United Orders 100 Boeing 787s and Throws in 100 737 MAXs for Fun

United

The worst kept secret in recent memory is now official. Today, United announced it is ordering 100 Boeing 787s, adding options for 100 more, converting 44 Boeing 737 MAX options into orders, and adding another 56 MAX orders on to the pile.

Even though this sounds like a completely insane number of airplanes, it’s really not. United is a big international airline that went through a lengthy spell of completely ignoring its fleet while former CEO Glenn Tilton tried to reverse engineer the airline into giving him a giant payday. Because of that, United has fallen severely behind, and its fleet is getting old.

This isn’t a perfect chart, but it’s pretty close. By the end of this year, United should have right around 220 widebodies and other than some distant A350s technically still on order, there is nothing left to be delivered.

United Widebody Aircraft by Aircraft Delivery Date

Data via Cirium

Remember that part about United neglecting its fleet? You can see exactly where that happened, but it’s actually understated. Keep in mind that many of those orders around the turn of the millennium — including all the 767-400s — were from Continental, not pre-merger United.

If you count it up, right around 120 of United’s widebodies are at least 20 years old. Those all absolutely need to have a replacement plan set, and that is what United is doing with this order. The 767s will all be gone by 2030, though these airplanes will start phasing out earlier as newer airplanes come in. (Those are the oldest widebodies in the fleet by far.)

The 777-200s will start phasing out later this decade, starting with the oldest airplanes in the fleet which are primarily those old Pratt & Whitney-powered “A” models with limited range.

The second 100 airplanes that United has on option… those are for growth opportunities, if they materialize. But since they’re just options, this will provide some flexibility and presumably help solidify delivery positions if the need arises. Plus, 200 sounds a lot bigger than 100, so Boeing probably knocked a little bit more off the price to show that people actually do still want to buy its airplanes.

And flexibility… there is some here. I mean, sure you’re buying 100 airplanes so you lose some flex in your options, but United does not have to make any decisions on the variant for the 787 orders yet. It can adjust those depending upon what it needs further down the line. I’d put my money more on 787-9s and -10s, but you never know what’ll happen by the time the decision has to be made.

I can’t imagine many, if any, of us are surprised that the Boeing 787 won the day over the A350 here. As United laid out on a call yesterday, there were just too many things going for the 787. First, it’s smaller than an A350 and to replace the 767s, United needs something on the smaller end. Sure, there are the A330neos in the market, but that adds more complexity. United was clear to explain on the call that already having a large base of 787s, needing to onboard a ton of pilots, and introducing a new fleet type does not sound like a recipe for efficiency.

Does this mean the 45-aircraft A350 order that has been on the books forever is dead? Nope. United said when the time comes to figure out a replacement plan for the 777-300ERs toward the end of the decade — which seems early — that’s when the A350 may make more sense.

I don’t think I really buy that line, but Airbus probably likes having the A350 on the order book, so no reason to cancel. Just keep pushing it out further and further. One thing does seem pretty clear… there’s no way those airplanes will be delivered in 2027 as currently scheduled.

With this order firmed up, United now has its fleet replacement plan in place through the end of the decade and beyond. That doesn’t mean there can’t be more orders to come, however.

Take the 737 MAX order. I asked what had changed between the last massive MAX order and now to make the airline decide it needed another 100 of them (mixing exercising options and new purchases). The response was that this was just really pushing planning further out. These MAXs are for the 2027/28 timeline, so as they extend the horizon beyond the original United Next plan, they find they want more planes.

With hundreds of these on order already, I don’t see why it makes sense to add more to the mix now… unless… wait, did Boeing roll out the ole’ “buy two 787s, get one 1 MAX free” holiday sweet dreams fiesta? Can’t turn that bargain down.

At first glance, this whole order is a big scary number. It requires a lot of cash and/or debt to buy these airplanes. But once you start going deeper and looking at the reality of the situation, this had to happen — at least, the widebody part of it. Previous generations of neglectful management put the airline in a place where it had to play catch-up.

In a sense, you could compare this to a decade ago when then-American CEO Gerard Arpey tried to make up for years of scrimping and saving by American’s leadership by placing a big order. Ok, granted, that was a split narrowbody order, and he was about to lose his job anyway, but you get the point.

