http://newsroom.united.com/2017-07-18-United-Airlines-Reports-Second-Quarter-2017-Performance

* $818M net profit (8.2% net margin) / $846M ex-special items
* "Top airline operation among major competitors," including completion and on-time arrival/departure in Q2
* Consolidated PRASM +2.1% and consolidated yield +2.0% YOY vs 2Q16
* Ended quarter with $6.6B unrestricted liquidity
* Deferred 4 A350s out of 2018 and accelerated 12 737MAXs into 2019 and two 787-10s within 2019

All in all seems like a pretty solid quarter. The A350 deferrals and 787 accelerations will obviously intensify speculation on the widebody front.

Was wondering how many A350s was UA supposed to get and Karel directed me to ATDB where it mentioned that 8 were scheduled for 2018 !

Lower fuel / quick retirement of the 747s is giving them flexibility in the International long haul fleet. There seems to be more focus on growing domestic market with new/used planes. Makes sense too, long haul international has had a nice run. Good to see them not over leveraging and proactively preparing for downturn/slow down. 4 more 77Ws in 2018 covers for the A35Ks.

Nice profit, but I doubt Wall Street will be happy.

TerminalD wrote:

Nice profit, but I doubt Wall Street will be happy.

No Wall Street is not happy (UAs stock is down after hours) but it has nothing to do with today's results which beat expectations quite handily. Wall Street is annoyed as UA is projecting PRASM to be -1 to +1 (ie flat) during Q3...wall street was looking for PRASM growth which is rather short sighted in my view.

TerminalD wrote:

Nice profit, but I doubt Wall Street will be happy.

Wall street is never happy.

United1 wrote:

No Wall Street is not happy (UAs stock is down after hours) but it has nothing to do with today's results which beat expectations quite handily. Wall Street is annoyed as UA is projecting PRASM to be -1 to +1 (ie flat) during Q3...wall street was looking for PRASM growth which is rather short sighted in my view.

I think analysts are eagerly awaiting additional "color" from Oscar and Kirby tomorrow on the specific drivers of the PRASM trends - in particular, the capacity/pricing environment across the Atlantic and Pacific.

https://twitter.com/e_russell/status/887406906918268938

The story continues on, I don't think we will see these A350s being delivered IMO. Where is the need for them with the 77W now killing off the 744 fleet? Could make a case for the A359 but it seems that the 789 and 787-10 can handle that area just fine.

We need to see the delivery schedule for the 35Ks but I'd want to know when the deferred a/c are due to be delivered under the new schedule?

Deferrals aren't uncommon but this is a large order and the latest line-up might provide some clues. I can't see Airbus allowing a cancellation without stiff penalties. Switching to different a/c perhaps if the value is similar.

There's not really a place in the UA fleet for A350s until maybe 2025 or 2030 when the oldest 777-200ERs need to be replaced.

Does that mean these A350 deposits become A321s and A330s in the nearer-term? Or A359s and A35Ks in the longer term? I imagine that decision will get punted down the road a few more years.

airzona11 wrote:

Lower fuel / quick retirement of the 747s is giving them flexibility in the International long haul fleet. .... 4 more 77Ws in 2018 covers for the A35Ks.

https://en.wikipedia.org/wiki/Fuel_econ ... C2.A0km.29

Retiring more 744s alone will lead to a much better bottom line. The above chart doesn't account for all variables, but no matter what fuel prices are, the 77W and 789s will make a huge difference. Once the 744s are gone, UA is pretty much done retiring planes en masse due to age or inefficiencies and most new deliveries are all for growth. On the other hand, a couple of competitors have a whole boatload of older-generation planes retiring in the very near future.

After several excruciatingly painful years watching UA struggle through a mountain of setbacks (SARS, 9-11, merger issues, AFA integration etc.) it's nice to see the pieces finally coming together.

Well we already knew, but this confirms that UA will operate both the 737-9 and 737-10.

adamblang wrote:

There's not really a place in the UA fleet for A350s until maybe 2025 or 2030 when the oldest 777-200ERs need to be replaced.

Does that mean these A350 deposits become A321s and A330s in the nearer-term? Or A359s and A35Ks in the longer term? I imagine that decision will get punted down the road a few more years.

I see no need or the A330NEO. I see them delivered early next decennium. The 77W must be cheap now because Boeing has some last of the line slots to sell.

adamblang wrote:

There's not really a place in the UA fleet for A350s until maybe 2025 or 2030 when the oldest 777-200ERs need to be replaced.

