We knew that United Airlines was going to place a wide body aircraft order today, and we now have all the details. There’s even a bit more to the announcement than we were expecting.
Continue reading: United Airlines Orders Up To 200 Boeing 787s
Share your questions, experiences, and thoughts below.
Going all in on one type—a Boeing at that— will leave them one Airworthiness Directive away from a total meltdown.
Polaris 787 is 20.5 inches versus 22inches on the 777.
Since these will get doors in Polaris, it could be a more claustrophobic fit than on AA or DL
I’m sure glad that billions of our tax dollars are being used to subsidize private businesses. Can’t wait til the government sends me some free stuff!
I doubt it would be more claustrobic than AA's future product since AA also plans to bring doors to future 787 business class too.
other financial sites are saying that UAL's capex will hit $10 billion per year for several years.... that level of spending is simply not sustainable for any US airline.
UAL stock is falling in pre-market trading while other US airlines are up. Wall Street doesn't like this level of spending.
Let's also not forget that United's pilot leadership is still wrestling from the fallout from the failed contract proposal that was shot down by UAL pilots. UAL is going to pony up some significant cash just to get its pilots up to what will be industry comparable pay and then that process will have to extend to other labor groups. When a company spends massive amounts on assets but has internal labor discord - which has been well-documented by UA employees on this site - there are plenty of reasons for red flags
What a surprise. Great and cool news from United comes out and tim is ready with his tired and trollish copy/paste wet sponge routine.
With respect, tim. The C suite at United is far more qualified to opine on their capex expenditures than some clown in the comments section. Scott Kirby has done wonders at united and is a brilliant revenue and financial mind.
Good for UA! Impressive order of widebodies but no surprise for a carrier with such great international hubs.
first, dozens of United's own employees are far less impressed with Scott Kirby that have posted on this blog than you would like to give them credit for.
second, Scott Kirby has made some absolutely horrific strategic failures - not the least of which was the LGA-DCA slot deal that benefitted DL but cost US and ultimately AA.
third, there is an airline that copied nearly the same strategy that UA is pursuing now with massive fleet purchases and that is AA - and they have financially underperformed the rest of the industry for years, in part because of fleet costs including debt service that are far higher than other airlines. AA's order was a fraction of what UA now has on the books - and AA was and still is larger than AA.
fourth, there was another airline that also had grandiose international visions of itself - and that airline was Pan Am. WAS, MAX, WAS.
Scott Kirby is taking UA down this path driven by his ego - not because there is any evidence that UAL can turn this massive order into a financial advantage.
You are free to disagree - and I expect you will but we have precendent in the US airline industry for how these types of things end up.
@Tim, Don’t mistake a vocal minority for widespread labor unrest. In my almost 30 years with United, I have never seen so much positivity regarding Scott Kirby and the airline’s future in general. Definitely negativity decades ago, but I see a seismic change in employee attitudes now and over the last few years.
The pilots contracts between the airlines will be very similar, so I would put too much in that either.
that is good to know and I appreciate the perspective. Internet chatter doesn't always reflect reality.
However, the financial realities of this massive order cannot be missed.
United didn't spend money on fleet for years but, as American has demonstrated and other airlines that are no longer with us, there are limits of what companies can spend and still be competitive with other companies in the same industry.
As of now, UAL stock is down 5%, leading the airline industry down.
There is nothing stopping UL from doing a sale and lease back if the projected cash flows dont appear. I wouldnt spend $10B/yr on capex, but it does not need to be terminal for the airline either.
Yet another surprise. A tim Dunn tie in about AA’s terminal demise as well. I don’t think anyone even needs an AI to predict your response to any positive news about aa and UA whatsoever.
And now, apparently per Tim, United’s entire fleet and financial analysis to the markets is driven by Scott Kirby’s ego. It’s almost like United and every other public company has a Board of very competent directors that approve purchases like this after walking through the associated financial plan… and lest you forget, Scott is not the chairman of the Board. Scott isn’t god, but the idea that he’s shepherding a multi billion dollar public company off his ego alone is a bit dumb.
A drop in stock price in one day of trading means absolutely nothing about this order. One day drops are usually much more indicative of short term traders trying to make a quick buck not long term investors.
it’s strange how delta’s pilots voted to strike (absent NMB approval) and the sky wasn’t falling at delta for you, but United’s pilots are a huge issue because of one PR move in Houston. This isn’t United’s first Houston rodeo when it comes to labor relations. They’ll be fine.
