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United Airlines slashes Boeing 737 MAX deliveries amid coronavirus downturn

May 1 2020
6 min read
United Airlines slashes Boeing 737 MAX deliveries amid coronavirus downturn
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United Airlines has halved the number of new Boeing 737 MAX jets it will add to its fleet over the next year-and-a-half as it prepares to "look different" after the coronavirus pandemic.

The Chicago-based carrier will take up to 40 737 MAXes by the end of 2021, or less than half of its pre-crisis plans, United chief financial officer Gerry Laderman said during a first quarter earnings call on Friday. Depending on when regulators re-certify the grounded jet, the airline could take delivery of 16 aircraft this year and 24 next.

In addition, United will take delivery of eight Boeing 787-9s this year and eight 787-10s in 2021 that were already in production when the pandemic hit.

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Airlines around the world face the stark reality that air travel will be significantly diminished for the foreseeable future. Even the best-case scenarios do not call for a return to 2019 traffic levels until at least 2022.

The latest numbers from the International Air Transport Association (IATA) show global passenger traffic fell by more than half in March compared to a year ago. Traffic in North America declined by nearly 50% year-over-year.

Fewer flyers means airlines will not need as many planes, especially new ones. Brazilian carrier GOL cancelled orders for 34 737 MAXes in March, and Southwest Airlines — the largest 737 operator in the world — has delayed the deliveries of some 75 MAX jets due in the next year-and-a-half to 2022 or later.

Related: Southwest cuts Boeing MAX deliveries by 75 jets over next two years

"We’ve been having intense discussions for the better part of a month with our MAX customers over deliveries," Boeing president and CEO David Calhoun said April 29.

Demand for wide-body jets that are most often found on prestigious long-haul international routes is also taking a hit. Boeing will cut production of its two best-selling models, the 787 and 777, to seven a month and three a month, respectively.

Delayed or cancelled deliveries, however, do not mean airlines are holding on to all of their old aircraft. American Airlines has put down five types in its 940-jet strong fleet and Delta Air Lines will retire its McDonnell Douglas MD-88s and MD-90s in June.

Related: American’s Boeing 767s, 757s among 80 planes that won’t fly again after the pandemic

 

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United, for its part, is not committing to retiring any of its more than 800 mainline jets. It has only "temporarily parked" aircraft that are not flying pending a better view of the recovery post-coronavirus, said Laderman.

And that recovery may be a ways off. Reservations are around "net zero" — or bookings minus cancellations — with no near-term sign of improvement, United president Scott Kirby said Friday. The airline is prepared for a worst-case scenario where demand for air travel remains unchanged into 2021.

“Disney World needs to be open… Cafes and museums in Paris need to be open before people go back," said Kirby on when people will begin to travel again.

In the meantime, United has slashed capacity by 90% through June and will continue to do so until people start flying again in significant numbers. The airline is also preparing for the possibility of involuntary furloughs and layoffs once the conditions attached to its federal payroll assistance from the CARES Act sunset on Sept. 30.

"When we emerge from this, United Airlines — and the airline industry — is going to look different," said Kirby.

Related: United Airlines sees positive uptick in flight searches, but only for travel next year

Featured photo by Frederic Tiberghien

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