United Airlines announced plans on Tuesday to buy 110 new airplanes, expanding its bet that the travel business would grow in the coming years even as evidence mounts that demand for flights is weakening right now.
The airline plans to buy 50 Boeing 787 Dreamliners, a twin-aisle plane, and 60 single-aisle Airbus A321neos. Deliveries will begin in five years. United did not disclose the value of the order. Based on list prices, the order would be worth at least $19 billion, but airlines typically negotiate steep discounts when ordering dozens of planes.
The purchase builds on several large orders. United has already started to receive some of those planes, with an additional 761 expected to be delivered over the next decade, including those in Tuesday’s order. The aircraft will be used to replace and expand the airline’s aging fleet, the oldest among the four large U.S. airlines.
“I’m convinced our strategy is the right one as we continue to add new, larger aircraft to take full advantage of our growing flying opportunities both internationally and domestically,” United’s chief executive, Scott Kirby, said in a statement.
The new, larger aircraft will help United carry more passengers without having to add more flights, which is becoming more difficult because of limited availability of airport gates and runways, insufficient staffing at air traffic control facilities, and overall congestion. In 2019, United offered about 104 seats on average per flight taking off in North America. By 2027, it expects that number to rise to more than 145, it said.
Adding more seats per flight will also help the airline reduce costs. Newer planes are typically more fuel efficient than older aircraft. The airplanes in United’s new order use 20 to 25 percent less fuel per passenger than similar, older planes, according to Boeing and Airbus.
United placed its largest aircraft order, for 270 planes, in 2021, followed by another order last year for 100 Dreamliners. Those orders allowed the airline to “secure the best possible deal terms,” Andrew Nocella, United’s chief commercial officer, said on a call with reporters.
Demand for airplanes has been growing for several years. Airlines have been frustrated, though, that Boeing and Airbus have not been able to produce planes as fast as they want because of supply chain disruptions and quality concerns.
There are signs that demand for tickets, particularly on domestic routes, may be softening. At the same time, jet fuel prices have risen much faster than expected in recent months.
Companies like United, however, have expressed confidence in their prospects, citing strong and sustained demand for international flights. “We expect a disproportionate part of our growth in the second half of this decade to come from global long-haul flying,” Mr. Nocella said.
Major airlines are expected to offer more details on their business when they announce financial results for the third quarter, starting with Delta Air Lines next week.
Source: The New York Times
BDST: 0947 HRS, OCT 04, 2023
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