United Airlines bets on travel boom with big plane order

  • 4 months   ago

United Airlines has placed its biggest aircraft order to date in a bet on travel returning post-pandemic.

The US airline confirmed it had ordered 270 Boeing and Airbus planes worth more than $30bn (£21.6bn) on Tuesday.

 

Its chief executive Scott Kirby said the purchases would "accelerate our business to meet a resurgence in air travel".

The deal will see older, smaller jets replaced - mostly with Boeing 737 Max planes - between 2022 and 2026.

The bigger planes will carry more passengers on domestic routes and enable the airline to sell more premium seats in first class or with extra legroom.

Like many other airlines, United Airlines struggled as demand for travel was constricted during coronavirus-related lockdowns.

At the height of the crisis, it announced that it would need to furlough up to 36,000 staff.

But Mr Kirby said Tuesday's move "underscores the critical role United plays in fuelling the broader US economy".

He added: "We expect the addition of these new aircraft will have a significant economic impact on the communities we serve in terms of job creation, traveller spending and the shipping of goods and services."

In a separate update on Monday, it announced that it expected that July would be its first profitable month on a pre-tax basis since last January. It is, however, still expected to report a quarterly loss between April and June in its next update.

United also plans to build up domestic hubs across airports in Chicago, Houston and Denver, as international and business travel returns at a slower pace.

The US screened 2.02 million passengers on 11 June at airports - the highest number since March 2020, according to its Transportation Security Administration.

But passengers who have been in the UK, Ireland, Brazil, China and Iran in the last 14 days cannot enter the US unless a specific exemption applies, as a presidential decree introduced last March is still in place.

Richard Aboulafia, an aviation expert at Teal Group, said the deals made sense for the airline in the current climate.

"The domestic markets are coming back pretty fast and fuel prices are coming back fast too," he said.

Airlines must make long-term bets to remain competitive, even if current conditions still present big problems, Mr Aboulafia said, adding that current low interest rates also encourage making purchases now.

The United Airlines move also signals a vote of confidence in planemaker Boeing as it continues to face worries over safety and battles with US regulators.

Stan Deal, president and chief executive of Boeing Commercial Airplanes, said on Tuesday: "We are truly humbled by United Airlines' confidence in the people of Boeing and the airplanes we design and build every day.

"Our strong partnership, dating back to United's founding, has helped us grow and weather challenges through the decades."

Source: BBC

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