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:
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.