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CHICAGO TRIB: UA "left behind" in buying new planes

CHICAGO TRIB: UA "left behind" in buying new planes

 
Old Jul 22, 07, 9:51 am
  #1  
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CHICAGO TRIB: UA "left behind" in buying new planes

July 22, 2007

"United Airlines stays at the gate as rest of world adds new planes"

"How long can United Airlines sit out the booming market for jetliners?

A decade ago, Chicago-based United was the first airline in the world to fly Boeing Co.'s 777, a large aircraft that revolutionized long-range travel by soaring over lengthy ocean routes on just two engines.

Now, United is watching Asian carriers with global ambitions, Japan's ANA and Singapore Airlines, launch the latest game-changing airplanes: Boeing's fuel-efficient 787 Dreamliner, and Airbus's A380 superjumbo jet, respectively.

That's because United hasn't ordered any new aircraft for its 460-plane fleet since it filed for bankruptcy nearly five years ago, even though almost all of the world's leading carriers are rebuilding their fleets...."

http://www.chicagotribune.com/busine...,5242967.story
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Old Jul 22, 07, 10:00 am
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While not defending UA, what these articles tend to miss is that UA has the youngest fleet in the industry, relative to its growth rates needs. But what UA is sorely missing is a cosmetic updating (new seats, new interiors, new attitude of staff, etc) which they are starting but will take too long to catch up with their competitors.
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Old Jul 22, 07, 10:20 am
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Originally Posted by blueman2 View Post
While not defending UA, what these articles tend to miss is that UA has the youngest fleet in the industry, relative to its growth rates needs.
I agree; this article is pure crap journalism at its best.

Sure, it'd be nice to see new planes at UA, but buying planes for the sake of just "buying them" makes no sense at all.

I think there's a place for this article, but it needs to be supported by much stronger reasoning than, "other airlines are getting new planes so UA should too."
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Old Jul 22, 07, 10:53 am
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And as soon as United would announce they were buying new planes, the Trib would come out with an article saying that stupid decisions like that will put UA back in bankruptcy. UA can never win when it comes to the Trib.
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Old Jul 22, 07, 11:07 am
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Originally Posted by flyingaintthesame View Post
UA can never win when it comes to the Trib.
Other than the comics, sudoku, and Sunday Transportation section, the Trib is a piece of garbage (much like most newspapers in the U.S.).
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Old Jul 22, 07, 11:22 am
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Originally Posted by blueman2 View Post
While not defending UA, what these articles tend to miss is that UA has the youngest fleet in the industry, relative to its growth rates needs. .
<soapbox on>

"Average" youngest fleet statistic doesn't actually mean much to the customer when one is flying an 18+ year old 747 (with non-upgraded interior, broken IFEs, broken seats) on a 14 hour long haul flight.

Sorta like saying in 2009, Rental Car Agency X has the youngest fleet ( a perfectly true fact ) and then you get a 1989 Cadillac in barely passable condition ( 10mpg, AM/FM 2 speaker radio and torn back seats ) handed to you as a luxury car rental. Oh yes.. it runs reliably.... but if your competion is renting out 2009 Cadillacs, Lexux or BMWs for the same price, or cheaper????

Those planes are potentially in the most profitable segments which are going to get the highest level of international competition in coming years.

With minimum delivery times for purchased aircraft of 6+ years for the 787, and 4 years or so for a 747-8... one needs to plan WAY ahead unless UA intends to lease 777's or 787's. And leasing makes little financial sense over the long haul, for this business.. unless one is just living day to day with no plan for the future and wants to boost apparent profitability for the moment ( by not investing in the future ).

Clearlly the decision to NOT order new planes for the future is due to the dedication of management to the business plan of "sell out/merge, and make lots of money for involved execs". The routes and gate access ( not planes or people ) are the selling features. But without a viable merger/buyout partner coming along REAL soon, UA will need to change their business plan to remain competitive without a merger/buyout option. But that's a whole 'nuther thread of thought.

<soapbox off>

Last edited by kkirksea; Jul 22, 07 at 11:34 am
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Old Jul 22, 07, 11:35 am
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Originally Posted by kkirksea View Post
<soapbox on>

Clearly the decision to NOT order new planes for the future is due to the dedication of management to the business plan of "sell out/merge, and make lots of money for involved execs". But that's a whole 'nuther thread of thought.

