BA ) desperately needs.

United said the firm’s orders for 100 twin-aisle 787 Dreamliners, along with an option to buy 100 more, would represent the largest widebody jet order recorded by any US carrier.

“The Boeing team is honored by United’s confidence in our family of aircraft to connect people and transport cargo around the world for decades to come,” said Stan Deal, CEO of Boeing’s Commercial Aircraft Division.

Shares of Boeing rose 3% in premarket trading following the announcement.

The 787 is an aircraft that is used primarily on long-haul international routes. The model’s purchase represents United’s belief that there is pent-up demand for international travel, which has not rebounded as quickly as US domestic passenger demand over the past year. Some countries – notably China – still have strict restrictions on flying into the country, and some passengers are worried about traveling abroad.

But United will receive the planes over the next 10 years, during which time any restrictions and concerns may become distant memories. And the first 100 Dreamline planes it receives will replace retiring older 757, 767 and 777 jets already in United’s fleet. Some of the older aircraft date back at least 30 years.

United’s options for 100 additional Dreamliners represent the company’s plans to expand its fleet and reach into international markets.

The significant order makes United “America’s flagship and the world’s leading airline,” United CEO Scott Kirby said Tuesday in an interview with CNN’s Poppy Harlow on CNN This Morning.

“This is just the next step on that path to replace some of our older 767s that are at the end of their lives, but also to create growth opportunities in the years to come in the international network for years to come,” Kirby said.

He also expressed no hesitation in ordering two Boeing aircraft that have had problems in the past, saying that “a few tough years did [Boeing] stronger” and notes that United has always had a “great partnership” with the airline.

The order, while an important boost for Boeing, is not a total surprise.

Airlines have a financial interest in sticking to the same model aircraft when they commit to it. Companies can save on pilot training and spare parts costs by filling their fleets with the same models.

Unlike a driver who can seamlessly move between car manufacturers, commercial pilots are limited to flying only the model in which they are certified. While United has some orders with Airbus ( EADSF ), nearly 80% of its existing fleet is made up of Boeing jets.

“We have a large installed base of the 787,” Kirby said when asked on a press conference about potentially increasing purchases of a competing Airbus model. “The economics of bringing in another fleet type doesn’t make sense.”

Boeing began taking orders for the Dreamliner in 2004, and United was one of the earliest US customers. It is made of a lighter composite material than the aluminum used to build most commercial jets, giving it much better fuel economy and thus operating savings compared to the older aircraft it will replace in the United fleet. United has not yet decided how many of each of the three different models of the Dreamliner it will take.

The 100 737 Max jets United is buying include 44 planes it already had an option to buy, and 56 new orders. In June 2021, it announced the purchase of 200 of the 737 Max jets, along with 70 competing aircraft from Airbus, in the largest aircraft order United has ever placed.

—CNN’s Jordan Valinsky contributed to this report.

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