Retiring? United's premium Boeing 757s, some 767s going to 'long-term storage'
United Airlines stands apart from is U.S. peers as not having officially retired any aircraft types from its mainline fleet even as the carrier's management offer some of the most frank assessments of the impact of the coronavirus pandemic on its business.
The Chicago-based carrier has parked some 450 mainline and 300 United Express jets, United senior vice-president of airport and network operations Jon Roitman told staff Monday in an internal newsletter viewed by TPG. That amounts to just over half of its combined fleet 1,407 aircraft.
Among the planes parked are 11 Boeing 757-200s in United's "premium" transcontinental service configuration and 16 Boeing 767-400ERs. The jets are now in "long-term storage" pending a decision on what aircraft will be retired, airline spokesperson Rachael Rivas told TPG.
The premium 757s, with 28 lie-flat business-class seats out of 142 seats total, are known by frequent flyers for being some of the friendliest for upgrades in United's fleet. The layout was previously known as "premium service," or PS, a brand that United retired in 2017.
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While the 27 757s and 767s may yet come back, the likelihood that they may have flown their last flights in United's colors is high considering the heavy toll COVID-19 is taking on the industry. U.S. carriers are burning as much as $10 billion a month with the average number of passengers on flights around 23 people during the week ending May 5, according to trade group Airlines for America (A4A).
United has shied away from officially "retiring" any aircraft to date in the crisis. Executives argue that they want a better sense of what the recovery will look like before making permanent decisions.
"Until we see what's needed to run the operation, we're not going to make any firm decisions on those," United's chief financial officer Gerry Laderman said in response to questions on aircraft retirements during an earnings call on May 1.
By comparison, American Airlines has retired or put in multi-year storage five mainline aircraft -- Airbus A330s, 757s, 767s and Embraer E190s -- and Delta Air Lines will retire its McDonnell Douglas MD-88 and MD-90s in June.
Related: American won’t fly an Airbus A330 again for at least two years
Every U.S. carrier is preparing to be smaller at year-end than they were last December. The question on every management team's mind is by how much.
United has modeled a worst case scenario of near-zero passenger demand through the end of the year. Such a scenario could see the 90% capacity cuts in May and June likely extended for some months to come.
"We aren't projecting that and certainly hope it's better than that, but we are planning for the possibility," incoming United CEO Scott Kirby said abou the scenario during the call.
Anything close to "zero" demand would mean United needs far fewer aircraft. Kirby has previously said that the 757s and 767s will be retired first, as well as many of the carrier's single-class 50-seat regional jets. The latter does not include the Bombardier CRJ550s that debuted last year and feature a first-class cabin.
Related: United considers retiring Boeing 757s and 767s, many of its 50-seat jets
The long-term storage of United's premium 757-200s leaves it with just internationally-configured jets for the foreseeable future. Its international 757-200s have 16 lie-flat business class seats -- 12 fewer than the premium 757s -- and 153 economy seats. These 757s, as well as United's 757-300s, remain in its fleet.
Prior to the crisis, United planned to introduce a Boeing 737 MAX 10 with a lie-flat premium domestic product. It is unclear if those plans have changed, and unknown when its first MAX 10 will arrive.
The 767-400ERs were a workhorse for United on flights to Europe and South America. The planes had 39 lie-flat business class seats, 70 Economy Plus seats, and 131 economy seats.
In addition, United senior vice president of flight operations Bryan Quigley told pilots in a May 2 memo that the carrier only planned to schedule the 767-300ER for the "foreseeable future."
Related: United sees Boeing 787 as new long-haul ‘workhorse,’ orders 7 more Dreamliners
United will take delivery of eight Boeing 787-9s, its new wide-body "workhorse" as Quigley put it, by year-end. The jets could replace the 767-400s as they seat just 17 more passengers.
While United can wait, it will have to retire jets at some point. In April, analysts at Cowen estimated that the airline industry may need to remove as many as 1,259 aircraft if demand is down 30% by year-end. That equals a roughly 238 aircraft reduction in United's mainline fleet.
And even in the seemingly unlikely scenario that travel demand ends up somewhere between pre-COVID levels and Cowen's estimate, United would still need to remove another 100 jets on top of the 27 757 and 767s already in long-term storage.
"Hope is not a strategy," Kirby said during the earnings call. "Nobody knows when this will end and life will begin to return to normal... We plan to continue to react nimbly as the situation evolves and won't hesitate to make hard decisions."
Related: United may change route map post-coronavirus, says no hub is ‘sacred’
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- 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.