United Airlines Buys 110 Airbus and Boeing Planes Amid Persistent Capacity Constraints

United Airlines is betting that the constraints limiting airline schedules will persist for years, and it’s responding with a new order for 110 Airbus and Boeing planes.

The deal is for 60 Airbus A321neos and 50 Boeing 787-9s for delivery between 2028 and 2031, the Chicago-based carrier unveiled Tuesday. It also includes 40 additional purchase rights for the A321neo and 50 options for the 787. The orders build on ones United placed with Airbus and Boeing for narrowbodies in 2021 and primarily widebodies in 2022.

The orders are driven, in part, by United’s need to replace older planes by the end of the decade, as well as grow at capacity-constrained airports around the world. Those constraints include the air traffic controller shortage in the U.S. and Europe, and government restrictions to achieve climate and other goals – for example, the Netherlands’ plan to cut flights at Amsterdam’s Schiphol airport next summer.

For an airline to grow under these constraints, they need to operate aircraft with more seats, a strategy known as “upgauging.”

United’s latest aircraft order will enable it to add seats to its existing schedules at constrained airports, including Newark, San Francisco, and in Europe and Asia.

“Gauge growth is how United will manage an increasing number of limitations on runways, air space, and gate capacity at the nation’s largest airports while still growing,” said Chief Commercial Officer Andrew Nocella Tuesday.

The A321neos will seat 200 passengers – they will replace Boeing 757-200s that seat up to 176 passengers. The new 787-9s will seat 257 passengers versus just 167 to 240 passengers for the current Boeing 767s. The carrier plans to retire its 757s and 767s by the end of the decade.

United does not intend to replace its 757s and 767s with A321neos and 787s on a one-for-one basis, Nocella said. However, the strategy is to use the new planes to grow via more seats per flight rather than more flights overall.

 In fact, at Newark, which was plagued by weather and air traffic control-related delays this summer, the carrier plans to operate fewer daily departures than it did in 2019 over the long term.

The airline is scheduled to take delivery of its first A321neo — part of its 2021 airplane order — next week, Nocella said. United plans to introduce it on revenue flights between Chicago and Phoenix in December.

New Aircraft Shortage

Both Airbus and Boeing face challenges meeting their aircraft delivery commitments on time. The situation is made worse by delays at their suppliers, including the well-documented issues facing Pratt & Whitney’s geared turbofan engines on the A320neo family.

Air Lease Corp. Executive Chairman Steven Udvar-Hazy in September called the situation for airplane makers “a real problem area,” that was fueling increased demand for leased aircraft.

Airlines are eager to lock in delivery slots. Air Canada, Air France-KLM, Cathay Pacific, and Latam Airlines have all ordered additional Airbus and Boeing models in the past two weeks.

Nocella cited the supply chain limits in his comments, adding that United’s deliveries this year are “significantly” delayed and that is unlikely to change for years to come. The timing of deliveries for the airline’s new order at the end of the decade is later than is typical for United, he said.

Asked about United’s willingness to place such a large order amid global economic uncertainty, Nocella said the carrier was confident in its outlook and had flexibility to adjust the timing of plane deliveries and other aspects of the deals.

United and its peers, American Airlines and Delta Air Lines, continue to see strong travel demand this fall in part fueled by large international networks. Their U.S. domestic-focused competitors – Breeze Airways, Frontier, JetBlue, and Spirit – have reported weak bookings and revised down their earnings estimates with some expecting losses in the third quarter.

All airlines face increased cost pressure driven by rising fuel prices and new, more costly labor agreements. Pilots at United recently ratified a new accord with up to 40% pay increases.

United had 657 aircraft on firm order at the end of June, its latest fleet plan shows. That includes 45 Airbus A350s that were ordered by the airline before its merger with Continental Airlines in 2010, and have been postponed repeatedly in the decade-plus since.

The airline maintains its A350 order, Nocella said. He declined to comment on whether United will ever take delivery of the planes given its plan to take delivery of 150 new 787s — the main competitor of the A350 — between now and the end of the decade.