Continental close to deal with Boeing

Airbus Industrie is facing a further setback in the North American market following reports yesterday that Continental Airlines was negotiating to place all its future aircraft purchase contracts with Boeing.

Such an agreement would follow hard on the heels of similar exclusive purchasing deals signed by Boeing with big US carriers Delta and American.

Gordon Bethune, the chief executive officer of Continental, was reported yesterday to have asked Boeing to make the airline an offer on the basis of an exclusive deal. Under it, Boeing would supply all Continental's fleet needs for decades.

It is widely believed that by making their beds with Boeing alone, both American and Delta won considerable discounts from the aircraft maker.

Moreover, airline chiefs are increasingly interested in having fleets composed of aircraft from just one manufacturer. The advantages of a single-brand fleet include simplified, and cheaper, training and maintenance arrangements.

It may not, however, be too late for Airbus to beat back Boeing on the Continental deal. The carrier is seeking to replace its fleet of 27 DC-10 jetliners with new medium-capacity aircraft. A first order could amount to as many as 40 aircraft with a ticket value of some $4.1bn (pounds 2.5bn).

Airbus has reacted furiously to the American and Delta deals, accusing Boeing of committing unfair marketing practices. The consortium is still considering whether it can launch legal challenges of the two deals.

Airbus has also publicly questioned American and Delta over the wisdom of deals that effectively shut off any competitive bidding for their future aircraft acquisitions.

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