United Airlines early Tuesday announced a massive new airplane order that proved even bigger than rumored: firm contracts for 200 Boeing 737 MAXs, along with 70 Airbus A321neos.
The news is a huge boost for Boeing’s efforts to revive the MAX program, which suffered hundreds of order cancellations over the past couple of years.
It’s the largest single airplane order since American ordered 200 MAX planes in June 2011. American then was on the verge of giving Airbus an order for 460 A320neos, a damaging prospect for Boeing that abruptly forced the U.S. manufacturer to agree to launch the MAX so that it could split the order.
Tuesday’s deal bumps United’s total MAX order book to 380 jets, including previous orders for 180 MAXs, with 30 already delivered. The agreement also includes buying data packages for the airline’s Boeing 737 MAX training simulators to support its pilot training programs.
Stan Deal, CEO of Boeing Commercial Airplanes, lauded the strong partnership between Boeing and United, “dating back to United’s founding.”
That’s a reference to United’s origins as part of Bill Boeing’s United Aircraft and Transport Corporation, a conglomerate formed in 1929 that built both airplanes and engines and also operated airlines. It was broken up by antitrust action in 1934, into Boeing, United Technologies (engines) and United Airlines.
“The Boeing team is excited to be building hundreds of these new jets for United and delivering on a landmark agreement that solidifies our future together for the next decades,” said Deal.
United placed an order in March for 25 MAXs, all of which were planes originally bought by other airlines that had abandoned their purchases. A United spokesperson said none of the planes in the newly announced order are taken over from previous customers, but are additions to Boeing’s order book.
That said, United is clearly taking advantage of the opportunity to buy at bargain prices during an unprecedented downturn, with both airplane manufacturers — and especially Boeing — eager for new sales.
The new aircraft order consists of 50 Boeing 737 MAX 8s, 150 Boeing 737 MAX 10s and 70 Airbus A321neos, heavily skewed toward the larger single-aisle jets. United said these new aircraft will replace older, smaller mainline jets and at least 200 regional jets that seat only 50 passengers.
The largest MAX model, the MAX 10, took off on its first flight just 11 days ago, though it won’t be delivered to airlines until 2023 as Boeing takes that time to develop and certify additional safety enhancements to the MAX demanded by the European aviation regulator.
On a conference call, Andrew Nocella, United’s chief commercial officer, said that between 2023 and 2026, the MAX 10 and A321neo will replace all of the airline’s 757-200s, which are variously configured to seat between about 140 and 175 passengers.
United’s willingness to wait for the MAX 10 is a big boost for that aircraft, which has registered relatively few sales compared to Airbus’s rival large single-aisle, the A321neo.
However, United’s additional order for 70 A321neos emphasizes how that plane’s extra range and capacity give it an edge over the MAX 10 in certain markets.
Nocella said United will use the Airbus plane, which has 10 more seats than the MAX 10, on flights out of its major hubs in New York, Newark and San Francisco, where runway constraints mean they cannot add more flights.
“The extra seats on the A321neo are going to be really important to our future growth plans,” Nocella said.
The big order with Airbus and Boeing is intended to revamp United’s single-aisle jet fleet and position the airline to grow with the expected surge in air travel as the COVID-19 pandemic downturn ends.
United expects to introduce more than 500 new, narrowbody aircraft in the coming years: 40 next year, 138 in 2023 and as many as 350 in 2024 and beyond.
It said all the aircraft will have a new cabin interior, featuring more premium and economy-plus seats, seat-back entertainment and in-flight Wi-Fi. And it intends to retrofit the same improved interiors in its entire existing single-aisle fleet by 2025.
The fleet revamp will “revolutionize the experience of flying United as we accelerate our business to meet a resurgence in air travel,” said CEO Scott Kirby.
He said leisure travel in the U.S. is essentially already back to pre-pandemic levels and United expects a fast and robust recovery in business travel, too, and eventually in international air travel.
“Today I would go beyond saying confident,” said Kirby. “Business travel is going to come back at 100%. Everything we see, every week, makes us even more certain that business travel and international travel are ultimately going to come back … at 100%.”
Kirby said United is well placed to take advantage of this expected rebound, including at its hubs in Chicago, Los Angeles, Houston and Denver.
Unlike many other airlines, United did not retire any aircraft during the pandemic.
In addition, it cut a deal with its pilots union to keep its pilots flying and their certifications up to date during the pandemic. So United hasn’t run into the serious staffing shortages that have caused hundreds of flight delays at some other U.S. carriers in recent weeks.
During the media call, Nocella said United expects to hit 4% to 6% average growth in the coming years.
And he said United will at some point want an even bigger single-aisle plane to replace its 757-300s, which seat more than 230 passengers.
Tuesday’s order “is not intended to replace our 757-300 aircraft,” Nocella said. “We’ll make the decision as to what the optimal replacement for that jet is at a later date.”
That leaves room for Boeing to weigh options for its next new airplane.
Separately, Nocella gave an update about the airline’s two dozen older 777-200s that have been grounded since February after a Pratt & Whitney engine on one blew up shortly after take-off from Denver.
That incident, the third instance of a hollow metal fan blade breaking off and destroying the engine, grounded all of those 777 models with the same engine worldwide.
With international passenger travel at very low levels, United hasn’t needed those planes, but hopes they will be ready for the expected upturn.
“We’re working with the FAA, Boeing and the Pratt & Whitney company to return those aircraft to service late this summer or early fall,” Nocella said. “We think that timing lines up with the international rebound we expect later this year or next year.”