June 26, 2022

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. It also plans to expand hubs like Denver and Chicago.

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 order shows United’s optimism about the recovery of air travel, which has previously focused on domestic recreational flights. United announced Monday that it would post positive adjusted pre-tax earnings for the first time since January 2020 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.

After the announcement, Boeing shares rose 1% in pre-market trading. United’s value was down 0.3%.

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.

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 aircraft while 300 will replace older jets like the Boeing 757-200 that are being retired, said Andrew Nocella, United’s chief commercial officer.

Premium travelers

Some of these planes will replace older single-class regional jets. That’s part of United’s push towards higher paying travelers.

United executives said flying the larger mainline jets means they can add more first class and economy plus seats or bus seats with more legroom. It also introduced new interiors for the aircraft, which include seatback umbrellas and larger overhead bins.

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 competitor Delta Air Lines. Prior to the coronavirus pandemic, Delta focused heavily on these travelers – especially at coastal hubs – adding more legroom and roomier jets between business hubs.

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% below pre-pandemic levels but has improved.

Comeback of the seat back

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 seat back screens from older aircraft while adding new narrow-body aircraft without them.

Executives had argued that many travelers would use their personal electronic devices to stream movies.

United plans to equip new jetliners with seat back umbrellas.

Source: United Airlines

Other airlines like Delta and JetBlue Airways still offer seat back entertainment systems.