United plans post-Covid recovery plan with an order for 270 Boeing and Airbus airliners
Signs of a travel industry recovery were boosted this week when the US airline giant announced its largest-ever order. The carrier placed the order as part of its plan to capture a larger market share post-pandemic.
The order is for 270 narrow-bodied jets and comprises 200 Boeing MAX jets and 70 Airbus A320 Neos. As part of its recovery plan, United also announced that it expects to add 25,000 jobs, mainly comprising of flight attendants, mechanics, and pilots.
The sale is worth over $30 billion, however, it is expected that United will have negotiated a large discount on the list prices. United has declined to say what the total cost of the order is. One industry analyst, Rob Morris, head of consultancy at Ascend by Cirrium, says that the final cost of the order is likely to be closer to half this figure.
United now has a total of 500 narrow-body airliners on order. About 200 of these will be used to expand its current fleet of 500 aircraft, with the remainder replacing its older airliners, including many of its 757-200 models.
Aiming High
United is aiming to capture a larger percentage of high-paying customers, particularly focused on coastal hubs like San Francisco and Newark. The jets on order reflect this strategy, with roomier seats and seatback screens standard on all the jets.
Andrew Nocella, United’s chief commercial officer, confirmed that the airline was seeking to expand its operations in these markets. He added that it was also targeting hubs like Chicago and Denver. He said that the company was aiming for annual growth of around 4% to 6% over the next few years.
The order shows United’s optimism that air travel will return to pre-pandemic levels in the near future. It announced this week that it expects to post positive pre-tax income figures for the first time since the pandemic began.
Airlines were one of the worst-hit sectors by the pandemic. They received $54 billion in federal payroll aid to keep workers in employment. Scott Kirby, United’s CEO, said that this had helped the airlines strategy of keeping hold of its pilot’s and other crucial staff ready for the rebound.
Despite the size of the order, both United’s and Boeing’s shares rose less than 1%. Many analysts had been predicting a larger order.
The Boeing order is for 200 of its controversial 737 Max jets. Of these, 150 are for the Max 10 model, the largest in the Max range, which only completed its maiden test flight earlier this month. The remaining 50 on order is for the smaller Max 8 model, the most popular model in the family.
The order is a shot-in-the-arm for Boeing. The company and the Max family have been beset by troubles and have lost market share to its European rival Airbus in the wake of two Max crashes, the grounding of the entire fleet, and well-publicized production problems.