Does that mean these A350 deposits become A321s and A330s in the nearer-term? Or A359s and A35Ks in the longer term? I imagine that decision will get punted down the road a few more years.

Any deposits put towards A350s that are being deferred will probably get applies to something else. May Airbus will get a contract for some A320 parts or service bulletins or an A350 landing gear exchange program or some other services.

When it's time to replace the 772's, why wouldn't United just order more 789's for the Pacific and 787-10's for the Atlantic? Wouldn't that be more efficient than adding a new fleet type?

ehaase wrote:

When it's time to replace the 772's, why wouldn't United just order more 789's for the Pacific and 787-10's for the Atlantic? Wouldn't that be more efficient than adding a new fleet type?

Depends on how much it would cost to cancel/defer the A350s. United admitted when they ordered the 359s that they got them for a very good price, but pretty much impossible to cancel without losing a boatload of money. Not sure how it changed when they got converted to 35J, but considering this is another deferral, I am guessing it's the same--pretty dang hard to cancel.

My guess is they'll convert some of them back into A359s when they need to replace some 772s, and order more 789s/78Js to cover other routes.

What about the 767 fleet? The -300ER's (35 frames) were built and delivered mostly in the 1990's with a handful ordered and delivered in the early 2000s. They are heavily used on TATL and Deep South America routes and are on the path to total cabin refits, with the last 3 class birds being the first 763's in the fleet to receive the Polaris cabin. This is a smaller and comparatively younger 767-300ER fleet than Delta's (and certainly that of AA's which is being drawn down at an accelerated pace), but they aren't young. What will UA replace them with? The 787 isn't a 1:1 replacement as they are different aircraft for different missions in the UA network. The 787-10 is significantly larger, isn't it?

The 767-400ER fleet (16 frames) are all ex-CO aircraft. It seems they have a lower dispatch reliability rate though all were built and delivered between 2000 and 2002 so have a lot of life left in them.

What's the 767 replacement strategy? Does it come before the oldest 772s need to be replaced (the -ER ones, not the 200As)?

jetblastdubai wrote:

airzona11 wrote:

Lower fuel / quick retirement of the 747s is giving them flexibility in the International long haul fleet. .... 4 more 77Ws in 2018 covers for the A35Ks.

https://en.wikipedia.org/wiki/Fuel_econ ... C2.A0km.29

Retiring more 744s alone will lead to a much better bottom line. The above chart doesn't account for all variables, but no matter what fuel prices are, the 77W and 789s will make a huge difference. Once the 744s are gone, UA is pretty much done retiring planes en masse due to age or inefficiencies and most new deliveries are all for growth. On the other hand, a couple of competitors have a whole boatload of older-generation planes retiring in the very near future.

After several excruciatingly painful years watching UA struggle through a mountain of setbacks (SARS, 9-11, merger issues, AFA integration etc.) it's nice to see the pieces finally coming together.

The 747-400 fleet is supposed to be fully retired before year end 2017.

boilerla wrote:

ehaase wrote:

When it's time to replace the 772's, why wouldn't United just order more 789's for the Pacific and 787-10's for the Atlantic? Wouldn't that be more efficient than adding a new fleet type?

Depends on how much it would cost to cancel/defer the A350s. United admitted when they ordered the 359s that they got them for a very good price, but pretty much impossible to cancel without losing a boatload of money. Not sure how it changed when they got converted to 35J, but considering this is another deferral, I am guessing it's the same--pretty dang hard to cancel.

I am not sure about the cancel point, if they choose to defer they defer. In today's world they can defer without canceling, I mean Delta deferred the 787 order from NW and they eventually converted it, but a deferral is a deferral. They can wait till there is an airplane they want (read fits the routes and demands they see they need) from Airbus before they convert to something.
I mean heck, UA had on the books a deferral from the narrowbody order for like 10 years, it is not a big deal to have deferrals as it saves you the deposit. UA will eventually buy another airbus aircraft at some point in the future.

ordbosewr wrote:

boilerla wrote:

ehaase wrote:

When it's time to replace the 772's, why wouldn't United just order more 789's for the Pacific and 787-10's for the Atlantic? Wouldn't that be more efficient than adding a new fleet type?

Depends on how much it would cost to cancel/defer the A350s. United admitted when they ordered the 359s that they got them for a very good price, but pretty much impossible to cancel without losing a boatload of money. Not sure how it changed when they got converted to 35J, but considering this is another deferral, I am guessing it's the same--pretty dang hard to cancel.