With United’s orderbook now flush and a continuous evaluation of the airline’s longer term needs in place, it should help United to actually better plan for the future instead of just buying another roll of speed tape and hoping the 767s will keep flying for another decade.

37 comments on “United Orders 100 Boeing 787s and Throws in 100 737 MAXs for Fun

  1. I know it’s about “the deal” that UA received but where does the “flying experience” come into play? The 737’s seats have less width than an A321. I myself do my best to avoid the 737 and book the Bus (I’m a Delta flyer).

    1. I’ve got to imagine that the financial impact of customers choosing an airline based on coach seat width is minimal.

      I agree that 6-across A32X is more comfy than a 737, but I can’t imagine that this factors into an airline’s decision at all.

    2. Sadly, 99% of passengers would have no clue that there’s any difference in the seat widths of the A320 series versus the 737 series. Well over 75% probably have no clue what type of airline they’re even flying – even when they’re on it. So, these factors wouldn’t play into a decision like this. It’s all about fleet planning in a strategic (and cost effective) way. Given UAs good relationship with Boeing, I’m sure that they drove a pretty hard bargain and it’s likely that Cranky’s joke about buy a 787, get a free MAX may have more truth to it than you’d think.

      As a frequent UA flier, I would have preferred more A321s and A350s and less 787s and MAX’s. But, that said, new Boeings are still pretty nice to fly on. Especially since UA’s interiors are more spacious and comfortable that DL’s standard economy or AA’s horrible Oasis product.

    3. Don’t the airlines spec the seat sizes/pitch, or can’t the MAX accommodate the same size seats as an A321?

      1. The MAX (like the 707, 737, and 757) has a slightly (7”) narrower fuselage than the A320 series, so you either take space from the seat width (1” per seat or so) or the aisle (but would have to be 7” to maintain the same seat width, obviously impossible).

        That said, I’m in the know about that and still don’t prefer an Airbus. As a fairly tall and skinny traveller, I care more about the seat padding, which is airline specific, the legroom, and the overhead bins (love the space bins that many or most AS 737s have now, accommodating standard rollaboards on their side so there are no concerns about getting all bags aboard). So I agree that it’s a tiny fraction of travellers who even know about the difference, and not all of those even care. Can’t imagine it makes a hoot of difference in airline planning.

        Where the width may matter more is in accommodating flat bed seats in business. Some airlines have done that in business on 757s, but more are using A321s these days. I don’t know if that’s purely about range or if the width matters there. But at best that only matters for the small subset of the narrowbody fleet that flies routes where airlines desire flat beds (transatlantic and a subset of transcontinental routes, basically).

    4. It’s not the seat width, it’s also the low windows that make the 737 a sub-optimal experience. The windows are small and low making looking out when you’re on the ground a difficult experience. It’s way past time to put the 737 out to pasture.

  2. This is disappointing. Was hoping for at least a mix of A350s thrown in there for variety – the ones left on order are only there because United can’t find anyone to buy the engines from them (I heard). The 787 is a nice plane, and even though I love the 767, it’s getting really boring (and old) flying that TATL – I have to connect in FRA or BRU to get some variety. The MAX order is much more disappointing, though – the 737 has always been an uncomfortable plane to fly in for anyone in the back.

    I will have to resort to finding codeshares with LH and SQ to get a ride on an A350.

  3. The 77Ws at UA are quite new, and it is highly unlikely the A350 would replace them. By the time they need to be replaced, more than likely the 777-9 will be on the table for UA. The future of the UA 350 order is to see it pushed off indefinitely as long as possible, and eventually repurpose it into a narrow-body order for additional 321XLRs and perhaps some A220s or 32 family jets.

    The 777-200s at UA are getting old. The 777As, to be replaced first, are 1995-96 deliveries, but the additional 772s ordered by PMUA and even the PMCO ones are getting long in the tooth. More 787 variants will replace the rest of those.

