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."
Related reading:
- 6 things you need to know about United Airlines MileagePlus
- The best credit cards for United Airlines flyers
- What is United Airlines elite status worth?
- Maximize your airfare: The best credit cards for booking flights
- The best credit cards to reach elite status
- How to survive basic economy on United Airlines
TPG featured card
at Bilt's secure site
Terms & restrictions apply. See rates & fees.
| 1X | Choose to earn up to 1X points on rent and mortgage payments with no transaction fee |
| 2X | Earn 2X points + the option to earn 4% back in Bilt Cash on everyday purchases |
Pros
- Choice to earn up to 1 Bilt Point per dollar spent on rent and mortgage payments
- Elevated everyday earnings with both Bilt Points and the option to earn Bilt Cash
- $400 Bilt Travel Portal hotel credit per year (up to $200 biannually)
- $200 Bilt Cash annually
- Priority Pass membership
- No foreign transaction fees
Cons
- Moderate annual fee
- Designed primarily for members seeking a premium, all-in-one card
- Earn points on housing with no transaction fee
- Choose to earn 4% back in Bilt Cash on everyday spend. Use Bilt Cash to unlock point earnings on rent and mortgage payments with no transaction fee, up to 1X.
- 2X points on everyday spend
- $400 Bilt Travel Hotel credit. Applied twice a year, as $200 statement credits, for qualifying Bilt Travel Portal hotel bookings.
- $200 Bilt Cash (awarded annually). At the end of each calendar year, any Bilt Cash balance over $100 will expire.
- Welcome bonus (subject to approval): 50,000 Bilt Points + Gold Status after spending $4,000 on everyday purchases in the first 90 days + $300 of Bilt Cash.
- Priority Pass ($469/year value). See Guide to Benefits.
- Bilt Point redemptions include airlines, hotels, future rent and mortgage payments, Lyft rides, statement credits, student loan balances, a down payment on a home, and more.