Great news but United Airlines is still a crappy airline to fly with. Their staff does not care about customer experience
A most impressive order. I assume the largest wide body order by a US-based airline previously was when United ordered 30 747-400s and 34 777s.
Brian,
airlines, just like you and me, buy assets either with cash on hand, take out loans and have the assets mortgaged, or sign leases. United doesn't have anywhere near the cash to pay for even one years worth of an order this size - and most of their cash is borrowed anyway. Loans and mortgages require payments for years to come. Leases also require payments but there is a middleman that owns the asset until you are in a position to pay it off. All of those methods require lots more cash.
Other airlines will grow and do not see a need to place orders of the massive size that UAL has placed. UAL's financial commitments just for airplanes is now almost 4X larger than American or Southwest's and 3X more than Delta's - which is itself growing its international fleet but has spent money over the past few years significantly buying new and current technology used aircraft - and has spent a fraction of what UAL will spend.
MAX,
I have been mercilessly criticized on here for reminding people that every US large jet airline including United are for-profit publicly traded companies which means that the company is owned by people that decide how much it is worth.
The simple reality is that the stock market has knocked 6% off UAL's market capitalization today; only JBLU which made up yet another excuse for why it will underperform this quarter did worse.
I have said for the entire time this expected order from UAL has been discussed that it is too large and risky and I published an article just this past weekend saying the announcement would hurt UAL stock - even though it has been long-expected. Investors don't like this much risk and they don't like talk of throwing a bunch of capacity into the market when airlines are making money.
Either Scott Kirby considers wiping out a couple billion dollars worth of UAL stock value just part of the cost of the deal or I am smarter than he is.
The next step, in all likelihood, is that UAL's credit rating will be downgraded which will further increase its borrowing costs - on top of high interest rates.
And throw in that Southwest has already announced that it will start paying a dividend and Alaska says it will start buying back stock, leaving Delta as the only airline that paid a dividend pre-covid that hasn't announced something for stockholders - but they have an investor update tomorrow so that could be coming.
United's stockholders, the people that own the company, are not excited about this announcement.
Other airlines are and will offer lower risk and higher return and still make more money
And voting for a strike under the RLA means nothing because there are multiple levels of processes that have to happen. Other airlines have also had labor groups vote to strike w/o an impact on their stock price. Investors understand how it works.
They also know the difference between how different airlines manage their fleets and spending. and that is what this is all about.
Their *leadership* doesn't care about the customer experience. Thusly the staff is not empowered to deliver a good one.
Tim,
If you knew anything about Pan Am and their network, it’s pretty ridiculous to compare United to them. Pan Am had no real domestic network to fuel their international network. By the time they had anything, they were already so far behind competitors that it no longer mattered. That’s hardly the case at United especially if you’ve paid attention to their long term domestic goals they’ve shared with the Street for nearly five years now.
Separately, US airways consolidating at dca, a very high yield domestic airport with very well established yield differential vs nearby airports like bwi and dulles, is hardly a strategic blunder in comparison to delta trying to build a two airport hub in NYC when CO/United had the only true domestic and international airport across the river. You act as though dca is some two-bit town that no one should be interested in vs lga. Even delta stated their New York hub operation was unprofitable for many years after the slot swap. You certainly didn’t ever hear that about dca from US or from AA YEARS later. By both accounts, delta and US/AA mutually benefited from the swap.
If anything, looking back today with the NEA, the slot swap was far more beneficial for US/AA. Delta is in New York with now two major competitors domestically. It’s pretty tough to say that about aa at dca. Dulles serves a purpose as does BWI but dca is very unique in the AA slot position vs delta at lga and their major competitors at lga and ewr.
Again, Scott Kirby isn’t god, but your random dogmatic statements make no sense.
Before the slot swap, Scott Kirby said he could not make 1/4 of the slots at LGA work profitably. That in itself is stuninng.
After the AA-US merger, US was required to divest an equivalent number of slots that came from the DL-US slot swap.
US already had more than 50% of the slots at DCA before the slot -swap; the DOT let it go through but drew the limit with the AA-US merger. Bottom line is that the US ended up having to divest the DCA slots it got from the DL-US slot swap.
DL got 1/4 of the slots at DCA for $60 million and now has 47% of LGA's slots.
DL is the largest airline in NYC now; EWR is simply not capable of operationally serving the size that UA needs compared to DL's split hub at LGA and JFK which has a combined 5 effective usable runways compared to EWR's 2. Building a hub the size of what UA has hasn't worked.
