Today’s Quarterly Earnings report was an opportunity for United Airlines to boast about record earnings for Q1 and also to make official a new fleet plan. At least one of the changes – the new 777-300ER order – is hardly surprising as it has been rumored for several months now. Ditto the reconfiguration of some 777s for domestic service. From the press release:
- Exchange 10 787 orders with Boeing for 10 777-300ERs for delivery beginning in 2016. The new 777-300ER aircraft will provide attractive upgauge and range opportunities to the company at competitive economics.
- Extend the life of 11 additional 767-300ER aircraft. The company now plans to extend the life of all 21 767-300ER through investments in winglets, reliability improvements and interior modifications, which will improve financial performance and make the aircraft more customer pleasing.
- Reconfigure and transition 10 777-200 aircraft currently used in international markets into the domestic network, and position a number of its trans-Atlantic 757-200 fleet into the domestic and Latin markets, with the extension of the 767-300ER aircraft.
The 777-300ER (77W) order was “announced” by others a few months ago but only confirmed today. For Boeing the move is a mixed bag. It opens up earlier 787 delivery slots and allows for the 777 line to continue a bit longer at “full” pace before the 777X is introduced. On the down-side, the 787 project took a hit in Boeing’s earnings call this quarter as being further out of budget than planned or previously announced and losing 10 orders isn’t likely to help. For United it means access to the larger planes the company needs to handle missions the 747s are flying today as those aircraft approach retirement. The move also raises questions about the financial decisions between CapEx and OpEx and where the company can save more money overall. Or, perhaps, United is starting to consider the secondary 787 market sooner than not given that other carriers are already talking about retiring them at less than 10 years old.
The new order – as well as the reconfiguration of the 777-200 planes – also means the likely introduction of a 3-4-3 configuration for the economy class cabin. The 10-abreast layout is the way of the future it seems and that’s mostly bad news for passenger comfort. This part is unconfirmed so far but seems likely, especially as the higher density configuration gets the 77W closer to the total capacity of the 747, something United likely needs to maintain.
The return of 10 planes to the domestic 777 configuration shifts all the non-ER of that type away from international service. The company’s decision to retire its older 757-200 planes has placed significant capacity and performance pressures on a number of routes, including flights to Hawaii and some transcon flights. The reconfigured planes still will not have the range to cover Hawaii to the east coast but this move should allow for more larger planes to the islands and probably a few hub-to-hub routes as well. Of course, with the tighter squeeze in the back it is not clear that getting the additional wide body domestic service really is all that great for passengers but many do love flying on the bigger planes.
— Edward Russell (@e_russell) April 17, 2015
The shifting of 757-200s into domestic operations also means that a few international routes (Barcelona, Madrid, Hamburg and Berlin) get up-gauged to 767-300ER service. These are European destinations which were on the edge of the 752 range for winter service; they’ll now have many fewer issues with fuel stops though it will also be interesting to see how they handle the increased capacity vis a vis route profitability and overall expenses. Then again, with fuel prices reasonably low right now it seems likely that won’t be a huge issue. The 763 retrofit also means cutting the number of planes with first class cabins down by 11. Arguably better than retiring them outright from the fleet, especially for passengers trying to get upgrades on the newly up-gauged routes, though the loss of first class seats is something some will lament. For economy class passengers the retrofit means getting a new in-seat AVOD IFE system which will be a major upgrade from the current kit.
In the end this is all arguably old news, but seeing it mostly confirmed means we can now know what to expect in the future.
Also in the release this morning: Fuel expenses were a BILLION dollars less in Q1 ’15 YoY. That’s a huge number. Also, a much more significant drop compared to Delta which had significantly higher total costs and per gallon costs. There’s definitely something interesting going on with the fuel numbers comparing the US majors.
Never miss another post: Sign up for email alerts and get only the content you want direct to your inbox.