I am not sure about the cancel point, if they choose to defer they defer. In today's world they can defer without canceling, I mean Delta deferred the 787 order from NW and they eventually converted it, but a deferral is a deferral. They can wait till there is an airplane they want (read fits the routes and demands they see they need) from Airbus before they convert to something.
I mean heck, UA had on the books a deferral from the narrowbody order for like 10 years, it is not a big deal to have deferrals as it saves you the deposit. UA will eventually buy another airbus aircraft at some point in the future.

I agree, Airbus is not going to anger a huge airline like United by holding deposits and not negotiating contracts. United probably spends millions a year in spare parts from Airbus to support the A320 fleet. Airbus doesn't want to lose a future sale and burn the relationship. There is not a huge incentive right now to block UA from deferring A350s because there are plenty of operators likely willing to take the slots. End of line A330ceos or A320ceos would be a different story,

sadiqutp wrote:

Was wondering how many A350s was UA supposed to get and Karel directed me to ATDB where it mentioned that 8 were scheduled for 2018 !

Assuming ATDB is right, if 8 A350's were scheduled for 2018 and 4 were deferred, doesn't that mean 4 are coming next year? Can it be confirmed that 8 were scheduled for 2018?

350s won't happen. UA is pulling a CO and moving to all Boeing. I'm sure any penalty Airbus will charge UA will be quickly reduced in the price of a few more "transition" 77Ws.

boilerla wrote:

ehaase wrote:

When it's time to replace the 772's, why wouldn't United just order more 789's for the Pacific and 787-10's for the Atlantic? Wouldn't that be more efficient than adding a new fleet type?

Depends on how much it would cost to cancel/defer the A350s. United admitted when they ordered the 359s that they got them for a very good price, but pretty much impossible to cancel without losing a boatload of money. Not sure how it changed when they got converted to 35J, but considering this is another deferral, I am guessing it's the same--pretty dang hard to cancel.

My guess is they'll convert some of them back into A359s when they need to replace some 772s, and order more 789s/78Js to cover other routes.

I understand that UA has already converted orders to the MadMAX and is patiently waiting for mythical Boeing MoM but is it possible that UA may convert the 350 order into 321LR's specifically? My understanding is that the 321LR will debut before the MadMAX and is the closest thing available inside this decade to the 752? I understand the 752's will be around for a good while longer but the 321LR is slated to offer TATL performance far more economically than the 752 and should be able to perform West Coast to Hawaii year around without penalty. Moreover, it sounds like the 321N is a better fit for lie flat seating than the 737M given its wider cabin.

The 321LR is still a paper airplane in that it has yet to yield real-world performance data. UA is in a position where it can wait and see how the aircraft performs before pulling the trigger. In my mind, the 321LR fills 4 voids for UA.

1) It allows UA to essentially "get out of" their seemingly superfluous 350 order with little to no penalty.
2) Gives them an aircraft to supplement and ultimately replace their 752 fleet where the additional range is needed. It may also open up TATL routes that were perhaps unprofitable with even the 752 given its now inferior older generation economics.
3) It gives them a TCON capable aircraft with proven lie flat seating abilities for their Coast product
4) Gives them a higher density aircraft capable of flying into all 4 major Hawaiian Island Airports with no penalties in winter.

I know nothing about the prices UA paid for the 350's or the price they might pay for a 321LR conversion but lets say for the sake of discussion they were able to get 75 321LR's in exchange for the 350 order.

UA could possibly divvy up 25 LR's for 752 supplement and expansion on TATL routes, 25 for TCON Coast expansion, and 25 for WCHI services.

The 73M9/10 could be used for hub-hub trunks supplementing the domestic 77A aircraft and hub-larger spoke/leisure routes where range is not an issue. Internationally the M9/10 could be used for shorter S. America.

Of course saying all this I can hear the bratty high school girl from the movie Mean Girls saying "Stop trying to make the 321 happen". I'm done playing arm chair fleet planner now.

77H

Newbiepilot wrote:

ordbosewr wrote:

boilerla wrote:

Depends on how much it would cost to cancel/defer the A350s. United admitted when they ordered the 359s that they got them for a very good price, but pretty much impossible to cancel without losing a boatload of money. Not sure how it changed when they got converted to 35J, but considering this is another deferral, I am guessing it's the same--pretty dang hard to cancel.

