Jnews is about news!

United Airlines makes big Boeing order, includes 100 Dreamliners By Reuters


© Reuters. FILE PHOTO: Invited guests for the premiere of the Boeing 787 Dreamliner are reflected in the fuselage of the aircraft at the 787 assembly plant in Everett, Washington, July 8, 2007. REUTERS/Robert Sorbo/File Photo

By David Shepardson and Rajesh Kumar Singh

NORTH CHARLESTON, S.C./CHICAGO (Reuters) -United Airlines said Tuesday it is ordering 100 Boeing (NYSE:) 787 Dreamliners and 100 737 MAXs as it pushes for post-pandemic growth and replaces older, less-efficient aircraft.

The Chicago-based airline’s order for 200 airplanes is worth about $43 billion at list prices and represents a big boost to the U.S. planemaker after political and production issues for the two planes this year.

United said its new order for 100 737 MAX airplanes consists of exercising options to purchase 44 737 MAX aircraft for delivery between 2024 and 2026 and 56 additional MAX aircraft for delivery between 2027 and 2028. United now has a total of 443 MAXs on order.

United’s big bet on the 787 reflects expectations for continued rising demand for long-haul travel and a desire to replace older airplanes.

The big aircraft order, however, has sparked concerns about United’s balance sheet. It is estimated to result in a capital expenditure of $20 billion over the next two years.

Analysts at Jefferies estimate United’s total capital expenditure will likely reach $50 billion through 2032 on 700 new aircraft deliveries.

“There is no doubt this order needed to happen, but elevated leverage is a substantial headwind going forward,” they wrote in a note.

In a regulatory filing, however, the Chicago-based carrier said it is “committed” to delivering a strong balance sheet and its debt reduction plan.

Its shares were down 5.5% at $41.78 in mid-day trade, while Boeing shares were up 0.2%

United also said it would again delay its previously announced order for 45 Airbus A350s until 2030 “at the earliest.”

Industry sources have said this order, an expanded version of one dating back as far as 2009, is effectively in limbo after several delays and may not materialize.

United CEO Scott Kirby (NYSE:) told reporters “the right time for 350 versus (787) conversation is when we’re replacing the bulk of the 777s, which really doesn’t begin to the end of the decade.”

Airbus was not immediately available for comment.

Kirby said one key factor in the decision between Boeing and Airbus for its major widebody order was its current 787 fleet.

“When we’re trying to bring on 2,500 pilots a year and grow the airline, introducing a new fleet type slows that down dramatically,” Kirby said.

United hired 15,000 new employees in 2022, including 2,400 pilots, and is on track to hire 15,000 in 2023, including another 2,500 pilots.

It expects to take 787s deliveries between 2024 and 2032 and can choose among 787-8, 9 or 10 models. United will buy 787s to replace its entire 767 fleet by 2030 and some 777s, cutting carbon emissions per seat by about 25% for the new planes.

United Chief Commercial Officer Andrew Nocella said the order will allow it to replace older planes with new more fuel-efficient ones with more premium seats that carry more cargo and fly faster. “We make more money,” Nocella said of the plan.

The airline plans to tout the order at an event on Tuesday at Boeing’s South Carolina factory with Boeing Commercial Airplanes CEO Stan Deal.

Both the MAX and 787 have faced problems this year.

In August, Boeing finally resumed 787 deliveries after production problems forced it to suspend deliveries in May 2021. The Federal Aviation Administration in July approved Boeing’s inspection and retrofit plan needed to meet certification standards and is inspecting each aircraft before delivery.

Last week, Boeing suffered a setback when Congress declined to extend a looming deadline that would impose new safety standards for the MAX 7 and MAX 10 variants. United said 80 of the new 100 MAX planes it is ordering will be the MAX 10.

Boeing has been lobbying for months to convince lawmakers to waive the deadline that affects its MAX 7 and MAX 10 airplanes and was imposed by Congress in 2020 after two fatal 737 MAX crashes killed 346 people in Indonesia and Ethiopia.

On the extension, Kirby said he was “pretty sure it’s going to get done in the next Congress” because “it was the right safety outcome” but reiterated United could switch to other MAX variants or buy more Airbus planes if lawmakers did not agree.

In June 2021, United announced its largest-ever order of 270 Boeing and Airbus jets, including 200 Boeing 737 MAX and 70 Airbus A321neo jets as part of its “United Next” growth plan.

United said it was making no changes to the A321neo order.

Leave a Reply

Your email address will not be published. Required fields are marked *