OAG Travel News

UAL Corp., parent of United Airlines, may cancel an order for 42 Airbus aircraft, forfeiting a $91-million (U.S.) dollar deposit and possibly heralding a wave of deferrals and cancellations for the major plane makers as their customers scale back growth plans.

The airline, one of Airbus' best U.S. customers, is currently committed to pay $2.2-billion for the purchase of 42 A319 and A320 single-aisle aircraft. If it does cancel the order, UAL would forfeit the advance deposit paid to Airbus.

It is “highly unlikely that (UAL) will take future delivery of these aircraft,” UAL said in a July 24 filing with the U.S. Securities and Exchange Commission.

The U.S. airline industry, suffering under the weight of soaring fuel costs, is rapidly shrinking. United has said it would cut its fourth-quarter capacity of its main operations by up to 16.5 per cent, meaning it will need fewer planes to serve its routes.

Some analysts have said Airbus, a unit of Europe's EADS , and rival Boeing Co could lose a quarter or more of the plane orders on their books as carriers cut back growth plans in the face of high fuel costs.

Airbus has had 43 order cancellations so far this year, according to its website, but some of those are accounted for by shifts to a new version of its A350 model. It said earlier this year that U.S. low-cost carrier JetBlue Airways Corp. will defer some deliveries.

Boeing has had no cancellations this year, but has said Southwest Airlines Co. and AirTran Holdings Inc. have deferred some orders.

Source: http://ago.mobile.globeandmail.com