United Airlines revises fleet plan

April 23, 2015: United Airlines announced its 1Q2015 earnings today (which will eventually be posted with commentary on SkyWriterAviation.aero). What caught our eye in the press release was the following. United will:

  • Complete the removal of more than 130 50-seat aircraft from its schedule by the end of 2015. UAL will remove additional 50-seat aircraft in 2016 and beyond as aircraft come off lease.
  • Exchange 10 787 orders with Boeing for 10 777-300ERs for delivery beginning in 2016. The new 777-300ER aircraft will provide attractive upgauge and range opportunities to the company at competitive economics.
  • Extend the life of 11 additional 767-300ER aircraft. The company now plans to extend the life of all 21 767-300ER through investments in winglets, reliability improvements and interior modifications, which will improve financial performance and make the aircraft more customer pleasing.
  • Reconfigure and transition 10 777-200 aircraft currently used in international markets into the domestic network, and position a number of its trans-Atlantic 757-200 fleet into the domestic and Latin markets, with the extension of the 767-300ER aircraft.
  • Acquire additional used narrowbody aircraft. The company is in final negotiations regarding the lease of 10 to 20 used narrowbody aircraft for delivery over the next few years. In addition, the company plans to continue to seek other opportunities to acquire used aircraft to meet its needs as market conditions allow.

Removing 130 50-seat aircraft is a lot of lift, being replaced by Embraer E175s through its partners. We understand Boeing is pitching those 25 E-Jets it will take in on trade from Air Canada as part of the 737 MAX deal to United.

Exchanging the Boeing 787-9s for the 777-300ERs is, by now, anti-climactic. This deal has been in the works since late last year. UA already released the 789 delivery slots back to Boeing and some of these already have been placed with other carriers. This deal is part of Boeing’s all-out effort to fill the production gap for the 777. The UA 777s are believed to be scheduled for delivery in 2017 and 2018. Our Market Intelligence indicates the pricing to UA of about $130m-$135m, including Buyer Furnished Equipment. This is a substantial discount to the usual market price of $150m to $170m.

Extending the operation of UA’s 767-300ERs is something we reported in our Aviation Partners Boeing article. We reported that APB is planning a scimitar feature for the Boeing 757 and 767, with United interested in this additional technology. The addition of the scimitar will result in a further economic savings of 1.5%, APB calculates.

Shifting some of the 757Ws from the Atlantic to US domestic and Latin America, replacing them with the 767-300ERs, accomplishes several things. The 767s allow for growth in the 757s markets; better passenger appeal is achieved; the occasional fuel tech stop required by 757s is eliminated; and UA is able to increase service on long-thin routes in Latin America. Shifting some 777-200s from international to domestic is a particularly interesting development. This returns this aircraft to markets not seen in decades. UA hasn’t said which markets will be assigned to the 777s, but we’d guess US trans-con in the hotly competitive New York-LA/SFO markets are going to be beneficiaries. It will be interesting to see what American and Delta airlines and JetBlue will do in responses. United at one time operated the 777-200 between Seattle and Chicago.

Acquisition of more used aircraft is not a surprise to those of us inside the industry. We’ve heard of UA looking for more Boeing 737NGs for some time.

24 Comments on “United Airlines revises fleet plan

  1. Why not buy some new 767-300ER? It may be awhile before the MOM is delivered.

    • Why buy new, when Qantas retired its whole fleet of 767-300ER there were about half a dozen with under 10 years use.

  2. “The 767s allow for growth in the 757s markets; better passenger appeal is achieved; the occasional fuel tech stop required by 757s is eliminated;”

    They weren’t occasional at all and a Media drama hurting the United and Star Alliance Brand. Frequent flyers / connection flyers were avoiding them like hell & do a search on the social media..

    After finding a solution, even United was honest about when they send around this internal memo:

    “We are making aircraft upgauges on some routes between EWR and locations in Europe beginning this fall to help reduce fuel stops and to meet customer demand and cargo opportunities in these markets.

    We were already replacing Boeing 757s with Boeing 767s on flights from EWR to BCN (Barcelona, Spain) and TXL (Berlin) this summer and now they will continue as 767s year-round.
    We will make the same upgauges from EWR to HAM (Hamburg, Germany) and MAD (Madrid, Spain) effective Oct. 25.

    The upgauge to 767s will reduce fall and winter fuel stops on westbound flights due to high winds and improve our reliability on these routes.

    We will load the changes into SHARES on April 18. ”

    About the 787/777 switch, I guess this is very good news for Boeing and United got great cheap capacity. Win-Win! The 787 back-log reduced with a few underpriced 787s won’t cause any loss of sleep and they are less needed while the 767 stay longer. Well done United / Boeing IMO.

    • “Exchange 10 787 orders with Boeing for 10 777-300ERs for delivery beginning in 2016.”

      Is that a 1 for 1 swap or does it include tab changing ?

  3. “Exchanging the Boeing 787-9s for the 777-300ERs is, by now, anti-climatic.”

    I think you mean “anti-climactic” as in having no climax as opposed to “anti-climatic” meaning opposed to the weather… although I suppose if the 777-300ER has higher carbon emissions than the 787-9 both might apply!

    • Scimitars are currently a development of Aviation Partners Boeing. ‘Nuf said.

      • Well I think we should add in that Aviation Partners built and proposed the Winglet for the A320.

        Airbus claims they came out with their own (hmmm) and Aviation Partners is suing Airbus for copying their curved winglet that now goes on the A320.

        It certainly looks identical to what Aviation Partners builds and proposed, though of course lawyers will put in the techno mumbo jumbo that conclusively proves it is not (Airbus lawyers of course)

      • Let me rephrase that.is there any technical or intellectual property problem that prevents aviation partners Boeing from supplying scimitars to Airbus customers.or anything to prevent Airbus designing something similar.

    • Some would argue that UA’s current fleet is already dirty enough …

  4. are you going to do evaluations of delta and american’s fleet plans also?

    • DL and UA haven’t announced alterations to their existing fleet plans, so no immediate plans to do so.

  5. Something that made me chuckle a bit…

    The order swap “gives lie to the idea that the 787 was a game-changing aircraft,” says Richard Aboulafia, an aerospace analyst with Teal Group. “The 787 is a great plane, but is it a quantum leap better than the 777-300ER? Clearly not.”

    http://www.bloomberg.com/news/articles/2015-04-23/ditching-dreamliners-here-s-why-united-just-bought-a-bunch-of-older-airplanes

    This goes a bit further than his previous “drug-like rush” remark on the CFRP 787’s early customer frenzy.

  6. Pingback: » Daily Aviation Brief – 28/04/2015

  7. Pingback: United Makes Some Big Fleet Changes, More Widebodies Coming to Domestic Flights | The Cranky Flier

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