United Airlines is dreaming big for the next decade. The carrier announced an order today for 100 Boeing 787 Dreamliner aircraft, plus 100 more options, to fuel its widebody fleet replacement and growth strategy. By the end of the decade, assuming the options are exercised, more than 80% of United’s long-haul flying could be on 787s.
This order further solidifies our lead and creates new opportunities for our customers, employees and shareholders by accelerating our plan to connect more people to more places around the globe and deliver the best experience in the sky.– Scott Kirby, United CEO
United expects to take delivery of the 787s between 2024 and 2032. It can choose among the three available variants to maintain fleet flexibility and support a range of routes.
The carrier will also exercise options on 44 737 MAX plus add another 56 firm orders to its single-aisle backlog. The 737 MAX options exercised are anticipated for 2024-2026 delivery. The 56 new MAX orders should join the fleet in the 2027-2028 timeframe. The 100 new MAX are split as 20 –8 and 80 –10 models.
All told, United now anticipates deliver of more than 700 new planes by 2032, including 443 firm MAX orders. More than 100 new aircraft are slated to join the fleet in 2023 and 150+ in 2024.
The order answers a major question for United: What to do about the aging fleet of 767s. Lacking any other options that cover the range and seating capacity of that fleet directly, United will take the Dreamliners to start the replacement process, as well as for growth opportunities.
Chief Financial Officer Gerry Laderman explains:
We are ordering 100 firm 787s. We expect them to deliver between 2024 and 2032. Think of those aircraft as replacement aircraft. During the same 10-year period we have about 120 widebody aircraft, 767 and 777s, that will hit 30 years of age. We are very sad to see those aircraft go, but it is time to start thinking about retirement of those aircraft. The 100 firm orders will replace the 767s and some of the 777s.
We also have 100 options to acquire additional 787s. Think about those as opportunities…to expand our international franchise.
Chief Commercial Officer Andrew Nocella is also keen on the economics of the upgraded fleet. “Every time we replace an older 767 or 777-200ER we make more money, and that’s obviously very important to our shareholders. These aircraft are dramatically more fuel efficient, they fly faster, they carry twice as much cargo, and they have more premium seats.”
A trickle down effect
By the end of 2030 United expects to retire its entire 767 fleet. The 777 retirements will also begin in that time, somewhere in the 2027ish ballpark. The replacement cycle will not, however, be a direct one-to-one approach.
United is keeping its A350 order on the books, though it now expects deliveries no sooner than 2030. The carrier sees it as a potential replacement for the 777, but not the 767. With the smaller 767s needing to be replaced more urgently, executives see the 787s as a better fit for United, particularly with respect to staffing challenges. As CEO Scott Kirby explained, “The 787 and and A350 are both great airplanes. But we already have a large installed base of 787s. And in this world where 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 also emphasized the size differential on the A350s, with the 787 a “better replacement for the 767 because it’s smaller.” He believes the “right time for A350 versus 787 conversation is replacing the bulk of the 777s which really doesn’t begin till the end of the decade.”
Which is not to say that the company is not already thinking about the 777 replacements. Notably, the Pratt & Whitney powered planes, mostly flying domestic routes today, are the oldest 777s in the fleet. When the time comes to retire those, however, don’t expect direct replacement by 787s.
Nocella explains, “We’ve contemplated every move we need to make to make sure that we continue to have the appropriate domestic wide body coverage. We do very well with domestic wide bodies and to Hawaii; that will not change.”
But the value of the 787s is in their fuel efficiency on longer routes. So instead of those flying to Hawaii, Nocella expects “some of the 777s you see flying around the globe may take up the mantle of flying more medium haul domestic routes, to and from Hawaii, to make that equation balanced.”
Also, United now holds 100 options for 787s, so should it decide Dreamliners are the correct replacement for its 777s those orders can start sooner than the 2030 timeframe of the oft-postponed A350 order.
And based on the fleet makeup, that will almost certainly be the case. The 120ish planes Laderman sees as replaced by this order consist of just over 50 767s and 70ish 777s. Maybe the A350s eventually can replace the relatively new 777-300ERs in the fleet. But the 777-200 and 777-200ERs will mostly see 787 replacements, it appears.
A premium capacity conundrum
Another challenge for United comes around replacing the “High-J” configuration 767-300 sub-fleet. Those planes fly today with 46 Polaris seats, 22 in Premium Plus, 43 in Economy Plus and 56 in economy. There is no 787 configuration operating within United today that comes close to matching that layout. And, at least for the next few years, there probably won’t be.
Nocella is keen on the 787-9 as a replacement for the High-J configuration, noting it “has a large amount of premium seating and should be well-suited to take over the flying that’s currently performed by the High-J 763.” And in many ways that is an astute observation. The 787-9 flies in a 48/21/39/149 configuration. The first three numbers align very well to the premium-heavy 763 layout. But with nearly 100 additional economy class seats some markets will likely see yield dilution in the back of the plane.
Of course, if the premium seats are still selling that might not be a problem. But it is definitely something to keep an eye on.
Nocella also notes that the deliveries will come over an extended period of time. This leaves the option open for future configuration changes. “But the 787-9, as it stands today, we think is a pretty darn good replacement for the 767-300 and –400.”
The 787s will be delivered with United’s four on-board products: Polaris business class, Premium Plus premium economy, Economy Plus extra legroom and economy. For now, none of that changes. The company recommitted to its interiors upgrade plans, including both the widebody and single-aisle planes.
More than 90% of international widebodies now feature the United Polaris® business class seat, as well as United Premium Plus® seating. The remaining planes are anticipated to complete by the summer of 2023.
United also reiterated its United NEXT plan to retrofit 100% of its mainline, narrow-body planes with its signature interior. First announced in Summer 2021, that plan called for the fleet to be fully retrofit by mid-2025. And one executive at the time even teased a late 2024 timeline. Those retrofits remain stalled, however. Initially the company anticipated completing 66% of the retrofits by the end of 2023.
The revised timeline now calls for approximately 100 aircraft to be completed in 2023 with the remaining expected to be completed by the end of 2025.
MAX certification concerns
With respect to questions around the MAX 7 and MAX 10 certification and a need for Congress to act, Kirby is also confident that a common flight deck experience is the correct safety decision. Should that not come to pass, however, he expects that United would convert some of its MAX 10 orders to MAX 9 and cancel some, replacing them with A321neo aircraft orders.
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