United Predicts Revival Of Pandemic Hit Travel Sector Orders 25 New Boeing 737 Max Jets

Orders for an additional 25 Boeing 737 Max jet planes were placed with the United States based aircraft makers by United Airlines which is the largest order for the planes since they were grounded globally in March 2019. The American airline also accelerated the delivery of 45 other 737 Max jets that had been previously ordered by the airline, the firm disclosed on Monday. 

This decision of placing orders for more planes and accelerating the delivery time line was based on the estimates of the company of a rebound in air travel will take place firmly by next year itself.

“With a number of our aircraft nearing the end of their lifecycle and the growth opportunities that we know will exist in the Covid-19 recovery period, this agreement will help us to grow as demand returns and renew our fleet with more environmentally friendly, customer-pleasing aircraft,” United Chief Commercial Officer Andrew Nocella said in a memo to employees.

This disclosure of the positive sentiment in the airline also resulted in stocks of both United and Boeing rising by about 4 per cent on Monday along with the rise in the shares of the major US airlines.

The deal with Boeing for the planes was disclosed by United in its annual filing with the Securities and Exchange Commission while also disclosing that it had also shortened the time line for the deliveries of 40 planes to 2022. It will also take deliveries of five more of the planes in 2023. From this year forward, a total of 180 737 Max jets have been ordered for delivery by United.

At the time when the 737 Max planes were grounded globally in March 2019, there were only 14 of the planes in United’s fleet. The global grounding of the planes were done after two fatal accidents involving the planes within a span of just 5 months in which 346 people were killed. Since the lifting of the grounding order of the plane sin November last year by the US Federal Aviation Administration, United was the first airline to resume deliveries 737 Max planes. Since then, 12 737 Max planes have been delivered to United by Boeing. The deliveries in February have not been reported by Boeing,

Starting February 11, 737 Max planes were used in its services by United and currently the airlines is flying the planes on about 30 flights every day.

Despite concerns among a section of flyers about the safety and security of the revamped 737 Max planes, United is confident of the passengers being comfortable of flying on the 737 Max, Nocella said.

“Flights on our Max aircraft in 2018 and 2019 had the highest average customer satisfaction score of any large narrowbody aircraft,” Nocella said in his memo. The 15 per cent savings o on fuel that is provided by the 737 Max compared to the older 737 jets is also another reason for United operating and ordering the planes. 

United is also eager to take advantage of the 15% fuel savings that the Max offers compared to older 737 jets.

(Adapted from CNN.com)

Categories: Economy & Finance, Regulations & Legal, Strategy, Sustainability

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