Continental Airlines Orders 34 More Boeing Planes

Continental Airlines on Tuesday announced an order for 34 additional Boeing jets, including 10 of the cutting edge 787 Dreamliners and 24 of the 737s, a staple of low-cost carriers around the world.

With 10 of the 787s already on order from Boeing, the deal for 10 more will put the Houston carrier in the position of being the biggest customer for the new aircraft, which has yet to be built. The planes, which have two aisles and three rows of seats, will be used to fly to foreign destinations, the airline said.

The order for 24 more of the smaller 737 Next Generation model jets will be used to replace older model 737s. The single-aisle jets are well suited to domestic routes and make up more than 70% of Continental's fleet.

A 787's list price ranges from $138 million to $188 million, while a 737 Next Generation's list price spans $54 million to $80.5 million, according to Boeing's Web site. Airlines typically pays less than list price for planes.

Continental didn't detail what type of 787 and 737 aircraft it is going to order.

The 737s will start to arrive in 2008 at Continental and the 787s in 2009, the airline said.

Both aircraft are designed with fuel efficiency in mind. On Monday, Continental (CAL) said that it expects fuel prices to average $2.13 a gallon this year. In 2005, the average price per gallon for Continental was $1.78 a gallon, which was up from $1.19 in the prior year.

The interest in new aircraft is only the beginning of orders expected this year from U.S. carriers, according to UBS analysts.

"Continental has a relatively young fleet and is buying new aircraft mainly for growth purposes," wrote analyst David Strauss. "We believe many U.S. and European airlines are still likely to place orders this cycle to replace older aircraft."

Both Boeing and Airbus had record years for orders last year, topping 1,000 aircraft each. Much of the demand came from airlines in Asia and the Mideast looking to build out their fleets. Facing up to fragile finances, the major U.S. carriers like American Airlines (AMR) and United Airlines (UAUA) have held off on orders. Northwest Airlines (NWACQ) also has 787s on order with Boeing.

Continental stock closed down 1.6% to $23.62, while Boeing shares lost 1.8% to $80.65.

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