RegulatoryJul 17, 11:22 AM
United Airlines to Retire 80 Older Aircraft in 2027 as Boeing 737 Max 10 Joins Fleet
Number of retirements a "step up" from previous years, says the US carrier. United Airlines plans to retire 80 older, less fuel-efficient aircraft in 2027 amid a fleetwide cabin refresh that should help cut costs and improve margins. The new number of retirements is a "step up" from previous years, United chief financial officer Mike Leskinen said during the carrier's second-quarter earnings call on 16 July. This should help balance capacity with demand and help ensure the airline's entire fleet is retrofitted with upgraded interiors more quickly. As new aircraft enter the fleet, they will bolster United's "barbell approach", which matches newer, fuel-efficient aircraft to high-demand, profitable routes. Older aircraft with more dated cabins and higher costs can be "sat down" and only used when necessary in peak times. "It maximises not only profits, but it maximises return on invested capital to have a larger amount of these younger, more fuel-efficient aircraft," says Leskinen. United expects to take delivery of its first Boeing 737 Max 10 aircraft in 2027, with up to 20 expected next year and another 147 on order.. The more fuel-efficient new model will feature plenty of premium seats and will operate United's most important routes. "The Max 10 will be superior in every way," says the carrier's chief commercial officer, Andrew Nocella. Earlier in July, Boeing said it had started producing Max 10s on a new factory line in Seattle as it works toward securing US Federal Aviation Administration (FAA) certification for the narrowbody. Cabin upgrades across the fleet United reaffirmed its previous plan to add SpaceX's Starlink satellite Wi-Fi to 1,000 aircraft by the end of the year. "As fast as Starlink can produce the antennas for us, we're going to get them on the airplane," says chief executive Scott Kirby. "For premium customers that really want to be able to make sure they're connected with high speed, it is going to lead to big share gains for us." Other cabin refresh work – including increased premium seat capacity, upgraded seatback entertainment screens and larger overhead bins – is also under way, United says, which should help increase margins. Getting those margins to where United wants them, in the "mid-teens" will require "more structural changes in the industry", Kirby says, noting some competitors will lose money this year thanks to sharply higher fuel costs. "They have an awful lot of flying that loses money on an individual route basis. One way or another, that gets resolved over time," he adds.