United MileagePlus (Consolidated) - Comments from B/E Aerospace (seat supplier) on UA plans

From the BE Aerospace earnings call yesterday...

A lot open to interpretation but looks like common seat for new airline is not yet set (though note Koito problem not mentioned).

Interesting though BE sees a major retrofit in the "not distant" future (though that's like 5 years for these guys). Message implied may be that Global First is on probation, and the route they're taking now of parallel orders is actually the more expensive one to keep that option open in case they decide to go 2 class.

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United Continental was a great thing. They were both our customers, especially for premium class products. And when they merged, they struggled for a while, trying to figure out which livery they were going to agree upon as a common for both fleets. They were not able to make that decision in the short-term, and they both confirmed orders with us to continue delivering products under both liveries, which we are doing. That is ongoing as we speak.

I think the end result of that will be that they will likely have a major retrofit program at some time in the not-too-distant future when they decide what to agree on finally. They are just not able to do it so quickly. They cannot get the integration done, so they are going to go ahead and spend a couple of hundred million dollars extra and still have two fleets for some period of time.

Clearly, there has to be integration on seating but the question centers on timing.

The lead times are so long in these cases, and the die was already cast, that it will be a number of years before we see anything that can definitively be said to be the future way for the combined airline. Whether they yet have decided on anything is doubtful - perhaps the ex-Koito planes will provide an answer but I doubt it.

I would have thought the most obvious first step will be to align BF and UA Business products - but both are effectively new products and have a shelf life of probably ten years. Alternatively, what they do with economy seating in the 747s might provide a clue.

I would have thought the most obvious first step will be to align BF and UA Business products - but both are effectively new products and have a shelf life of probably ten years. Alternatively, what they do with economy seating in the 747s might provide a clue.


I think that's what they're referring to.

There is big lead time in the parts and such for these seats, so if they made a change to what UA committed to, that would slow down delivery. That's why they're going with what each company had before so as to keep on track with the retrofits and new aircraft deliveries.

...They cannot get the integration done, so they are going to go ahead and spend a couple of hundred million dollars extra and still have two fleets for some period of time.

Easy to pull the trigger to nix blankets, pillows and nuts but not so easy when it comes down to large five-year strategic plans. That's why they pay those guys millions in RSUs every year. Making the tough decisions.