I am not sure about the cancel point, if they choose to defer they defer. In today's world they can defer without canceling, I mean Delta deferred the 787 order from NW and they eventually converted it, but a deferral is a deferral. They can wait till there is an airplane they want (read fits the routes and demands they see they need) from Airbus before they convert to something.
I mean heck, UA had on the books a deferral from the narrowbody order for like 10 years, it is not a big deal to have deferrals as it saves you the deposit. UA will eventually buy another airbus aircraft at some point in the future.

I agree, Airbus is not going to anger a huge airline like United by holding deposits and not negotiating contracts. United probably spends millions a year in spare parts from Airbus to support the A320 fleet. Airbus doesn't want to lose a future sale and burn the relationship. There is not a huge incentive right now to block UA from deferring A350s because there are plenty of operators likely willing to take the slots. End of line A330ceos or A320ceos would be a different story,

I wasn't implying UA won't defer the orders. In fact, I said just that--UA will defer them and likely convert most of them to 359s. They could still use more 77Ws, but they didn't really order that many more.

77H wrote:

boilerla wrote:

ehaase wrote:

When it's time to replace the 772's, why wouldn't United just order more 789's for the Pacific and 787-10's for the Atlantic? Wouldn't that be more efficient than adding a new fleet type?

Depends on how much it would cost to cancel/defer the A350s. United admitted when they ordered the 359s that they got them for a very good price, but pretty much impossible to cancel without losing a boatload of money. Not sure how it changed when they got converted to 35J, but considering this is another deferral, I am guessing it's the same--pretty dang hard to cancel.

My guess is they'll convert some of them back into A359s when they need to replace some 772s, and order more 789s/78Js to cover other routes.

I understand that UA has already converted orders to the MadMAX and is patiently waiting for mythical Boeing MoM but is it possible that UA may convert the 350 order into 321LR's specifically? My understanding is that the 321LR will debut before the MadMAX and is the closest thing available inside this decade to the 752? I understand the 752's will be around for a good while longer but the 321LR is slated to offer TATL performance far more economically than the 752 and should be able to perform West Coast to Hawaii year around without penalty. Moreover, it sounds like the 321N is a better fit for lie flat seating than the 737M given its wider cabin.

The 321LR is still a paper airplane in that it has yet to yield real-world performance data. UA is in a position where it can wait and see how the aircraft performs before pulling the trigger. In my mind, the 321LR fills 4 voids for UA.

1) It allows UA to essentially "get out of" their seemingly superfluous 350 order with little to no penalty.
2) Gives them an aircraft to supplement and ultimately replace their 752 fleet where the additional range is needed. It may also open up TATL routes that were perhaps unprofitable with even the 752 given its now inferior older generation economics.
3) It gives them a TCON capable aircraft with proven lie flat seating abilities for their Coast product
4) Gives them a higher density aircraft capable of flying into all 4 major Hawaiian Island Airports with no penalties in winter.

I know nothing about the prices UA paid for the 350's or the price they might pay for a 321LR conversion but lets say for the sake of discussion they were able to get 75 321LR's in exchange for the 350 order.

UA could possibly divvy up 25 LR's for 752 supplement and expansion on TATL routes, 25 for TCON Coast expansion, and 25 for WCHI services.

The 73M9/10 could be used for hub-hub trunks supplementing the domestic 77A aircraft and hub-larger spoke/leisure routes where range is not an issue. Internationally the M9/10 could be used for shorter S. America.

Of course saying all this I can hear the bratty high school girl from the movie Mean Girls saying "Stop trying to make the 321 happen". I'm done playing arm chair fleet planner now.

77H

UA pushed their 752s to the absolute limits when used on TATL routes, so many of the routes couldn't be served, especially with a heavier premium cabin installed (Polaris). Another problem is that as I understand it, Polaris isn't designed to be in a narrower cabin, so UA would have to use the older Diamond seats on the brand new 321s.

Although I'd love to see the 321LR in UA's fleet, I am guessing UA will just wait for the MOM and take the 350s as 35Js and 359s.

So this was the quarter when the Dr. Dao plane dragging incident occurred. I remember people were up in arms and swearing never to fly United ever again. Based on the financial numbers, it looks like that didn't really have a negative impact on their performance.

77H wrote:

boilerla wrote:

ehaase wrote:

When it's time to replace the 772's, why wouldn't United just order more 789's for the Pacific and 787-10's for the Atlantic? Wouldn't that be more efficient than adding a new fleet type?

Depends on how much it would cost to cancel/defer the A350s. United admitted when they ordered the 359s that they got them for a very good price, but pretty much impossible to cancel without losing a boatload of money. Not sure how it changed when they got converted to 35J, but considering this is another deferral, I am guessing it's the same--pretty dang hard to cancel.

