How Expensive Is It For Airline To Update Its Fleet

United Airlines Plans a Record Fleet Expansion as Travel Rebounds

The carrier is ordering 270 single-aisle planes from Boeing and Airbus, signaling confidence that the pandemic is receding and travelers will spend on premium service.

Credit... Chris Helgren/Reuters

Published June 29, 2021 Updated Sept. 29, 2021

United Airlines appear on Tuesday that information technology would place the largest order for airplanes in its history and create well-nigh 25,000 jobs a year later on a pandemic devastated its business, betting on a domestic travel boom and demand for more than expensive, premium seats.

The order, for 270 single-aisle Boeing and Airbus planes, is the biggest aircraft buy from a U.Southward. airline in a decade and will allow United to increase the number of planes in its fleet and their average size. As part of that expansion, the visitor expects to hire more people, including up to 5,000 in Newark and iv,000 in San Francisco.

United'southward buy is the strongest signal yet that airline executives believe that the coronavirus pandemic is petering out in the United States and that demand for travel is set to increase strongly in the next several years. Merely a year agone, the airline industry sought authorities bailouts and borrowed billions of dollars to survive.

The order is besides a big win for Boeing, which has struggled to regain its credibility with regulators and airlines later on two fatal crashes grounded its elevation-selling plane, the 737 Max. The manufacturer volition supply 200 of United'south new planes, all versions of the 737 Max. Airbus will provide the remaining 70, all from the A321neo line, which competes directly with the Max.

United, which is based in Chicago, declined to say how much information technology was paying for the planes or how the orders would be financed. In a securities filing, the visitor said it expected to spend nearly $36 billion in the coming years for planes, plane improvements, engines and other capital investments. About 40 percent of that amount volition be spent by 2023, when it expects the first of its 270 planes to be delivered.

American Airlines announced in 2011 that it was buying 460 planes, the last major order past a U.S. airline. United's fleet is older than that of American and Delta Air Lines, its ii biggest competitors. And about a 3rd of United'south flights employ fifty-seat regional jets, which offer simply a single class of seats. The new order, combined with existing orders, will help the airline decrease the share of flights on those modest planes to well-nigh 10 percent, enabling it to sell more premium tickets.

Including previously appear orders, United expects to add more than than 500 planes in the coming years. Virtually 300 will supervene upon smaller jets, while 200 will be used to expand the armada. The airline is likewise planning to upgrade existing unmarried-aisle planes to match the interiors of the new planes, with a focus on amenities like seat-back screens and better internet service. The airline has just over 800 planes.

"Information technology's nigh building an airline that can compete with anyone," Andrew Nocella, the airline's chief commercial officer, said in a phone call with reporters.

Past 2026, the expansion, which the company is calling "United Next," will increase the number of seats per United flight in North America by nearly 30 pct and increase the number of premium seats per flight by 75 percentage. In expanding the number of first- and business-class seats for auction, United is hoping to lure away affluent and business travelers from Delta, which markets itself every bit a premium airline.

Aeroplane prices vary greatly past transaction, only such large aircraft purchases are typically deeply discounted, and Boeing'due south outsize share of the lodge probably reflects an even amend deal for United, according to George Dimitroff, head of aircraft valuations for Arise by Cirium, a consulting firm that specializes in aviation.

The order is one of several that Boeing has won in the months since global regulators began lifting their bans on the 737 Max tardily last year. The manufacturer has struggled to sell a larger 737 Max model, the Max 10, but United's order includes 150 of those jets and 50 of the smaller and more popular Max eight. That is important considering while the two models toll nearly the aforementioned to build, a Max x sells for more. Cirium values a Max x at about $l million apiece, compared with less than $44 meg for a Max 8. (United said the Max 10 would seat 189 passengers compared with 166 for the Max 8. The A321neo will seat most equally many equally the Max x.)

"It makes sense for United, information technology makes sense for Boeing," Mr. Dimitroff said.

The new planes are best suited for domestic flights, though they could be used on some trans-Atlantic routes. And while the social club includes none of the larger, twin-aisle planes typically used for international flights, United has taken commitment of about xxx of those planes — Boeing 787s and 777s — over the by two years.

"At that place wasn't a demand for us to gild wide-torso jets right now," Mr. Nocella said. The airline expects to wing more flights internationally in the summer of 2022 than information technology did in 2019, he added.

United laid the groundwork for this calendar week's order last summer during a daylong executive meeting at O'Hare International Airdrome in Chicago, said Scott Kirby, the airline's chief executive. The airline decided not to retire any planes during the pandemic, which other airlines were doing, and began to lay the strategy for the current social club.

"We sat around and spent the day talking near where we thought the world was going to get, and it's turned out to be very close to what nosotros thought it would be," Mr. Kirby said in a call with reporters.

Air travel has slowly recovered throughout the pandemic, a recovery that accelerated in recent weeks equally people began summer vacations. On Sunday, the Transportation Security Assistants screened nearly 2.ii one thousand thousand people at airports, the most since the pandemic began 16 months ago. United said this week that information technology expected to earn a monthly pretax profit in July, its first since Jan 2020.

United said the new planes it was ownership would help improve its overall fuel efficiency by about 11 percent.