United Airlines announced its largest ever aircraft order on Tuesday: 270 narrow-body aircraft from Boeing and Airbus as the airline pegs its post-pandemic growth.
The fleet plan is central to United’s goal of attracting more travelers, especially high-paying travelers in major coastal hubs like San Francisco and Newark, New Jersey. The Max 10 and A321neo aircraft are the largest models in their families and United will use them to grow in capacity-constrained markets, said Andrew Nocella, United’s chief commercial officer.
It also plans to expand into hubs like Denver and Chicago and have annual system-wide growth of about 4 to 6% over the next several years, Nocella said.
In a far-reaching growth plan, the airline announced it would add roomier seats and back entertainment, a departure from an earlier strategy.
The airline also announced a recruitment course that is expected to include around 25,000 employees for the new aircraft, including pilots, flight attendants and mechanics.
The contract shows United’s optimism about the recovery of air travel, which has previously focused on domestic recreational flights. United announced on Monday that for the first time since January 2020 it will post positive adjusted pre-tax earnings for the next month.
United and other airlines took $ 54 billion in federal payroll to keep workers busy. CEO Scott Kirby said the airline’s strategy of training pilots and flying similar planes enabled it to be prepared for the rebound in demand.
Boeing stock rose less than 1% in early trading. United’s were down slightly. Several analysts had expected the airline to announce a major order.
The order includes 200 Boeing Max jets. Of these aircraft, 150 are Max 10, the largest in the family. Boeing completed the first Max 10 test flight earlier this month.
The remaining 50 Boeing aircraft are the manufacturer’s most popular model, the Max 8.
The large purchase on top of United’s existing order book for Max aircraft is another vote of confidence in the aircraft manufacturer, which is struggling to regain a foothold after two Max crashes and several production problems.
United also plans to purchase 70 Airbus 321neos, adding an order for dozens of the long-haul version of the aircraft.
Sales are valued at more than $ 30 billion at list prices, but airlines typically receive significant discounts, especially on large orders. United declined to disclose what it was spending on the plane. The order is likely closer to $ 15 billion, estimated Rob Morris, global advisory director at Ascend by Cirium, which evaluates aircraft and provides a variety of other industry data.
The airline now has around 500 narrow-body aircraft arriving from next year.
About 200 of the planes will be used to expand the airline’s fleet to 500 planes while 300 will replace older jets like the Boeing 757-200 that are being retired, Nocella said.
Some of these planes will replace older single-class, 50-seat regional jets. It’s part of United’s efforts to attract higher paying travelers. Larger aircraft with more seats and amenities will make United more competitive, the airline said in an investor presentation.
United executives said flying the larger mainline jets means more First Class and Economy Plus seats or bus seats with more legroom can be added. It also unveiled new interiors for the aircraft that include backrest screens and larger overhead bins that it claims will fit in any passengers’ carry-on baggage.
United said it will offer larger overhead bins on its new aircraft.
Source: United Airlines
This focus on higher-priced seats – and the customers who will pay more for them – is an attempt to beat Delta Air Lines’ competition. Prior to the coronavirus pandemic, Delta focused heavily on these travelers – especially at coastal hubs – adding more legroom and roomier jets between cities that traditionally attracted valuable business travel.
The demand for business travel was decimated in the pandemic, but has recently declined, according to analyst reports.
United CEO Kirby told reporters that he expects demand for business and international travel to “recover 100%”. He said demand for business travel is still 60% lower than before the pandemic but has improved.
Comeback of the seat back
United plans to equip new jetliners with seat back umbrellas.
Source: United Airlines
Another shift in United’s strategy is that it will add seatback entertainment to its planes, something United had moved away from. Rival American Airlines – where Kirby worked before joining his current airline as president five years ago – had removed the backrest screens from older aircraft and added new narrow-body aircraft without them.
Executives had argued that many travelers would use their personal electronic devices to stream movies.
Other airlines like Delta and JetBlue Airways still offer seat back entertainment systems.