SEATTLE — The massive United Airlines order announced Tuesday — for 100 Boeing 787 Dreamliner twin-aisle jets plus 100 single-aisle 737 MAXs — provides Boeing a double confidence boost.
After more than three years marked by human tragedy in the 737 MAX crashes, 787 production setbacks and a broad business collapse due to the global pandemic, United placed its bets on the two key jets at the center of the storm.
At a celebratory event to sign the jet orders at the North Charleston, South Carolina, 787 assembly plant, Boeing chief executive Dave Calhoun told hundreds of Boeing workers assembled there: “The day is huge.”
“I couldn’t imagine after what we’ve been through the last couple of years … a better way to express … the tribute to all of you for having lived through this,” he said.
Tuesday’s deal shows Boeing’s workforce a path toward a brighter future and offers job security specifically in North Charleston and Renton. The South Carolina ceremony was webcast to the Renton workforce.
With United resurgent, eager to grow and get ahead of competitors as the pandemic subsides, airline CEO Scott Kirby positioned the choice of Boeing as bolstering an American icon in a time of trouble.
“Boeing is one of the most important companies in our country,” Kirby told the South Carolina workforce. “You’re our largest manufacturer, largest exporter, great manufacturing jobs, high-tech, all the things that we want to do more of in this country. … It’s important for (Boeing) to be successful not just to me as an airline CEO, but to the whole country.”
“I applaud you for everything you’ve done in the last few years, to be in the position that you’re in today,” Kirby told the Boeing workers. “You had some tough events happen … But you’ve come back as strong as ever.”
The scale of the deal is enormous. Financial terms were not disclosed and it’s not possible to estimate its value exactly since the airplane sub-model breakdown was not released. However, market pricing data from airplane valuation firm Avitas suggests that after standard discounts the firm orders are worth about $20 billion.
Boeing sales chief Ihssane Mounir said the new firm orders added to prior purchases mean United is on track to amass a fleet of 518 MAXs and 171 Dreamliners.
Gerry Laderman, United executive vice president and chief financial officer, recalled that Boeing and United have supported each other through various earlier crises, including the aftermath of the Sept. 11 terrorist attacks in 2001.
Now again, United is offering Boeing its support, he said: “In 2024, between the 737 and the 787, one out of every six (Boeing builds) is being built for United Airlines.”
United set to grow
United emerged from an airline started in 1927 by Boeing’s founder, Bill Boeing.
His company, which then included manufacturing of both planes and engines as well as running an airline, was broken up by antitrust authorities in 1935, splitting off United from Boeing.
The two have collaborated on business deals for decades. And this particular moment was ripe for another deal, with Boeing at a low point and United ready to expand.
United’s big jet purchase is part of Kirby’s strategy to grow rapidly as air travel returns to pre-pandemic levels, and gain an edge over American and Delta, particularly on international routes.
The airline hired 15,000 people in 2022 and plans to add another 15,000 next year, including 2,500 pilots, 4,000 flight attendants, 2,000 aircraft mechanics and 7,000 customer service reps, gate agents and ramp workers.
United claims to be the largest U.S. carrier across both the Pacific and Atlantic oceans and has added new routes to Africa, the Middle East and India.
The Dreamliner portion of the deal — 100 jets, plus options to buy an additional 100 at similar pricing — indicates that, as the constraints of the pandemic on global air travel lift, the 787 is well-placed to reap more big sales from airlines flying such long-haul routes.
Despite quality defects that halted 787 deliveries for more than a year, and ongoing rework to fix planes that is still slowing deliveries, United clearly values the economics of the 787 and believes Boeing can restore the pace and quality of its production.
Andrew Nocella, United’s executive vice president and chief commercial officer, said the 787s will replace the airline’s 767s, offering more seats and more cargo space along with a 25 percent improvement in fuel efficiency.
United already flies the smallest 787-8 from the U.S. to Ghana and Jordan and the larger 787-9 on routes from San Francisco to Singapore and from Houston to Sydney, Australia.
But he called the largest Dreamliner, the 787-10, “the star of the show.”
“Its economics are unbeatable,” Nocella said. “It’s an amazing machine for United Airlines.”
He pointed to a United strategy of increasing the size of the airplanes in its fleet so that it can carry more passengers out of airports where the number of flights is increasingly constrained by lack of capacity.
“These new aircraft are bigger than the 767s they replace so we can grow the airline, particularly at airports that don’t have new runways,” he said.
Boeing workers in Washington state, who originally designed and built the 787, will miss out on most of the work for that jet.
In 2021, Boeing closed the first 787 line in Everett and consolidated assembly of the jet in South Carolina.
The 787 bay in Everett is still full of 787s being reworked after the discovery of manufacturing defects.
However, once those planes are fixed, all the 787 work will be done in South Carolina, where Boeing hopes to eventually raise the production rate to 10 Dreamliners per month.
Restoring the MAX
The separate MAX part of the deal will benefit Boeing’s workforce in Renton.
The new order for 100 MAXs adds to huge MAX orders placed by United last year so that its fleet size toward the end of the decade will grow to more than 500 of these aircraft.
After the two fatal MAX crashes in 2018 and 2019 that killed 346 people, Boeing fixed the systems that caused the accidents and airlines began restoring it to service.
United CEO Kirby said Tuesday that when United placed its prior big 200-jet order for MAXs last summer, “there was still a lot of uncertainty. There was a lot of noise about the MAX and what was going to happen.”
He said he reassured his board and told them of his “immense amount of trust for Boeing.”
United’s continued big commitment to the MAX, signaling such strong confidence in the airplane, may help Boeing get over one remaining hurdle to the full restoration of the MAX — the uncertainty hanging over the certification of the largest variant, the MAX 10.
A defense appropriations bill Congress passed last week didn’t include an amendment Boeing lobbied for that would allow it to certify the MAX 10 without redesigning its flight crew alerting systems.
Boeing continues to lobby for that reprieve in some other legislation. In a press interview Monday, United CEO Kirby said he expects lawmakers will eventually give Boeing what it wants.
If they don’t, he said United can order more MAX 9s.
