General Dynamics Wins United Airlines Order for Business Jets

General Dynamics Corp.’s Gulfstream unit said Sunday that it won an order from UAL Corp.’s United Airlines for as many as 35 business jets worth as much as $1.25 billion for the airline’s new business-jet venture.

United is buying 12 jets and taking options on 23 more, with deliveries beginning in the second quarter of next year, Gulfstream Aerospace Corp. President Bill Boisture said at the Paris Air Show. On Saturday, the airline ordered 40 Falcon jets from Dassault Aviation of France and took options for 60 more in a contract worth as much as $2.5 billion.

United is setting up the corporate jet arm in response to a drift of first-class passengers to business jets, bought mostly through fractional ownership programs. The company is the first major airline to move into the business and will sell ownership stakes in the planes to individuals and companies.

“We selected Gulfstream because of its strong reputation in the market for safety, comfort and reliability and the company’s long-term commitment to product support and service,” said Stuart Oran, president of United Bizjet Holdings.

The initial firm order will comprise seven Gulfstream IV-SP jets and five larger Gulfstream Vs, Boisture said. The options will be divided among GIV-SPs and new extended-range GV-SPs, now under development.

United has said it’s aiming for a fleet of about 200 aircraft by 2006. Boeing Co. has said it is talking to United about its Boeing Business Jet, developed from the single-aisle Boeing 737 airplane.

United Bizjet intends to offer “a full range of business aviation products from light aircraft to ultra-long-range aircraft like the GV,” Oran said. “We are not planning on ordering in the fractional program any aircraft larger than the GV-SP.”

Larger aircraft may be ordered for a later corporate shuttle operation. These orders may include the Boeing’s business jet or the Airbus Industrie corporate jet, based on the A-319 aircraft, he said.

United Bizjet is going to be run completely separately from United Airlines’ business, Oran said. The company is “a United investment, not a United subsidiary,” he said. It will rely on United’s technical and operational expertise, while hiring from outside the airline industry in such areas as cabin crew and customer relations.

Business jet sales in general have been booming, tripling in value from 1995 to 2000 after three decades of weak demand, according to Teal Group Corp., a Fairfax, Va.-based research firm.