The third in our series of airlines fleets is United Airlines. United has the smallest fleet of the three mega-carriers. The table below lists the airline’s current fleet.
United can trace its heritage to Boeing and 1929 when William Boeing merged his airline with Pratt & Whitney and Varney Air Lines. In the following chart we show the combination of average fleet age, size and seat count per aircraft. The chart summarizes the fleet situation well. Airbus is in orange, and the Boeing’s are in blue.
In the next table we show the same information as in the chart. For those aircraft that have multiple configurations we took the capacity we think best reflects reality. The 787-10 and A350-1000 seating has not been defined, so we took the OEM suggested seating.
Starting the lowest seat counts we can see United is acquiring second hand A319s because they are cheap. Opportunistic acquisitions work as we have seen at Delta. The challenge United faces is that any A319 it acquires has to have V2500 engines, and only 33% of the A319s have these engines. United had ordered 65 737-700s on March 8 2016, only to switch this order on November 16 2016. United decided to defer the 737-700 order to the MAX8s. United also converted four of 65 737-700 orders to the larger -800 model, with these aircraft to be delivered in the second half of 2017.
If you read our analysis of Delta and American you will note a theme here – all three airlines need to make decisions about the 120-150 seat segment. Delta selected the CS100 but has not ordered sufficient to cover its replacements. American and United have yet to place any bets. United’s A319s are ageing and that big 737-700 order was thought to be the solution – but then the strategy changed. What that strategy is now isn’t clear yet. It is thought that the 2016 United competition was very close between the CS100 and 737-700.
In the 180-220 seat segment, United has stayed with Boeing and is standardizing on the 737-900ER. The MAX9 is the follow on. To replace the 767s, United has selected an initial batch of 787-8s. The 787s are something of an over-match for the 767, having much greater range. But the extra capabilities do allow for flexibility in adding new routes. Overkill can be useful.
For the 250 seat segment, it seems the 787-9 will replace the 767-400ERs. This is also something of overkill, but the 787-9 allows United to do clever new markets like SFO-TLV. United has also started routes to the interior of China. Boeing has stressed that the 787 is the consummate market maker for airlines. United is surely one of its poster children.
Similarly United might be considering the 787-10 as a replacement for its 777-200ERs. There would have be a number more 787-10s ordered to accomplish this.  But the first cards have been played.
At the top end of the fleet for 747 replacement is the 777-300ER and A350-1000. The airline may convert some of the Airbus A350-1000s to smaller long-haul models, as CFO Andrew Levy was quoted as saying last year. The challenge here for Airbus is that United, as a long-time Boeing customer, has been able to acquire 777-300ERs are at favorable prices. Moreover, the 777-300ER is a very fine aircraft for long hauls. Almost certainly United’s capital cost per seat for the 777-300ER is much lower than for an A350-1000. Both the 777-300ER and A350-1000 are suitable 747-400 replacements. There are 20 747s to replace and United only has 14 777-300ERs coming. Might they take more of these are knock down prices, help Boeing close its production gap? This is a probable outcome, because Boeing must be eager to make a deal.
But what then about the 35 A350-1000s? Consider this – there are a number of 767-300ERs to replace and perhaps the 787-8 won’t be doing this. After all, the last 787-8 United ordered was in 2012. Since 2013 United ordered more -9s and -10s. It would annoy Airbus to lose the A350-1000 order as United is the #2 customer scheduled for that aircraft. By now the Airbus supply chain has probably already started moving on the first United aircraft. Airbus might consider offering United the A330-900 – if United did this it would be following Delta’s lead. The A330-900 could also work as a replacement for the 767-300ER and -400ERand would be a useful tool that could be deployed across either the Pacific or Atlantic. United could then deploy its 787-8 fleet on emerging markets it identifies.
The Bottom Line:
United has two decisions that will impact the industry in 2017. One is choice of a 100-130 seat aircraft for smaller markets (or not choosing one and ceding them to he competition) and the other is what to do with the A350-1000 orders. Will it choose A321neos to replace some 757s and A330-900s to replace 767s, or maintain A350-1000s to replace 747s? The triple option is likely available, once United decides on its future strategy. It is also possible United becomes the launch customer for the 737 MAX10x.
Co-Founder AirInsight. My previous life includes stints at Shell South Africa, CIC Research, and PA Consulting. Got bitten by the aviation bug and ended up an Avgeek. Then the data bug got me, making me a curious Avgeek seeking data-driven logic. Also, I appreciate conversations with smart people from whom I learn so much. Summary: I am very fortunate to work with and converse with great people.
