- United Airlines just announced an order for 270 new aircraft to revitalize its aging narrow-body aircraft fleet.
- The Boeing 737 Max and Airbus A321neo were chosen in an order valued at more than $30 billion.
- In-flight entertainment will also be added to all existing narrow-body aircraft by 2025.
- See more stories on Insider’s business page.
The next era of United Airlines is now arriving.
A Boeing 737 Max 8 aircraft painted in United’s new colors arrived at the carrier’s Newark hub on Sunday ahead of a landmark announcement dubbed “United Next.” Its arrival straight from Boeing was the first of a new 270 aircraft order for some of the industry’s newest aircraft including the Boeing 737 Max and Airbus A321neo.
United Next aims to revitalize the airline’s aging fleet of aircraft and will see more than 500 aircraft delivered through the end of the decade. United is splitting the order between two manufacturers with a total of 50 Boeing 737 Max 8, 150 Boeing 737 Max 10, and 70 Airbus A321neos comprising the order.
The order is valued at more than $30 billion based on current Boeing and Airbus list prices but United’s executive team made it clear that the airline isn’t paying full freight for the aircraft. Boeing has been discounting 737 Max prices in a bid to restore confidence in the aircraft following its 20-month grounding and United likely received a pandemic discount for the 70 Airbus A321neo aircraft.
Each aircraft have their own strength in terms of performance capabilities but all can serve nearly every short to medium-haul domestic route that United currently serves with advantages in fuel efficiency compared to current-generation models.
The focus for the larger Max 10 and A321neo aircraft will be serving Newark and San Francisco. The two cities are where United has runway constraints that the two aircraft can uniquely manage while still carrying as many passengers as possible.
United Next also calls for retiring smaller regional aircraft on which customers don’t often enjoy flying. They’ll be replaced with more “mainline” Boeing and Airbus aircraft, as well as the premium-focused Bombardier CRJ550, with more first class and “EconomyPlus” extra-legroom seating to the tune of 75% more premium seats per departure.
“Today, for example, about one-third of our domestic departures are in single-class, 50-seat jets; we’re going to lower that to 10% or less over the next three years, “Andrew Nocella, chief commercial officer, said. “The average size of a United Airlines domestic or North American flight is going to increase by about 30% over the next few years.”
Inside the new aircraft will be United’s new signature interior that includes seat-back in-flight entertainment, a major shift for United that had recently opted for streaming entertainment and will greatly differentiate the carrier from American Airlines. Larger overhead bins will be installed to accommodate more carry-on bags.
“United is clearly making a play for the premium market with this announcement,” Henry Harteveldt, travel industry analyst and cofounder of Atmosphere Research Group, told Insider. “United is clearly taking aim against Delta and is going to attempt to give Delta a run for its money in courting the premium customer.”
All United narrow-body will be upgraded over the next four years. Toby Enqvist, United’s chief customer officer, estimates that’s 66% of aircraft will be retrofitted in 2023 and the entire fleet will be complete by 2025.
The upgrades will give United a better opportunity to compete based on its product and go after a higher echelon of travelers that can afford to spend more on fares. But still, investments will need to be made in United’s service and catering to be truly competitive, according to Harteveldt.
“United did exactly what a well-run airline should do,” Harteveldt said, noting that the pandemic presented a better financial opportunity to purchase aircraft.
United Next doesn’t include new orders for wide-body aircraft but the airline has been steadily modernizing with Boeing 787 Dreamliner and Boeing 777-300ER aircraft, with more arriving in upcoming years.