TWA’s 717 Order Is Good News in Short Haul

Trans World Airlines’ newly announced order for up to 100 Boeing 717 jetliners improves prospects for the Long Beach aircraft program, but it still may not be enough to secure the plane’s long-term future.

St. Louis-based TWA also announced orders Wednesday for up to 150 planes from rival Airbus Industrie--a move that dulled the deal’s glow for Boeing.

TWA, despite ongoing financial difficulties, has signed letters of intent to buy the planes, worth a total of as much as $9 billion. The purchase represents the airline’s largest order ever and remains key to its turnaround plans.

TWA said it will buy 50 Boeing 717s, with options for 50 more. It will use a 111-seat version of the jet to replace many of its aging DC-9 planes on regional flights.

From Airbus, TWA will buy 50 A-318s--a planned competitor to the 717--and 25 planes from the Airbus A-320 “family” of planes. The airline will also hold options for an additional 75 planes from within the Airbus A-320 family, with the exact models to be selected later, TWA said.

“It’s a plus for the 717 program,” said John Walsh, an industry consultant in Annapolis, Md. “But the TWA order is the best one they’ve got.”

TWA’s order lessens concern that had been building recently over the short-haul 717’s fate. In Long Beach, where 1,500 to 2,000 employees work on the 717, anxiety has been particularly high. Under current production plans, the work force could grow to 2,500 employees--growth that would partially offset other layoffs scheduled for the facility in 1999 and 2000.

Three years ago, AirTran Airways--formerly ValuJet--committed to buying 50 of the planes, with options for 50 more. But AirTran, like TWA, also faces financial stability questions.

In May, Boeing landed orders for five more planes from Bavaria International Aircraft Leasing.

But no new orders emerged for months--despite the plane’s roll-out and the start of test flights over the summer. The drought was broken earlier this week, when European leasing company Pembroke Capital put in an order for 10 717s.

That gives Boeing 115 firm orders for the Long Beach-built jet and options for 100 more.

“This is a happy bit of news, because I felt that the 717 outlook was partially bleak,” said Bill Klein, unit chairman of the Southern California Professional Engineering Assn., a union representing about 3,500 Boeing engineers. “Now we have some significant orders.”

Still, analysts suggest that because both Boeing and Airbus fought hard for the deals, they may have been forced to offer heavy discounts and grant TWA the right to walk away from the commitment.

Gerald Gitner, TWA chairman and chief executive, declined to divulge contract details. But he said he remains committed to the 717.

“We think it’s a good airplane and it fits into our system,” Gitner said.

Boeing shares rose 13 cents to close at $34.56 on the New York Stock Exchange. TWA gained 50 cents to $5.63 on the American Stock Exchange.