From Chicago, Boeing (BA) announced Thursday that it has accepted an order for 150 737 jets from United Air Lines, a subsidiary of United Continental (UAL), with deivery expected beginning in 2015 and concluding in 2022. The terms of the deal, worth about $14.7 billion, includes 100 of the 373 MAX 9 planes and 50 next-generation 737-900ER extended-range jets.
In announcing the deal in a press release, Boeing CEO Ray Conner said, “United and Boeing share a rich history together and we are delighted United has chosen the 737 for its future fleet, renewing our partnership for decades to come. We believe the 737 provides unsurpassed quality and value in the market and will provide efficiencies and other benefits to United’s operations.”
Despite the news, Goldman Sachs gave a “sell” recommendation to United Continental stock, but in Boeing’s release, United CEO Jeff Smisek said, “This order is a major step in building the world’s leading airline, and we look forward to offering our customers the modern features and reliability of new Boeing airplanes, while also making our fleet more fuel efficient and environmentally friendly. New aircraft deliveries support our flexible fleet plan, permitting us to tailor future capacity up or down, based on changes in demand or other market conditions.”
In the wake of this deal, Boeing stock inched up Thursday, while United Continental has slumped nearly 4 percent thanks to the Goldman Sachs recommendation.
This deal should bode well for Boeing stockholders, including Ken Fisher’s Fisher Asset Management and Adage Capital Management of Phil Gross and Robert Atchinson. These two funds were invested at nearly $600 million at the end of March, so this order should be welcome news. On the other hand, David Tepper’s Appaloosa Management, LP, is seeing its state in United Continental take a hit with the Goldman recommendation overshadowing this purchase. In the first quarter of 2012, Appaloosa had increased its stockholding in UAL by nearly 600 percent to $171 million. Unless the details of the purchase can oversahdow the Goldman news, Appaloosa will feel the pinch with 4 percent of its portfolio invested in UAL.