My guess is they'll convert some of them back into A359s when they need to replace some 772s, and order more 789s/78Js to cover other routes.

I understand that UA has already converted orders to the MadMAX and is patiently waiting for mythical Boeing MoM but is it possible that UA may convert the 350 order into 321LR's specifically? My understanding is that the 321LR will debut before the MadMAX and is the closest thing available inside this decade to the 752? I understand the 752's will be around for a good while longer but the 321LR is slated to offer TATL performance far more economically than the 752 and should be able to perform West Coast to Hawaii year around without penalty. Moreover, it sounds like the 321N is a better fit for lie flat seating than the 737M given its wider cabin.

The 321LR is still a paper airplane in that it has yet to yield real-world performance data. UA is in a position where it can wait and see how the aircraft performs before pulling the trigger. In my mind, the 321LR fills 4 voids for UA.

1) It allows UA to essentially "get out of" their seemingly superfluous 350 order with little to no penalty.
2) Gives them an aircraft to supplement and ultimately replace their 752 fleet where the additional range is needed. It may also open up TATL routes that were perhaps unprofitable with even the 752 given its now inferior older generation economics.
3) It gives them a TCON capable aircraft with proven lie flat seating abilities for their Coast product
4) Gives them a higher density aircraft capable of flying into all 4 major Hawaiian Island Airports with no penalties in winter.

I know nothing about the prices UA paid for the 350's or the price they might pay for a 321LR conversion but lets say for the sake of discussion they were able to get 75 321LR's in exchange for the 350 order.

UA could possibly divvy up 25 LR's for 752 supplement and expansion on TATL routes, 25 for TCON Coast expansion, and 25 for WCHI services.

The 73M9/10 could be used for hub-hub trunks supplementing the domestic 77A aircraft and hub-larger spoke/leisure routes where range is not an issue. Internationally the M9/10 could be used for shorter S. America.

Of course saying all this I can hear the bratty high school girl from the movie Mean Girls saying "Stop trying to make the 321 happen". I'm done playing arm chair fleet planner now.

77H

Couldn't even get to the second page of posts about UA fleet before we discuss whether UA should get A321s. This topic has been hashed out on virtually every UA fleet thread and every thread on the 737 MAX9 and MAX10.

admanager wrote:

sadiqutp wrote:

Was wondering how many A350s was UA supposed to get and Karel directed me to ATDB where it mentioned that 8 were scheduled for 2018 !

Assuming ATDB is right, if 8 A350's were scheduled for 2018 and 4 were deferred, doesn't that mean 4 are coming next year? Can it be confirmed that 8 were scheduled for 2018?

That's what I'm wondering as well. If they had 8 scheduled and deferred 4, that leaves 4. Wouldn't they have deferred them too if they didn't intend to take them? That leads me to believe that either something is lost in translation or perhaps they are planning to take some next year. Oddly, they never really seem to talk about it though.

77H wrote:

boilerla wrote:

ehaase wrote:

When it's time to replace the 772's, why wouldn't United just order more 789's for the Pacific and 787-10's for the Atlantic? Wouldn't that be more efficient than adding a new fleet type?

Depends on how much it would cost to cancel/defer the A350s. United admitted when they ordered the 359s that they got them for a very good price, but pretty much impossible to cancel without losing a boatload of money. Not sure how it changed when they got converted to 35J, but considering this is another deferral, I am guessing it's the same--pretty dang hard to cancel.

My guess is they'll convert some of them back into A359s when they need to replace some 772s, and order more 789s/78Js to cover other routes.

I understand that UA has already converted orders to the MadMAX and is patiently waiting for mythical Boeing MoM but is it possible that UA may convert the 350 order into 321LR's specifically? My understanding is that the 321LR will debut before the MadMAX and is the closest thing available inside this decade to the 752? I understand the 752's will be around for a good while longer but the 321LR is slated to offer TATL performance far more economically than the 752 and should be able to perform West Coast to Hawaii year around without penalty. Moreover, it sounds like the 321N is a better fit for lie flat seating than the 737M given its wider cabin.

The 321LR is still a paper airplane in that it has yet to yield real-world performance data. UA is in a position where it can wait and see how the aircraft performs before pulling the trigger. In my mind, the 321LR fills 4 voids for UA.