    1. > The 777-200s at UA are getting old. The 777As, to be replaced first, are 1995-96 deliveries

      Guess that means I am getting old, too. I remember when they first joined the fleet, and trips across the Atlantic from SFO suddenly had those low res TV screens in the backseat. And then E+ offered (I think) 36” of space. Luxury travel for the dirty masses in the back was (re-)born!

  4. You write the following: and it’s fleet is getting old.

    it’s means “it is”.

    The correct format is its, no apostrophe needed, for this type of possessive construct with the word it.

    1. Pretty sure Brett knows the difference and just made a typo. Glad you were able to provide such a pedantic response though….

  5. Curious whether UA considered more 77Ws to bring down the capital costs. UA’s getting flak for this massive CAPEX, they could’ve taken the DL approach of buying last-gen models on the cheap (321s, 739s, 330s) by adding 77Ws (77Ws take some 772 routes, 772s move down to replace retiring 763s).

    1. The 77W line is closed. UA ordered the 777-300ER in the last production spots and got a great deal to help Boeing bridge the transition to the 777-9 line.

    2. Even if they could get cheap 77Ws, using them to replace 772s which replace 763s is a poor match in capacity all around.

      There simply aren’t any last-gen models available now, otherwise I’m sure United would have bought them if they were a useful size and the price attractive.

  6. UAL stock is leading the airline industry down at the middle of trading today.
    Real investors – the owners of United Airlines, see this as far more risky and aggressive than other airlines that will also grow their businesses and replenish their fleets.

    1. Okay, and? It’s one day of trading, chill.

      JBLU is now down about 10% vs UAL 7%. AAL is down 6% and DAL down about 5%. Grasping at straws with how the investors feel.

    2. Why are you apparently happy about the market downturn in airline stocks? United’s former management did what American’s did pre-bankruptcy. It didn’t invest in basic infrastructure, i.e., aircraft. Last time I checked, airlines need aircraft to operate. There comes a point when companies have to invest in basic capital needs. As the old Fram oil filter commercials said, “Pay me now, or pay me later.” There’s a risk in investing so much money on new aircraft, But IMHO, there’s an even greater risk in doing nothing, Obviously, the ideal way to invest in new aircraft is how Southwest does it – slowly and steadily.

      1. Ghost,
        I am not celebrating anyone’s misfortune. I do know business well enough to know that when a single company needs to spend 3-4 times on fleet what its similarly sized competitors will spend over the same period that it won’t turn out well. There are abundant examples in airline history to show that.
        And American has financially underperformed most of the rest of the industry for much of the decade in which it spent billions more on aircraft in part because AAL’s aircraft related ownership and lease costs have been at the top of the industry. Now, UAL will take that place.

        Delta simply would not have placed orders the size of what UAL has placed multiple times. There is simply no need to order $55 billion worth of aircraft – more than UAL makes in revenue in a single year. And size-adjusted neither would Southwest – both of which are much stronger financially than United.

        UAL made some bad financial decisions but UAL’s owners – its investors see the risk in committing to such a massive amount of financial obligations to try to “fix” those decisions.

        and the next step – I can guarantee you – will be that United’s credit rating will be downgraded which will increase the cost of these airplanes.

        1. @Tim, Brett laid out why this makes sense long term and why it needed to be done. You’ve made other comments about UA’s old planes and inefficient fleet. These planes will be in the fleet for decades and will set UA up very well. Not sure why you’re focused on one day’s stock performance.

        2. Ever since the $53 BILLION industry Covid bail-out, I have been reconsidering airline debt, credit ratings, and balance sheets. Prior to Covid, I was concerned about American’s ability to avoid bankruptcy. I thought a bankruptcy and restructuring at AA would be a drag on industry performance, as the entire industry would be forced to compete with bankruptcy fares at AA. Perhaps even see AA attempt to reduce costs to the point of morphing into an ULCC.
          In line with that thinking, prior to Covid, I would agree that a $55 billion United spend would be excessive. That a one-time CAPEX expense, associated debt, and possible credit-rating adjustment would hog-tie United for years, EVEN IF they absolutely needed to modernize and simplify their fleet.
          But Covid, or, more specifically, the Government’s financial response to Covid, has flipped my opinion on CAPEX, debt load, and credit ratings. The Government has clearly signaled the airline industry is too critical to our nation’s commerce and infrastructure to fail. The Big 3 are now too big to fail. And they know it. So why not renew the fleet? Who really cares about total debt anymore? What difference does it make if one carrier is paying more interest than another? Everyone is guaranteed to survive. Yes, one or two may perform better than the others. And the few who do out-perform the others WILL be around to pick up the pieces if someway, somehow a competitor stumbles and the safety net disappears.
          Mr. Snyder, I would like you to write on this topic. The essential financial de-facto re-regulation of the industry as virtue-signaled by the Covid bailout. A white paper of sorts on this topic, authored from
          a macro viewpoint. THAT would be an interesting read and could be a seminal work on this competitive sea change.

