Yesterday United Airlines announced their second quarter results, which was their highest second quarter pre-tax income in company history.
There’s one especially interesting note buried in the press release about their earnings, indicating that United has signed an agreement to purchase 19 used Boeing 737-700s, with deliveries expected to begin in December.
While the 737 MAX is grounded globally, and United had 14 737 MAX 9s in their fleet (with a further 20 737 MAX 8s and 21 737 MAX 9s yet to be delivered), I suspect this has very little to do with United’s short-term need for capacity:
- December is a long ways off, and it’s possible that the plane will be flying again not too long after that
- Winter is historically a slower period for travel, so if this were motivated by a short term need, winter isn’t when they’d start service
Rather it seems that United is doing well and feels they’d benefit from more capacity. Historically United hasn’t bought a lot of used planes, though it can make a lot of sense to do so.
In many cases used planes are a fraction the price of new ones, and while they might not be quite as fuel efficient, with a bit of investment you can at least make their interiors nice. This is something that Delta has done extremely well over the years.
United currently has 40 737-700s in their fleet, so this will increase the size of their 737-700 fleet by nearly 50%. Meanwhile between the 737-800s and 737-900s, United has about 300 additional 737s.
I really do wonder where United will be getting these 737-700s from, as it hasn’t been disclosed. I would assume they’re getting all the planes from one source, in which case that’s a lot of planes to get in a fairly short period. Are there 737-700s stored somewhere, or is there an airline retiring that many of the aircraft type over the coming months?
I guess we’ll find out soon enough.
Bottom line
We can expect United to get 19 additional 737-700s starting in December 2019. I imagine they’ve gotten a good deal on those planes, so with a bit of investment in the interiors, these planes should blend in nicely.
Personally I don’t view this as a temporary 737 MAX replacement, but rather as a way for the airline to boost capacity. Of course I guess it’s also possible that United might cancel some of the 737 MAXs they have on order if these problems persist, but that’s probably totally separate, if so…
Are there any 737s still in the Mohave Desert?
SAS could be another source of the planes, as they're getting rid of all their Boeing planes.
A 286 can easily handle the processing needed. What is concerning is that the programming or design is so poor if it is not handling the processing in this case.
Maybe Air France-KLM? KLM and Transavia are getting rid of their 737-700s... KLM has got 18 (or maybe a few less) 737s and Transavia (KLM subsidiary) currently owns 6 737-700s.
@Luke Vader -- "From one of the articles, 'The processor at the heart of the 737 MAX jet is, startlingly, the Intel 80286 chip.' ”
Yes ... there are those who make such claims, probably by assuming that the 80286 chip purportedly used on the 737 Classic line got directly carried over to the 737 MAX line. I don't know if such an assumption is, indeed, valid because there have also been generations of FMC's...
@Luke Vader -- "From one of the articles, 'The processor at the heart of the 737 MAX jet is, startlingly, the Intel 80286 chip.' ”
Yes ... there are those who make such claims, probably by assuming that the 80286 chip purportedly used on the 737 Classic line got directly carried over to the 737 MAX line. I don't know if such an assumption is, indeed, valid because there have also been generations of FMC's that tracked evolutionary generations of the 737 through NG and now MAX. For example the latest FMC model# is 2907C1 and uses the Motorola 68040 at 60-MHz with 4-MB SRAM and 32-MB code+data memory. On even newer generations of Boeing airliners (B777, B787), it has been reported that they switched to use the AMD 29040 RISC microprocessor instead. Furthermore, if the MCAS processor(s) happen(s) to be totally separate from the legacy FMC processors, then there really is *no* reason to use the 80286 at all! Are there even Intel-licensed manufacturers of the 80286 chip at this point in time, since Intel has reportedly halted production of that chip almost 3 decades ago?
It is actually very distressing that the aviation industry (apparently commercial as well as military) will stick to using such out-of-date legacy processors across such long time periods! They really take that idea of "if it ain't broke, don't fix it" to the "MAX" (pun intended)! :-P
@BillC -- Do a Google search on "boeing 737 mcas 80286"... you'll get plenty of results.
From one of the articles, "The processor at the heart of the 737 MAX jet is, startlingly, the Intel 80286 chip."
@upstater -- "The 737 MAX Flight Control Computer, based on 1980s era 80286 Chips chokes on instructions after the MCAS software patch. It is a profound problem without an easy fix."
Where do you get such disinformation from? The 1980s era Intel 80286 chips haven't been in production for almost 3 decades ... so how does the 737 MAX therefore use them for their Flight Control Computer during this 21st century? Really? Seriously?
@winngslover, yes Wow only had A320, A321 and A330, but United is “rebranding” them as 737-700
@Brian interesting, and probably will mean United (and Boeing) are trying to keep this under wraps, but the call signs will give it away in time I guess.
@ John:
agree -- the A319 is a bit wider/taller/more comfortable and quieter so it does make for a marginally better passenger experience.
I honestly don't understand why airlines love the A319, but don't care that much for the 737-700 when it can fit a couple more rows in it.
I will say, the 737-700 can do some niche markets, maybe do some SNA-IAD type routes.
A correction: United Airlines has zero (0) 737 MAX 8 aircraft on order. They only have 737 MAX 9 and MAX 10 aircraft on the order books.
They are probably also doing this so quickly with eye towards reinvestment for corporate tax deductions of liquid funds.
@Sam: WOW Air only operated A320, A321 and A330 ;)
Because United already flies the 737-700 the combination of low prices on used + not introducing a new type of aircraft is probably appealing.
Plus, the 737-700s will be good for the hot and high airports (Denver, Mexico, Bogota, etc) where the 737-800 might have penalties?
I
My reading of the tea leaves is that UA is hedging in the event the MAX isn’t returned to service any time soon. There has been no optimistic news coming from Boeing or anywhere else on the MAX problem, just a cascade of new issues.
They will be from China Southern.
19 of them are around 12-15 years old (mid-age), while the other 7 are 2012 models. I believe they will be keeping the 2012 models, and 15 years is typical retirement age for Asian airlines.
This is an admission by United the 737 MAX grounding will go well into 2020.
The 737 MAX Flight Control Computer, based on 1980s era 80286 Chips chokes on instructions after the MCAS software patch. It is a profound problem without an easy fix.
Maybe they are taking in some former wow planes?
I know that Southwest is planning on retiring some of their oldest 737-700s this year - maybe United is buying some of theirs??? United has also previously bought some 737-700s from Copa Airlines, but they only have nine in their fleet now. Maybe they'll buy all of Copa's 737-700s and will get the additional ten from somewhere else???
ANA and Aeromexico each have 19 737-700 in their fleet hmm...