1) It allows UA to essentially "get out of" their seemingly superfluous 350 order with little to no penalty.
2) Gives them an aircraft to supplement and ultimately replace their 752 fleet where the additional range is needed. It may also open up TATL routes that were perhaps unprofitable with even the 752 given its now inferior older generation economics.
3) It gives them a TCON capable aircraft with proven lie flat seating abilities for their Coast product
4) Gives them a higher density aircraft capable of flying into all 4 major Hawaiian Island Airports with no penalties in winter.

I know nothing about the prices UA paid for the 350's or the price they might pay for a 321LR conversion but lets say for the sake of discussion they were able to get 75 321LR's in exchange for the 350 order.

UA could possibly divvy up 25 LR's for 752 supplement and expansion on TATL routes, 25 for TCON Coast expansion, and 25 for WCHI services.

The 73M9/10 could be used for hub-hub trunks supplementing the domestic 77A aircraft and hub-larger spoke/leisure routes where range is not an issue. Internationally the M9/10 could be used for shorter S. America.

Of course saying all this I can hear the bratty high school girl from the movie Mean Girls saying "Stop trying to make the 321 happen". I'm done playing arm chair fleet planner now.

77H

Despite the response above critiquing the A321LR dialogue, I see no reason why it can't happen. Not expecting it to, but I didn't expect Frontier to announce 21 new cities, Norwegian's MAX to debut on TATL flights right out of the gate, QR to go for a stake in AA. Nobody knows what's going to happen until it happens.

So, as I read above, neither a 757 or A321 would get the new Polaris hard product- on TATL or "ps" (or whatever the new name is?). If so, I would consider that to be quite shortsighted as it would leave them behind the competition- especially a few years out from now when those Diamond seats are really going to be an ancient product. I realize consistency is a good thing, but couldn't United at least select a new J seat type that would fit a single aisle, in a Polaris style cabin? With the Saks bedding and throw pillows, it would all go a long way to make a preferred and competitive Premium cabin. United has always be fixated on the the margins premium cabins and loyal premium MP members bring in.
I wonder: with the recent good financial reporting, if United will feel less urgency to refit the existing wide body fleet?

As for the A350, I am disappointed again, I really wanted to see them in United colors pretty bad. Perhaps it's just the geek in me, but I would bet that a part of United's recent improvements and successes are due to having so many Dreamliners. I think their premium international fliers have been enjoying the new aircraft, the 787 and now the 14 77W's. The improvement in the experience on a new 77W is vast - so much better vibe on board than a blue and blue and blue/grey 772 or 767.

One last question. If United did just cancel the A350s all together, would the financial hit be a one-time hit? I assume huge, but maybe they are weighing the one-time kick in the jewels, then get back to making money???

VC10er wrote:

One last question. If United did just cancel the A350s all together, would the financial hit be a one-time hit? I assume huge, but maybe they are weighing the one-time kick in the jewels, then get back to making money???

It is all up for negotiation. United spends millions every year with Airbus on parts and services. The money could be applied elsewhere. Airbus isn't going to risk damaging the relationship with a big airline like United. Deposits are usually under 3% and have been as low as zero for subsequent orders.

Newbiepilot wrote:

VC10er wrote:

One last question. If United did just cancel the A350s all together, would the financial hit be a one-time hit? I assume huge, but maybe they are weighing the one-time kick in the jewels, then get back to making money???

It is all up for negotiation. United spends millions every year with Airbus on parts and services. The money could be applied elsewhere. Airbus isn't going to risk damaging the relationship with a big airline like United. Deposits are usually under 3% and have been as low as zero for subsequent orders.

The days of free deferrals have gone. Both A & B have 'hardened' up contract terms and enforcement.

Because this order pre-dates that stance, it may be 'soft' in comparison to a new contract written today, but almost certainly, at every deferral the contract will be tweaked, and/or the paid deposit value erodes, and/or the acquisition value increases.

Airlines, like any other hard-nosed business, buy from whoever offers the most cost-effective product for their business. Businesses with supplier grudges, rarely make good decisions, and the CEO's of those businesses rarely stick around.

Newbiepilot wrote:

It is all up for negotiation. United spends millions every year with Airbus on parts and services. The money could be applied elsewhere. Airbus isn't going to risk damaging the relationship with a big airline like United. Deposits are usually under 3% and have been as low as zero for subsequent orders.

The industry works different than you may think. Here's some interesting lecture:

A Paris Air Show player offers some brutal home truths for airlines

KarelXWB wrote:

Newbiepilot wrote:

It is all up for negotiation. United spends millions every year with Airbus on parts and services. The money could be applied elsewhere. Airbus isn't going to risk damaging the relationship with a big airline like United. Deposits are usually under 3% and have been as low as zero for subsequent orders.

