United Airlines on a venture to buy 110 Planes From Airbus and Boeing

Saturday, October 7, 2023

United Airlines announced plans on Tuesday to buy 110 new airplanes, expanding its bet that the travel business would grow in the coming years even as evidence mounts that demand for flights is weakening right now.

The airline plans to buy 50 Boeing 787 Dreamliners, a twin-aisle plane, and 60 single-aisle Airbus A321neos. Deliveries will begin in five years. United did not disclose the value of the order. Based on list prices, the order would be worth at least $19 billion, but airlines typically negotiate steep discounts when ordering dozens of planes.

On Tuesday, United Airlines revealed intentions to purchase 110 new aircraft, increasing its wager that the travel industry would increase in the years to come despite mounting evidence that current flying demand is waning.

The airline intends to purchase 60 single-aisle Airbus A321neos and 50 twin-aisle Boeing 787 Dreamliners. In five years, deliveries will start. United withheld information about the order’s value. The deal would be worth at least $19 billion based on list pricing, but when ordering numerous planes, airlines frequently bargain for significant discounts.

United’s chief executive, Scott Kirby was convinced that their our strategy is the right one as they continue to add new, larger aircraft to take full advantage of the growing flying opportunities both internationally and domestically. Due to the restricted number of airport gates and runways, the lack of manpower at air traffic control facilities, and general congestion, United will be able to transport more passengers without having to operate more flights thanks to the new, larger aircraft. On average, United offered 104 seats on each flight departing from North America in 2019. It anticipates that number to increase to more than 145 by 2027.

The acquisition adds to a number of sizable orders. Some of those aircraft have already begun to arrive at United, and a total of 761 more, including those from the order placed on Tuesday, are anticipated to be delivered over the following ten years. The planes will be used to upgrade and replace the airline’s outdated fleet, which is the oldest among the four major American carriers. The airline will be able to cut costs by adding additional seats on each journey. Older aircraft often use more fuel than newer ones.

According to Boeing and Airbus, the aircraft in United’s latest order burn 20 to 25 percent less fuel per passenger than comparable, older aircraft.

Andrew Nocella, United’s chief commercial officer, said “United placed its largest aircraft order, for 270 planes, in 2021, followed by another order last year for 100 Dreamliners. Those orders allowed the airline to secure the best possible deal terms”.

However, businesses like United have stated that they are optimistic about their future, citing the robust and ongoing demand for international flights. There are indications that ticket demand, especially on domestic routes, may be decreasing. The cost of jet fuel has also recently increased far more quickly than anticipated. Major airlines, beginning with Delta Air Lines next week, are anticipated to provide more information about their operations when they report financial results for the third quarter.

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