          1. I will reply once here to all of the replies that have been made to my original reply that have not been addressed.
            First, it is financially very dangerous to think that the government will bail out the airline industry because of the financial performance of one company. The reason the federal government provided billions of aid to the entire industry was because demand collapsed and hundreds of thousands of employees in the industry would have been furloughed. UAL execs never said they were pursuing such a strategy any way.
            Second, posting factual and accurate information is not trolling even if it is info that some people don’t want to hear – whether that was believing that American would file for bankruptcy at the end of the first decade of the 2000s (which it did) or that UAL’s fleet purchase today exposes the company and its shareholders to excessive risk.
            Third, other airlines including American and Delta used the pandemic to retire older aircraft and, in Delta’s case, have more aircraft in their mainline fleet now than they did pre-covid – and both AA and DL have narrowbody and widebody growth capacity – and still have order books that are one-third of what UAL’s is now.
            Fourth, Delta just took delivery of its first A350 with Airbus’ New Production Standard which makes the A350-900 longer range than the 787-9 and also larger. If Delta goes ahead wiht the A350-1000 order (which DL execs told DL employees internally was coming) DL will have all of the growth UA is targeting but at a fraction of the cost up front and on an operating basis. AA is waiting for the new longer range 787-9 which UA will obviously get as well.
            Fifth, EETCs are on the balance sheeet based on credit rating… they simply are. Northwest Airlines was the first airline to use EETCs.
            Sixth, UAL stock continues to fall today more than the airlines that are down while DAL stock is leading those airline stocks that are up after a positive investor update.

            There are simply less risky plans by other airlines to grow than what United has proposed and the investors in the industry see that.

            1. Ummm, you misinterpreted what I wrote. Not the first time. At any rate, I’m saying that the Government will bail out any one, two, or all three of The Big 3. Why? 1) The Big 3 are so large that the remaining carriers could not easily gobble up all that abandoned share, 2) Over 100,000 jobs would evaporate, many in traditionally Democratic strongholds.

              Delta made $2.6 Billion in profit this year. That’s awesome. But did they force American out of any markets? Did they run United out of anywhere? Is Delta even an existential threat to ANYONE? No, they are not. But they do run a better operation than the others and they leverage that into higher fares and greater profits. If one of the others were to fail AND if the Government didn’t bail them out, then Delta would be well-positioned to take advantage. But that scenario is highly unlikely. The Covid bailout sets an unlikely yet still valid precedence of eye-wink regulation in the industry.

          2. MissTheMasters – I don’t agree with this thesis. Yes, airlines will survive thanks to government largesse, at least the big 3 will. But the owners will suffer, so if the board is authorizing spending just because they think the government will bail them out if something goes wrong, then they are probably lining themselves up for massive shareholder lawsuits.
            Survival of airline does not necessarliy mean maximizing shareholder value, and the board must focus on doing the latter.

            1. Well of course the Boards will do their due diligence. But tell me one time in the entire history of the industry when a Board shot down a new aircraft order? Hughes clashed with his TWA Board routinely, but they never overruled his aircraft acquisitions. Every Board has “the going concern” out to justify their actions. Of the Big 3, the one with the worst financial standing is American. If they were concerned about their financial situation, wouldn’t they be asking for pay cuts in their current contract negotiations? American is even growing the Northeast Alliance while the judge is preparing his ruling. They are taunting the Court. But they know they are “made men.”