The industry works different than you may think. Here's some interesting lecture:

A Paris Air Show player offers some brutal home truths for airlines

While interesting, it is also clear that Mr. Kelly was primarily talking about the smaller airlines who are placing these huge expansion orders. The UA guys are not the ones making once in a lifetime deals or infrequently interacting with the manufacturer. UA is one of the big guys like Aercap. They know how to make sure they are not being taken for a ride.

globalcabotage wrote:

350s won't happen. UA is pulling a CO and moving to all Boeing. I'm sure any penalty Airbus will charge UA will be quickly reduced in the price of a few more "transition" 77Ws.

Except for the fact that UA has taken and continues to look for more used A319s.

jfidler wrote:

So this was the quarter when the Dr. Dao plane dragging incident occurred. I remember people were up in arms and swearing never to fly United ever again. Based on the financial numbers, it looks like that didn't really have a negative impact on their performance.

I guess the dozen or so A-Net doomsayers who stayed in mommy's basement and boycotted UA didn't affect the results this quarter, The average person knows the truth in these stories is not what you read in the media. UA continues to improve both financially and operationally in spite of their brand being permanently damaged according to the experts here.

admanager wrote:

sadiqutp wrote:

Was wondering how many A350s was UA supposed to get and Karel directed me to ATDB where it mentioned that 8 were scheduled for 2018 !

Assuming ATDB is right, if 8 A350's were scheduled for 2018 and 4 were deferred, doesn't that mean 4 are coming next year? Can it be confirmed that 8 were scheduled for 2018?

Could be a deferral because of seat supply problem with Zodiac ? Could explain the partial deferral

FromCDGtoSYD wrote:

admanager wrote:

sadiqutp wrote:

Was wondering how many A350s was UA supposed to get and Karel directed me to ATDB where it mentioned that 8 were scheduled for 2018 !

Assuming ATDB is right, if 8 A350's were scheduled for 2018 and 4 were deferred, doesn't that mean 4 are coming next year? Can it be confirmed that 8 were scheduled for 2018?

Could be a deferral because of seat supply problem with Zodiac ? Could explain the partial deferral

No, UA would not defer the planes because of that. Deferring planes now costs UA money, if it was a seat supply issue UA would still fulfill their end of the contract to make sure Zodiac suffers the penalties while UA gets compensated for the late delivery. Their 77Ws are facing seat supply problems, yet there were no deferrals and UA even ordered 4 more last month.

According to people here UA has done little internally to prepare for the A350's arrival, which is an indication that they just don't want the aircraft now.

Polot wrote:

KarelXWB wrote:

Newbiepilot wrote:

It is all up for negotiation. United spends millions every year with Airbus on parts and services. The money could be applied elsewhere. Airbus isn't going to risk damaging the relationship with a big airline like United. Deposits are usually under 3% and have been as low as zero for subsequent orders.

The industry works different than you may think. Here's some interesting lecture:

A Paris Air Show player offers some brutal home truths for airlines

While interesting, it is also clear that Mr. Kelly was primarily talking about the smaller airlines who are placing these huge expansion orders. The UA guys are not the ones making once in a lifetime deals or infrequently interacting with the manufacturer. UA is one of the big guys like Aercap. They know how to make sure they are not being taken for a ride.

United is one of the power players and can negotiate hard. Aercap and GECAS were referred to in the article, but a number of airlines also have power and influence. Airlines like United, American and Delta have power to negotiate based on size. Airline groups like IAG, Air France/KLM, Lufthansa, Qatar and Singapore have power because they hold influence over a number of over airlines.

The little airlines are the ones that get taken advantage of. Either they over order and have to pay penalties or they go to leasing companies who have less than favorable contracts.

United has a whole lot more power if they want to minimize cost when deferring an A350 than an airline like Frontier does if they try to defer an A320neo.

Planesmart wrote:

The days of free deferrals have gone. Both A & B have 'hardened' up contract terms and enforcement.

Because this order pre-dates that stance, it may be 'soft' in comparison to a new contract written today, but almost certainly, at every deferral the contract will be tweaked, and/or the paid deposit value erodes, and/or the acquisition value increases.

Airlines, like any other hard-nosed business, buy from whoever offers the most cost-effective product for their business. Businesses with supplier grudges, rarely make good decisions, and the CEO's of those businesses rarely stick around.