DL's operation even just at LGA generates far more revenue than AA gets at DCA - and unlike AA, DL has a major international hub in the same metro area.
Kirby was the creator of the slot deal at US and has tried unsuccessfully to diversify its NYC presence beyond EWR.
What happened 10-15 years doesn't matter when the evidence shows that Kirby's slot strategy backfired in DL's favor and the same is true for UA's NYC strategy which, although he didn't create it, he has tried to fix it.
Wow
Takeaways:
1. apparently ewr isn’t successful, per Tim. I think most people would be shocked to learn Newark doesn’t work financially or operationally for United. Of course Newark is congested, but Delta would trade what they have in New York in a heartbeat for the single airport domestic/international consolidation United has at Newark.
2. The aa/us merger effectively took away the extra aa slots at dca, not the ones from delta. Us/aa just didn’t grow incrementally at dca from the merger. The doj didn’t take away US’ growth from the slot swap. That’s it. But, very tim Dunn of you to ignore that.
3. What a normal tim Dunn thing to mention Scott Kirby lga slot profitability comments but ignore delta’s own comments about NYC profitability post slot swap. To say nothing of what their lga profitability Must be now with depressed business travel demand, forced usage of those slots, and new competition in the New York market. “Can someone say slot squatting, Binghamton?”
Beyond that, the rest of your notes are just the usual fake facts and misdirected data not worth replying to.
What a surprise: in tim Dunn fantasyland, delta has been perfect while everything aa and UA have done, including the jewel that is the Newark airport, are just failures.
Hope the kool aid is tasty today.
MAX,
solely for the benefit of the popcorn eating spectators, I will respond.
AA's slot portfolio at DCA is smaller than it would have been if AA/US had not had to divest the amount of slots that it gained from DL as part of the US slot swap.
DL is operating the most flights in NYC out of all 3 airports by not trying to run a hub at any single airport. DL's NYC strategy has allowed DL to grow larger. You are the one that brought up hub size in NYC. I am presenting facts that anyone that looks at facts and not emotion can see counter your comment.
What DL said about its NYC operations 15 years ago = in the middle of the Great Recession - doesn't matter one iota, esp. since UA itself has had to shrink its EWR operation in order to maintain a semblance of operational reliability - and EWR is still the most delay prone airport.
DL has simply outsmarted Scott Kirby, United and USAirways multiple times in its Northeast US strategies. Whether you can admit that or not doesn't change the fact that DL has the advantages which you simply don't want to see.
DL doesn't want or need a massive hub in a heavily delay prone NE airport.
and the fake facts that you can't seem to want to grasp are that UAL's own investors do not like the massive risk that the company has signed up for under Scott Kirby and that will become increasingly apparent over the coming months and years. Other airlines including Delta will be able to grow with much less risk and with fleets that are as fuel efficient but less costly to acquire and operate
Only a matter of time till they cancel A350 & A321 order - just stick with two types.
Hard to ignore the A321XLR though. Boeing is certainly not competitive in that range.
There is also room for the C300 (er A220-300).
They're not going to cancel the 321 order. First NEO is on the property this summer. They're counting on the XLR as a 757 replacement and to go to small stations in Europe. So you'll see even more trans Atlantic traffic in the future.
You mean like Southwest, Ryan Air, Lyon Air, etc? It will take a long time before they are just using 787s. Still have a lot of use out of the 777s and 767s.
My calculus is that UA is projecting many more long haul destinations with that second 100 plane option. The future of long haul looks bright.
Why does Ben allow one single respond with ten or more replies on most every topic?
for the same reason that he allows users that make personal attacks on other users.
Perhaps you should ask Ben to clean up the personal attacks on other users and ban those people.
Other sites, including VFTW, have upped their game on moderation. OMAAT needs to do the same.
it is one thing to challenge ideas. It is not acceptable to engage in personal attacks on other users.
tim dunn talking about personal attacks by others might be the most ironic thing I've read all month.
Tim, you do realize Gary is talking about you as the troll on VFTW? YOU are the one that attacks him personally, tells him what he can and can't write, has to respond to EVERY article about Delta, and every positive article about AA or UA to say how Delta would do it better with just flat-out fake information or extremely misleading usage of actual data.
We all want fewer trolls on the internet. We'd achieve it if you'd stop writing on every comments section attacking blog owners or flat out lying about stats on any topic from 789 orders to revenue accounting.