<soapbox off>
I think you picked on the wrong plane for the old age issue. The 747s are old, but they have a very long useful lifespan if maintained and updated. The 737-300s, however, are VERY old. And pretty much at end of life. See page 17 of this document:

IF Document

However, I do agree with your assertion that merger mania and short term thinking is a problem at UA right now. And it is impacting their decision on not ordering any new planes.
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Old Jul 22, 07, 12:08 pm
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I think the fact that so many of those new planes are sold to leasing companies and not direct to the airlines is also a key point ... UA will likely be able to lease a plane without the purchase without too much difficulty. Cost effective? That depends, but it's not that they won't be able to get them at all.
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Old Jul 22, 07, 12:20 pm
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I agree that a better investment would be to drop some money into the 747 fleet and upgrade the seats, IFE, everything. IMO a better return for the dollar. 747's will have a long lifespan because of their relatively low cycles compared to other aircraft.

Last edited by redbeard911; Jul 22, 07 at 12:29 pm
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Old Jul 22, 07, 12:45 pm
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Gotta agree with the Trib on this. A couple of key items from the article:

Even so, analyst say United's 1990s-era aircraft will be at a disadvantage to the newer aircraft, which will have lower fuel and maintenance costs if they perform as the planemakers have promised.
When other airlines are operating flights at significantly lower costs than UA, what will that do to fares, and passengers' perceptions of UA? Who wants to fly old beat up planes when newer planes are available for the same fare?

United's planes had an average age of 12 years as of the end of 2006, making its fleet newer than those of most U.S. carriers. But United's toughest overseas competitors are upgrading aircraft holdings that are younger than United's: Singapore Airlines' planes are 6 years old, on average; ANA's average age is 9 years.

Analysts say that aircraft age is especially important to well-heeled travelers, and United doesn't match up favorably with its overseas competitors.
5 years from now those numbers will look even worse. And the domestic planes won't do any better. People will not only be looking at age, which for the 737 and 757 are getting up there, but the cycles. The wear and tear, both inside and out, will impact the decisions of passengers. Who will stick with an airline that won't be improving until near 2020? I got my million miles in. Recent decisions, like taking 5+ years apparently to upgrade F & C, are making it easier to justify moving to other airlines, especially for international flights.
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Old Jul 22, 07, 12:49 pm
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Originally Posted by kkirksea View Post
<soapbox on>

"Average" youngest fleet statistic doesn't actually mean much to the customer when one is flying an 18+ year old 747 (with non-upgraded interior, broken IFEs, broken seats) on a 14 hour long haul flight.
The oldest 747 in UA's fleet is exactly 18 years old last month. Many of the oldest planes were sitting in the desert for a period of time after 9/11. Additionally, over 1/2 of UA's 747 fleet is 10 years old or less.

I agree about the upgraded interior... except the suites aren't that old. It's just that the premium product didn't trickle down into C and Y.
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Old Jul 22, 07, 12:55 pm
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Originally Posted by GoingAway View Post
I think the fact that so many of those new planes are sold to leasing companies and not direct to the airlines is also a key point ... UA will likely be able to lease a plane without the purchase without too much difficulty. Cost effective? That depends, but it's not that they won't be able to get them at all.
Precisely!^ This doesn't mean UA wont be flying new planes, just that they wont be buying them for now. I agree with others that just buying aircraft for the purpose of buying them is stupid if they don't exactly meet UA's needs.
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Old Jul 22, 07, 2:05 pm
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Originally Posted by lucky9876coins View Post
Precisely!^ This doesn't mean UA wont be flying new planes, just that they wont be buying them for now. I agree with others that just buying aircraft for the purpose of buying them is stupid if they don't exactly meet UA's needs.
Exactly ^. UA has not been out of bankruptcy that long. They have had some good quarters and some not so good. There are plans for new C & F which all costs $$$.

If UA were to order a plane for purchase, I assume they would have to put down a deposit? This would tie up money for years, which in the short-term could be put to better use i'm sure. If the need for a new plane arises (ie. UA finds some more Asia routes to expand on ) then i'm sure they could lease without too many problems.

Either way UA are damned
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Old Jul 23, 07, 11:13 pm
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The article also fails to mention the young fleet age of UX, as well as the shift of domestic capacity to UX. Perhaps the reason UA isn't in a hurry to make a narrowbody order is because outsourcing the flying to the lowest bidder is more profitable than doing the flying on mainline equipment.

I am sure in the next round of pilot negotiations, raising the maximum seat count for UX operated flights will be a key negotiation point... not sure ALPA will agree with it.. but you can argue that UA's mainline network (especially international) will become a lot stronger if short haul domestic flying can be more profitable.
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Old Jul 23, 07, 11:50 pm
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All that UA is missing out is the 787. Delivery dates are now reported to be way out there. They probably don't want the A380. The A350XWB wants customers. They could also keep using 777's and order new ones, too.

Not having the 787 is not a death blow to UA.
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