United adds to its orders for Boeing 737 Max planes
United Airlines said Monday that it was adding 25 planes to its order for Boeing’s 737 Max jet, bringing its total to 180 in the coming years, and that it had sped up the delivery timeline as it seeks to position itself for the expected recovery in travel.
The expanded order is the latest show of confidence in the plane, which has just begun to fly again after two crashes led to a worldwide grounding for almost two years. It is also good news for Boeing, which is working to move past the Max crisis and, more recently, engine troubles aboard some of its 777 planes.
“These new aircraft are going to allow us to be more competitive,” said Andrew Nocella, United’s chief commercial officer. “It’s the right aircraft at the right time.”
United plans to use the jet throughout North America and in Hawaii, replacing smaller planes as demand returns, Nocella said. It is also more fuel efficient than its predecessors, an important benefit for the airline as it seeks to reduce its carbon footprint. And the plane will help United restart its strategy of strengthening connections at hub airports in the middle of the country, in Houston, Chicago and Denver, he said.
“This is going to allow us to get back on that track as we come out of the pandemic,” Nocella said.
The industry is preparing for a travel rebound once coronavirus vaccinations are widespread and the pandemic is tamed. The beleaguered 737 Max has been updated and readied to fly again after crashes in Indonesia in October 2018 and Ethio
pia in March 2019 killed a total of 346 people. After the second accident,the Max, a star of Boeing’ s fleet, was subjected to worldwide scrutiny from lawmakers, regulators and the news media. In November, the Federal Aviation Administration became the first global regulator to lift a ban on the jet. Boeing and the airlines that use the Max were required to install software updates, modify wiring and make other changes to the planes before they could fly again. Regulators in other countries followed, and the Max has already been used to carry out thousands of flights.
United, which has 30 Max planes in its fleet, started using the plane again only a few weeks ago. The airline expects to receive 24 this year, followed by 40 next year and 54 in 2023.
The Max has a list price of more than $120 million, but often sells for less, particularly in large orders. Industry analysts say airlines have leverage to bring that price down further as the travel slowdown eased pressure to build up fleets. The manufacturer has delivered more than 400 Max jets to customers since the plane first started flying paying passengers in 2017, with nearly 4,000 orders outstanding.
Unlike its competitors, United did not remove planes en masse from its fleet throughout the pandemic, part of a strategy aimed at making sure it had maximum flexibility as travel recovered, Nocella said. With another round of federal payroll aid for the industry seeming likely, United will also be able to retain much of its workforce through September. Two previous rounds of federal assistance have largely helped airlines avoid sweeping furloughs and layoffs.
While Monday’s order shows United is preparing for travel to rebound, a meaningful recovery is probably still a ways off. Nocella said United hoped to reach an “inflection point” late in the year, after which the recovery in travel would accelerate rapidly. For now, United and its peers continue to lose money by the day even as they cater to what few travelers remain.