United Airlines (UAL-US) announced on Tuesday (29th) the purchase of 270 aircraft, the largest order in the aviation industry in the past 10 years, to bet on economic growth after the epidemic.
This heavyweight order includes 200 737 MAXs from Boeing (BA-US) and 70 A321neo aircraft from Airbus. The list price is estimated to be about 35 billion U.S. dollars, but usually the final payment will be lower than the list price.
The massive purchase of new aircraft by United Airlines is regarded as a preview of the recovery of the aviation industry, and is the largest order since American Airlines (AA) purchased 460 aircraft in 2011. United Airlines Chief Executive Scott Kirby said that this “will accelerate our business to meet the recovery of air travel.”
United Airlines hopes to replace the older aircraft with smaller passenger capacity, carry more passengers with a larger aircraft cover, and sell more high-priced seats. According to Peter McNally, an analyst at Third Bridge, a research organization, United Airlines is attracting the attention of the U.S. tourism industry as many start-up companies start or plan to operate.
United Airlines said to investors on Monday that it expects to announce adjusted pre-tax profits in July. This is the first sign of United Airlines or other major airlines that they have made profits since the beginning of the new crown epidemic.
Demand for tourism has almost returned to normal, which has also helped to increase fares, although the demand for more lucrative business travel and international flights is not as good as before the epidemic.
According to Ron Epstein, an aviation industry analyst at Bank of America, this shows that United Airlines is a savvy aircraft buyer and believes that the MAX aircraft purchased by the company should be quite cheap. If United Airlines feels that it is not the right time to return to the aviation market, it will not Will buy planes so generously.
Buy airplanes at low prices to help improve costs
Carlos Ozores, Vice President of Aviation Consulting, said: “This is a great time to obtain transportation capacity at a low price. Although the aircraft market is still sluggish, it can bring long-term cost improvement.”
Based on United Airlines’ existing orders, it is expected that the company will have 500 new narrow-body aircraft, including 40 in 2022 and 138 in 2023. United Airlines stated that the delivery of aircraft between 2024 and 2026 is flexible, and some Boeing 737 MAX 10 orders can be transferred to other models.
Unlike its competitors, United Airlines did not retire the aircraft during the epidemic, and stated that it plans to test the first Boeing MAX 8 with a new inner layer this summer, and to fly the Boeing MAX 10 in early 2023.
United Airlines received US$10.5 billion in government assistance during the epidemic, and most of the funds were used for acquisitions to create 25,000 jobs.