United Airlines Buys 25 New Boeing 737 MAX Jets -- Update
By Alison Sider
United Airlines Holdings Inc. said it is buying 25 new Boeing
Co. 737 MAX jets and bumping up its orders for dozens more as it
positions its fleet for a travel rebound.
The deal is a boost for Boeing, which has lost hundreds of MAX
orders during a nearly two-year grounding following two fatal
crashes of the jet. The U.S. in November approved the MAX for
passenger flights again, requiring the plane to undergo software
updates and pilots to go through additional training, among other
Andrew Nocella, United's chief commercial officer, said in a
memo Monday that the MAX would be key to the company's long-term
growth and its ability to serve demand, which it expects to rebound
in the coming years, as the carrier starts to replace aging
aircraft that are nearing retirement. United resumed flying
passengers on the MAX in February.
"As the end of the pandemic nears and vaccines continue to roll
out, today's fleet announcement helps position us to meet the
demand we expect to see in 2022 and 2023," Mr. Nocella said.
United's move is the latest indication that the industry is
planning for demand to revive as more people are vaccinated. The
number of people passing through U.S. airports has climbed in
recent weeks, even though passenger volumes remain 50% to 60% below
Major U.S. airlines lost about $35 billion dollars last year,
and 2021 got off to a rocky start, with governments imposing fresh
restrictions on travel as new, more contagious strains of the
coronavirus began to take hold. Many international borders remain
closed, and businesses are still keeping heavy-traveling road
warriors at home.
Airline executives have different views on how quickly pent-up
demand for travel could return. Some are gearing up for what they
hope will be a surge in summer vacations. But most carriers expect
it will be years before demand is fully back to normal levels, with
business and international demand likely to take longer to come
Delta Air Lines Inc. has said it would bring 400 pilots back to
active duty by summer, and the airline told pilots last week that
it plans to bring them all back by October. The airline said it is
preparing to build its schedule back to 2019 levels of flying by
summer of 2023.
United, which lost over $7 billion last year, has said it is
ready to begin rebuilding, aiming to exceed its 2019 profit margins
by 2023. The airline has charted a cautious course through the
pandemic, with sharper reductions in flying than many of its
competitors, and Chief Executive Scott Kirby has said previously
that the recovery may not begin in earnest until later this
Unlike some rivals, United has largely held off on permanently
retiring swaths of its fleet, arguing that having the planes gives
it flexibility to take advantage of returning demand. At the same
time, oil prices have started to climb, which could make the more
fuel-efficient MAX jets appealing. United said its new MAX jets
will allow the airline to get back to its strategy of boosting
traffic to its hubs in Chicago, Denver, and Houston, which had been
a big focus in recent years.
United didn't disclose financial terms of the deal. The MAX
sells for $122 million to $135 million at list prices depending on
the model, though airlines typically receive discounts for large
Mr. Nocella said United is still lobbying for a third round of
federal aid to avert job losses at the end of March but needs to
place aircraft orders more than a year in advance of taking
delivery. The 25 newly ordered planes are slated for delivery in
Regulators around the world grounded the MAX jet in March 2019
after two crashes killed 346 people. Regulators in Europe, Canada
and other regions have cleared the plane to fly again.
Boeing said customers canceled orders for 511 MAX jets last
year, with hundreds more in question as the coronavirus pandemic
has reduced travel demand and forced airlines around the world into
retreat. Many have been able to walk away from their orders without
penalty, as generally allowed by Boeing contracts, because their
deliveries were more than a year late because of the grounding.
Other carriers have added to their MAX orders. Ryanair Holdings
PLC said in December it had agreed to buy 75 new MAX jets from
Boeing. Alaska Air Group Inc. added to its MAX order last year,
opting to replace most of its Airbus planes in the coming years
with MAX jets.
United said Monday that it would move up the delivery of 40
previously ordered MAX jets to 2022 and bring forward another five
deliveries to 2023. In total, United has 188 firm commitments for
MAX planes in the coming years, according to a regulatory filing
The airline said in the filing that it expects to receive 11 of
Boeing's 787 Dreamliner wide-body jets this year, including three
delayed from the final quarter of 2020. Boeing hasn't delivered a
Dreamliner since October, hamstrung by inspections and rework
linked to production problems. That has built up a backlog of
dozens of Dreamliners even as the plane maker cuts monthly
production to five. Boeing said last week that it still aims to
resume deliveries this quarter.
Doug Cameron contributed to this article.
Write to Alison Sider at email@example.com
(END) Dow Jones Newswires
March 01, 2021 14:03 ET (19:03 GMT)
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