United's fleet retrofit will take longer than expected, execs say
United Airlines will miss its target of 2025 to retrofit its entire fleet with new, modernized cabins, airline executives said Wednesday.
In comments during the airline's first-quarter earnings call with investors, chief commercial officer Andrew Nocella blamed ongoing supply chain constraints.
"The supply challenges across the board, whether it be [in-flight entertainment], chips, seats and many other things are just more challenging than they've ever really been," Nocella said. "The total time to convert all the aircraft is going to be longer than we expected, unfortunately, probably by a year or two."
United unveiled its new cabin interior in 2021 alongside an order for 270 narrow-body aircraft, saying it would retrofit its entire fleet of existing mainline aircraft. The new cabins feature individual in-flight entertainment screens with Bluetooth connectivity for headphones, larger overhead lockers and a new LED lighting scheme.
While airline executives initially suggested that the retrofit program would be completed by 2025, supply chain constraints — which have also affected new aircraft deliveries — caused that target to slip.
In December, during an announcement for a separate order of widebody aircraft, United CEO Scott Kirby told TPG that the retrofit program had started out slower than expected. Still, he had said it should be largely finished by the middle of the decade.
"Not much has been done so far," Kirby said at the time. "It's on track to be, if not 100% complete by 2025, substantially completed by 2025."
"There have been some supply chain [issues], but we've mostly gotten those wrestled to the ground," he added.
December's comments were the first time United suggested the project would likely slip beyond 2025. During Wednesday's conference call, Nocella said that despite the added year or two, customers would see "material progress" over the coming years as an increasing share of the fleet gets converted to the new interior.
Read more: With Boeing order, United reveals and doubles down on its plan for the next decade
"The odds of getting on an aircraft with the United signature interior [are] going to go up rapidly," he said. "It's just the tail that's going to take a little bit longer to get done."
Overall, United posted a net loss of $194 million for the quarter, compared to a loss of $1.4 billion in the first quarter of last year. Delta Air Lines, which reported earnings last week, similarly posted a loss.
The first quarter tends to be the toughest revenue season for airlines, with a slow travel period carrying over from the holidays until spring.
During the call, United executives noted a slight dip in business travel demand alongside larger macroeconomic turbulence.
"The United network is more reliant on business traffic that is not fully recovered to pre-pandemic volumes," Nocella said. "The United global network and East Coast trends are simply better aligned to March through October, post-pandemic, where leisure and premium leisure compensates for less traditional business traffic."
Business travel demand in the coming quarters was higher than in 2022, Nocella said. He noted that demand fell in the wake of recent banking crises but that it had since recovered.
Still, despite upbeat demand projections, particularly for international leisure and business travel — which United has more relative exposure to than other airlines — Kirby said the airline was preparing for a broader economic slump.
"It seems clear that the macro risks are higher today than they were even a few months ago," Kirby said. "Our base case, therefore, remains a mild recession or soft landing, which is consistent with what we're seeing in our bookings."
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Recommended Credit
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- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
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- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.
Rewards Rate
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
| 2X | Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com. |
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Intro Offer
You may be eligible for as high as 100,000 Membership Rewards® Points after spending $6,000 in eligible purchases on your new Card in your first 6 months of Membership. Welcome offers vary and you may not be eligible for an offer.As High As 100,000 points. Find Out Your Offer.Annual Fee
$325Recommended Credit
Credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.Excellent to Good
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.