United Airlines has made the decision to remove the largest version of the Boeing 737 Max, the Max 10, from its internal plans. CEO Scott Kirby stated during an interview with CNBC that the grounding of the Max 9 was the final straw that led to this decision. United had placed an order for 150 Max 10s in 2021, but with the aircraft yet to receive FAA certification and the increased scrutiny faced by Boeing, it is likely that the certification process will face further delays. Kirby expressed his belief that Boeing will be five years behind schedule in delivering the Max 10, making it impossible for them to meet their contractual obligations.
While Kirby did not disclose any alternative plans, he avoided answering a question about whether United would turn to Airbus to replace the Max 10 planes. It’s worth noting that United recently introduced the Airbus 321neo to its fleet, which is the closest competitor to the Max 10 in terms of size. The airline has a total of 130 A321neos on order and expects to have 31 of these aircraft in its fleet by the end of the year. While it remains to be seen whether United will choose Airbus as a replacement, it is clear that Boeing’s delays will have a significant impact on United’s growth plans.
CFO Michael Leskinen confirmed that Boeing is unlikely to deliver all 107 Max 9 planes scheduled for this year. This is not the first time that Boeing has failed to meet its delivery commitments to United, as last year, 24 scheduled deliveries were not fulfilled across various aircraft types. Leskinen assured that United will provide details of its revised fleet plan by early May during an Investor’s Day event. The delay caused by Boeing’s manufacturing woes will result in slower growth for United than originally planned.
Despite the challenges faced by Boeing in meeting its delivery schedules and gaining FAA certification, Kirby remains confident that the company is working to resolve its manufacturing issues. He expressed his encouragement for Boeing to expedite these efforts, emphasizing the importance of faster resolution.
United reported a significant increase in its net income for the year 2023, with $2.62 billion compared to $737 million in the previous year. Operating revenue also saw a substantial increase of 19.5%, reaching $53.7 billion. The operating margin for the year was 7.8%, up from 5.2% in the prior year. However, the final quarter of 2023 saw a decrease in net income to $600 million, compared to $843 million in the same period of the previous year. Operating revenue for the quarter recorded a growth of 9.9% with $13.63 billion. The operating margin for the quarter decreased to 7.3%, down from 11.1% in the last quarter of 2022. United’s forecast for the current quarter includes a projected loss, mainly due to the impact of the Max 9 grounding. The airline expects to have all 79 Max 9s back in operation by the end of the month.
United Airlines’ decision to remove the Boeing 737 Max 10 from its plans, along with the delays faced by Boeing, will undoubtedly impact the airline’s future growth strategies. While alternative plans have not been fully disclosed, the possibility of turning to Airbus remains open. United’s financial performance for the year 2023 showcased growth, but the final quarter experienced a decline due to various factors including the Max 9 grounding. As the airline navigates these challenges, it will be interesting to see how it adapts its fleet plan and works with Boeing to rectify the manufacturing issues.
Leave a Reply