How the Boeing 737 Max grounding will impact United Airlines into 2020
Operations at United Airlines will be impacted by the Boeing 737 Max grounding throughout 2020, as the carrier prepares for delivery delays and executives continue to express uncertainty over when the beleaguered fleet will obtain federal clearance to return to flight.
The Chicago-based air carrier previously elongated the potential for flight cancellations as a result of the grounding through early November.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| UAL | UNITED AIRLINES HOLDINGS INC. | 94.40 | -0.23 | -0.24% |
Meanwhile, shipments of the Max jet remain halted as Boeing continues to work with regulators on a software fix. The interruptions are poised to affect United’s schedule more significantly later in the year, given the carrier anticipated it would have double the number of Max jetliners in its fleet by October.
Overall, the pause in deliveries – which is also paving the way for Airbus to overtake Boeing as the world’s largest planemaker – is expected to reduce the number of potential flights at United each day by 90 routes.
“None of Boeing’s customers know right now exactly when they are going to get their scheduled Max deliveries,” CFO Gerry Laderman told investors on Wednesday. “We won’t fully catch up next year.”
On top of flight cancellations and delivery disruptions, it is also affecting when United can modernize part of its long-range fleet.
Airbus recently introduced the A321XLR, a single-aisle jetliner that is designed to help carriers fly international routes in markets where demand may not be high enough to fill wide-body planes.
United is weighing whether to purchase that jet but is waiting to see Boeing’s competing product, an offering that is currently delayed amid the Max scandal.
“We would like to see some clarity so that we can make the choice, but we do have a little bit of time that we can wait,” Laderman said.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| BA | THE BOEING CO. | 147.13 | +3.73 | +2.60% |
Even if the Max jet does obtain clearance to fly again in the coming months, United will almost certainly have to cancel additional flights beyond Nov. 3.
We can get our “airplanes through the required maintenance check … much quicker than we are going to want to fly them,” CEO Oscar Munoz said on the firm’s earnings call. “The long pole in the tent for us is really about how long in advance we have to sell tickets.”
Ahead of any approval from the Federal Aviation Administration for Boeing’s software update intended to fix the issues that led to two fatal crashes, United is conducting enhanced simulator training both for the Max and the other aircraft in its fleet.
Alongside the Max grounding, United was also impacted in the second quarter by a need to cancel flights to India amid increasing political tensions in the Middle East.
The decision by Pakistan to close its airspace forced the carrier to remove routes to Delhi and Mumbai. Those flights, however, will return on Sept. 6, according to chief commercial officer Andrew Nocella.
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Overall, profits at United grew 54 percent to $1.05 billion, above analyst expectations. The carrier increased its full-year forecast due to the results.