United Airlines and Boeing are planning a big announcement today at the airframe manufacturer’s facility in South Carolina. They’ve been expected to announce a huge order for Boeing 787s, which should be line-fit with a new Polaris business class suites with doors.
Ahead of the announcement details of the order have already been released. The Boeing 787 details are correct but they’re ordering MAX aircraft, too.
- 100 Boeing 787s, with options for an additional 100 planes, to be delivered 2024-2032
- 56 Boeing 737 Maxs, plus exercising options on 44 that were previously ordered
Last year United placed a massive order for 737 MAX aircraft and so today’s announcement was largely expected to focus on widebody 787s. When those MAXs were ordered, United announced a premium strategy that involved new planes being delivered with fast wifi and seatback entertainment and retrofitting their existing fleet however after 18 months none of those promised retrofits have yet happened.
.@united's expected aircraft delivery schedule as of Dec. 13, 2022. $UAL $BA https://t.co/kjfCk8lqqD pic.twitter.com/M1TUxGZjmG
— Ross Feinstein (@RossFeinstein) December 13, 2022
The 787s are expected to replace the airline’s 767 fleet, and earlier-to-retire 777s. United was never realistically going to order Airbus widebodies, since the carrier’s widebody fleet is exclusively Boeing to start with. Adding Airbus widebodies would have required massively undercutting Boeing because of the complexity it would add to their operation.
UAL’s capex will hit $10 billion per year for several years…. that level of spending is simply not sustainable for any US airline. American spent a fraction of that and ended up underperforming financially for years because of the higher interest and aircraft ownership costs.
UAL stock is falling in pre-market trading while other US airlines are up. Wall Street doesn’t like this level of spending.
Let’s also not forget that United’s pilot leadership is still wrestling from the fallout from the failed contract proposal that was shot down by UAL pilots. UAL is going to pony up some significant cash just to get its pilots up to what will be industry comparable pay and then that process will have to extend to other labor groups. When a company spends massive amounts on assets but has internal labor discord there are plenty of reasons for red flags
Meh. I’ll believe it when I see it.
Sulk @Dunn, Sulk!!! You can’t believe your eyes now can you!! Lol haha say what you want , UNITED ROCKS!! Delta is ancient flying shit!!!
@Tim Dunn, at least you won’t be able to say UA’s fleet is inefficient compared to DL’s! You take a dig at UA without the order and then again with the order.
Wonder where the 767-400s will end up? Maybe at Delta?
David
Debt. What debt? When you can belly up to the government cash trough life is good.
GPG,
UAL stock is leading the airline industry down today on a day when the broader stock market indices are up
Actual investors – the people that own UAL – are concerned as I have said they should be.
Other airlines simply have much less risky plans to succeed in the marketplace.
It will be interesting to see how the newest 737 variants play out given the FAA appears not to be bending on the certification date issue.
Thanks for your response @Tim Dunn so promptly. However, not to elicit the financial pov, this is a Huge Deal!! You can’t deny the fact that it’ll have repercussions for decades to come. Not only is UA quickly on its way to become the world’s largest airline overtaking everybody else, but also one of the newest, if not the newest single aisle and wide body fleets in the world. That alone, should be more than enough reason to celebrate such an astounding accomplishment.
GPG,
there isn’t a single true for-profit airline that has set out to be the largest or have the most dots on its route map that has turned out to be top tier in terms of profitability. Not one.
United Airlines is first and foremost a publicly traded for-profit company.
Its stockholders today are selling off the stock more than any other airline except for JBLU which made yet another set of excuses for what will certainly be another earnings miss this quarter.
Perhaps Scott Kirby counts wiping out a bunch of stockholder value as just part of the price of the deal but stockholders aren’t impressed.
and the next major business development for UAL will likely be a downgrade in its credit rating which will increase the cost of all of these new airplanes.
I would have preferred the wider cabin of the A350. Interested to see what improvements they make with Polaris 2.0 seats. Hopefully something more meaningful then checking the “has door” box.