June 30, 2021: United Airlines unveiled its largest-ever aircraft order on Tuesday: 270 narrow-bodied jet liners carriers from Boeing and Airbus as the airline charts progress after the pandemic.
The fleet plan is central to United’s goal of capturing more travelers, particularly high-paying ones in major coastal hubs like San Francisco and Newark, New Jersey. The Max 10 and A321neo planes are the largest models in their families and United will use them to grow in those markets, which have capacity constraints, said Andrew Nocella, United’s chief commercial officer.
Nocella said it plans to expand to centers such as Denver and Chicago over the next few years, and that the systemwide annual growth rate will be around 4% to 6%. In the broader development plan, the airline said it plans to add more room seats and back-to-back entertainment, a departure from the previous strategy. The airline has announced a lease, which it expects to employ about 25,000 people for the new aircraft, including pilots, flight attendants and mechanics.
The order raises hopes for a resumption of U.S. air travel, which has so far focused on domestic recreational flights. United expects positive, adjusted pretax earnings next month for the first time since January 2020 on Monday.
United and other airlines received $54 billion in federal grants in exchange for hiring workers. CEO Scott Kirby said the airline’s strategy of training pilots and flying similar aircraft provided an opportunity to be prepared to meet demand. Shares of Boeing fell 1.8 percent to close at $235.76, and United fell 0.7 percent to $52.15, while the S&P 500 ended less than 0.1 percent. Several analysts had expected the airline to announce a larger order.
The order includes 200 Boeing Max jets. Of these, 150 are at max 10s, the largest in the family. Boeing completed the first flight of the Max 10 earlier this month. The remaining 50 Boeing aircraft are the most popular models of the manufacturer, a maximum of 8. The large purchase at the top of the United’s current order book for Max aircraft is another vote of confidence in the aircraft maker, which struggled to regain its footing after the crash of two Maxes and several production difficulties.
United also plans to buy 70 Airbus 321Neos, increasing orders for dozens of long-range versions of the aircraft.
The sale is worth more than $30 billion at list prices, but airlines, particularly for large orders, generally receive substantial discounts. United declined to disclose what it is spending on the aircraft. The order is likely closer to $15 billion, estimated Rob Morris, global head of consultancy at Ascend by Cirium, which appraises aircraft and provides a host of other industry data.
The carrier now has about 500 narrow-body aircraft scheduled to launch next year. About 200 aircraft will be used to augment the airline’s fleet of 500 aircraft, while 300 will replace older aircraft such as its Boeing 757-200, which will retire, Nocella said.
Some of those planes will replace older single-class, 50-seat regional jets. That’s part of United’s push for higher-paying travelers. Larger planes 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 it will be able to add more first-class and economy-plus seats, or coach seats with more legroom. It also unveiled new interiors for the planes that include seatback screens and larger overhead bins, which it says will fit every passengers carry-on bag.
Another shift in United’s strategy is that it will outfit its planes with seatback entertainment, something United had moved away from. Rival American Airlines, where Kirby worked before joining his current carrier five years ago as president had taken seatback screens out of older planes while also taking in new narrow-body planes without them.
Executives had argued that many travelers would use their personal electronic devices instead to stream movies.
Other airlines like Delta and JetBlue Airways still offer seatback entertainment systems.
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