              I believe the Government is content with having the Big 3, a second tier of large carriers including Southwest, JetBlue, and Alaska, a ULCC segment including Frontier and (for now) Spirit, and new-entrants including Breeze and Avelo. And I think the stasis provided by this three-tiered industry will be protected vigorously by the Government.

            2. Miss – Well, we wouldn’t know what orders the boards shot down, because they never would have seen the light of day.

              The point is, I would not be leaning on the “well the government will save us” action because my shareholders would not find that acceptable. As for asking for concessionary pay cuts, that’s just not an option. You either play in the world that exists or you go away. This is not a time where concessionary contracts would ever be possible. DL finally went first with an acceptable contract, now the others will follow. It’s the cost of doing business. But buying airplanes is a whole different thing.

            3. Masters,
              of course boards do due diligence but they do so based on the assumptions and level of risks that management provides them and whatever they choose to do external to managment -which is rare.
              CF is right. The first responsbility of a publicly traded for-profit company is to the stockholders.
              The government cannot show preference for one airline which means that, even if the government helped the industry because of problems at one airline, the others will benefit to an even greater degree.
              There is no doubt that airlines have to continually renew their fleets; the difference with the approach that UA took yesterday is that they laid out almost a decade’s worth of purchases and signed contracts for them. There are and will be availability for large orders – 100 narrowbodies and 20-30 widebodies – for delivery within 3-5 years of contract signing.
              Airbus and Boeing are both increasing production – to the extent that they get suppliers to provide parts.
              The notion that any single airline should buy enough capacity from an airframer or that an airframer would want to tie so much of its future to any airline does not fit how the airline or airframe industry has historically worked.
              Bankruptcies have shown that leasing companies will repossess aircraft and park them before they will slash lease rates in the event an airline cannot pay. Airframers and leasing companies simply cannot afford to allow resale prices collapse.
              I have been very critical of American over the years but they are simply making many positive financial decisions over the long term and not just looking at short term profits. They still do not generate the profits that Delta or Southwest does or even United did in the 3rd quarter – even though it has had lower profits over on a year to date basis.
              Southwest is the world’s most consistently profitable airline. They are nowhere near second tier to anyone.
              The big 3 global carriers are stronger than they have been in decades and their strength relative to the industry will only increase.

    3. If DL placed this order, @Tim Dunn would be on here saying that this is a game-changing, innovative move from an incredible, perfectly managed company.

      1. Tim has spent the day trolling the internet on this topic; typical Tim Tuesday, really.

        But leave it to tim to take one day of stock performance and talk about all United investors as though all of them are day traders…

        “and the next step – I can guarantee you – will be that United’s credit rating will be downgraded which will increase the cost of these airplanes“.
        Because, again, tim doesn’t actually know how aircraft financing works and assumes airlines get aircraft financing rates based on their credit ratings. If he knew anything about aircraft financing or really anything about airline financials, he’d know United (really CO) is often credited with founding the EETC system that allows aircraft financing for nearly all airlines at investment ratings regardless of the airline’s individual rating. But… it’s Tim and he doesn’t know that but still posts nonsense anyway because there’s an article on the internet positive toward UA or AA.

        However, Nice to see him make a prediction he can be held accountable for, for once.

        1. If only United could buy a bunch of ragged out L1011s from TWA and Eastern, i.e., Delta’s wide body fleet renewal strategy from the late 90s.

          Don’t get me wrong. I loved those planes! 36 first class seats = upgrades for all!

  7. The real strategy here is to turn Boeing into a United assembly line so other airlines can’t grow nearly as much. Keeping Boeing’s elivery book locked up for the next decade is a great move.

  8. Quick note on MAX’s: they’re wide enough to fit ~18″ seats (similar to how the 777-9 will be able to fit 10 across more comfortably). United has their MAXes spec’d at 18″, and I believe Southwest’s are at 17.7″…and having flown Southwest MAX8s a few times the seat width difference is noticeable.

    I’ll still stake Airbii but seat width on the new 737s is reasonable enough that I’d only pick an Airbus (not the AA 319) if things were all-else-more-or-less-equal.

  9. I would like to remind everyone here that the best way to prevent trolling is to ignore any troll comments. Remember, it makes my life easier if they go away on their own instead of me having to take action.

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