I guess we'll see the impact of that in the future. For now we see this deferral, and we see how AA's order that started out with US ordering A350 Mk1s in 2007 has been deferred so many times it's hard to keep track of when they will show up ( https://thepointsguy.com/2017/04/aa-def ... eliveries/ , https://airwaysmag.com/airlines/america ... eliveries/ ). However it looks like DL Is happy to take the A350, at least the first batch, but the next batch is also deferred ( https://airwaysmag.com/airlines/delta-e ... eliveries/ ).

Here at AA, we've deferred our A350s significantly as well, and there is very little, if any, talk about it. Considering the amount of 787 orders and options we have, which can be used for 77E replacements next decade, I reckon we just swap for 25x A330-900neos to replace remaining 767-300ERs.

UA seems to be liking the 77W (welcome to the party!), and paired with already large 777/787 fleet, I would think low fuel is not the only factor here.

Boeing778X wrote:

Here at AA, we've deferred our A350s significantly as well, and there is very little, if any, talk about it. Considering the amount of 787 orders and options we have, which can be used for 77E replacements next decade, I reckon we just swap for 25x A330-900neos to replace remaining 767-300ERs.

UA seems to be liking the 77W (welcome to the party!), and paired with already large 777/787 fleet, I would think low fuel is not the only factor here.

Is that pure speculation on your part, or has there been a rumour about it? Seems it would make sense at a theoretical level.

MrHMSH wrote:

Boeing778X wrote:

Here at AA, we've deferred our A350s significantly as well, and there is very little, if any, talk about it. Considering the amount of 787 orders and options we have, which can be used for 77E replacements next decade, I reckon we just swap for 25x A330-900neos to replace remaining 767-300ERs.

UA seems to be liking the 77W (welcome to the party!), and paired with already large 777/787 fleet, I would think low fuel is not the only factor here.

Is that pure speculation on your part, or has there been a rumour about it? Seems it would make sense at a theoretical level.

I've heard several people talk about it on my end, but I would have to say it is speculation, yes.

My argument is since the A330 is established at AA, maybe it would make sense to swap for the A330neo.

Boeing778X wrote:

My argument is since the A330 is established at AA, maybe it would make sense to swap for the A330neo.

The -300s are on their way out though.

KarelXWB wrote:

Boeing778X wrote:

My argument is since the A330 is established at AA, maybe it would make sense to swap for the A330neo.

The -300s are on their way out though.

They will still have 15 relatively new A332s. A relatively small fleet type size for an airline the size of AA though, so there will probably be some consideration about whether they should expand the fleet with neos or phase out the A332s as well.

United1 wrote:

Wall Street is annoyed as UA is projecting PRASM to be -1 to +1 (ie flat) during Q3...wall street was looking for PRASM growth

And they should be, what with Delta pinning Q3 PRASM guidance at between +2.5 and +4.5. Simply staggering that UA can't get their act together when it comes to unit revenue growth.

Can't wait for Hunter Keay's quarterly "let's see if I can get Scott Kirby fuming" question.

winginit wrote:

United1 wrote:

Wall Street is annoyed as UA is projecting PRASM to be -1 to +1 (ie flat) during Q3...wall street was looking for PRASM growth

And they should be, what with Delta pinning Q3 PRASM guidance at between +2.5 and +4.5. Simply staggering that UA can't get their act together when it comes to unit revenue growth.

Can't wait for Hunter Keay's quarterly "let's see if I can get Scott Kirby fuming" question.

DL's guidance has never been the most accurate, which upsets much of the investor community. But keep in mind UA is playing catch up to regain the famous 'natural market share'. DL is already mature in that sense. Sure, most investors are not thrilled with UA adding domestic capacity, but it's part of a long term strategy. No doubt Hunter will be very vocal, while I don't always agree with him, I find his direct style refreshing.

VC10er wrote:

As for the A350, I am disappointed again,

Shouldn't come as a surprise. The production slots were axed three months ago.

I think the Dr Dao situation (and leftover Smisek stupidity) CLEARLY are and continue to drag down UA's performance.

The company is improving but on just about every key measure it's obvious that UA fills its planes with LOWER PAYING passengers than DL and AA, and the premium they pay is WIDENING not narrowing over time.

Just to be clear, DL's Q3 PRASM guidance is set to 4x higher than UA's. That is a 300% growth premium over United.

Anyone who thinks the airline isn't paying a price among big spenders is very clearly missing the point.

-G