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"UAL Places Orders for Unit Readying Fractional-Jet Plan"



Monday, June 18, 2001

UAL Places Orders for Unit Readying Fractional-Jet Plan
By ANNE MARIE SQUEO
THE WALL STREET JOURNAL


PARIS -- UAL Corp. placed orders that could total $3.75 billion over time
with Dassault Aviation SA and Gulfstream Aerospace Corp. to buy new business
jets that will help launch the airlines' new recently announced
fractional-jet ownership plan.

United BizJets Holdings Inc., a unit of UAL, Chicago, ordered 40 Falcon jets
from Dassault, based here, with options to purchase 60 more, in a total
package valued at about $2.5 billion. The UAL division also ordered 12
Gulfstream jets, with options to buy 23 more. That transaction, which also
includes a long-term maintenance agreement to support the planes, totals
about $1.25 billion, say officials at Gulfstream, a division of General
Dynamics Corp.

The orders are the first official move by the new UAL unit to snatch a share
of the fast-growing market to sell theoretical fractions of a jet to those
who are reluctant to own one. Companies such as Berkshire Hathaway Inc.'s
Executive Jets pioneered this plan and have attracted a number of imitators
since. By establishing its own fractional-jet ownership plan, UAL's United
Airlines is hoping to win back the business travelers it has been losing in
recent years amid numerous labor slowdowns, airport delays and other
problems.

"We concluded that commercial airlines only provide a portion of the
air-travel needs that these customers have," said Stuart Oran, president of
United BizJets. The company aims to have its first aircraft operating by the
second quarter of next year and have as many as 200 business jets in its
fleet within five years.

The orders will give the new business a mix of high-end and lower-end
business jets. Prices can vary depending on optional equipment and
bargaining tactics, but Gulfstream planes typically cost more than most
other business jets. United is set to take delivery of its first Gulfstream
in May 2002, with the rest of the deliveries extending to 2006. The first
Falcons will beginning arriving from Dassault later that same year, company
officials said.

United's choice of Dassault is good news for jet-engine maker Pratt &
Whitney, a unit of United Technologies Corp., which has had difficulty
winning new orders for its engines. Pratt & Whitney makes engines for
Dassault's Falcon. Separately, Pratt & Whitney received a maintenance
contract valued at more than $400 million from United, covering some of the
airline's existing commercial jetliners.

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