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(CNN Business) -
United Airlines on Tuesday announced orders to purchase 270 aircraft, the largest aircraft purchase in company history and the largest order by any airline in about a decade.
The list price of the 270 planes is about $ 35 billion.
Airlines generally pay only a fraction of list prices, and because it's not a good time to sell planes yet, United pays well below half the usual price.
United is likely to get an especially significant discount on the 200 Boeing 737 Max planes that make up the bulk of the order.
The remainder of the order corresponds to 70 Airbus A321neo aircraft.
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The purchase is another sign that airlines see a recovery from the pandemic on the horizon.
On Monday, United told investors it expects to post an adjusted pre-tax profit in July, the first sign of profitability for United or any major airline since the start of the COVID-19 pandemic.
Demand for leisure travel is almost back to normal, helping drive up fares, even if the most lucrative business travel and international flights are still only a fraction of what they were before the pandemic.
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"It's a sign that United is a smart aircraft buyer," said Ron Epstein, an aerospace analyst at Bank of America.
I'm sure they're getting a good deal with Max's.
But if they weren't feeling reasonably good about the return of the market to fly, they wouldn't be doing it. "
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Smaller aircraft replacement
United will use most of the planes ordered Tuesday to replace 200 smaller regional jets carrying around 50 passengers each, allowing it to increase capacity without adding flights at airports like Newark and San Francisco, which limit takeoffs and landings. of each airline.
It will also replace around 100 older full-size aircraft.
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It should be good news for passengers, who tend to dislike smaller planes, Chief Executive Officer Scott Kirby said in a presentation to investors on Tuesday.
“We are trying to fly 50-seat regional planes between Chicago and Dallas or between Newark and Atlanta.
And we're trying to compete with people who have a much better product, "Chief Executive Scott Kirby said in an investor presentation on Tuesday.
“We did not have the opportunity to compete effectively.
This order is about remedying that and creating a home network that has a product that our customers like. "
Currently, United said, regional jets are being used for a third of domestic flights.
Tuesday's purchases will bring that number down to 10%.
Expectations of recovery in business and international trips
Including Tuesday's orders and previous orders it had on the books, United now has orders for 500 new jets in the coming years, with 40 jets, many of those wide-body used on long-haul routes, to be delivered next year. and 138 only in 2023.
It's a surprising change from a year ago, when a lack of demand forced United and every other airline in the world to park planes and halt purchases and deliveries.
This year's new aircraft supply will remain a fraction of pre-pandemic levels.
But, like United, Southwest and Delta have also announced aircraft purchases in recent months.
"What a difference a year makes," Kirby said.
But he noted that United has been planning recovery and discussing buying since last summer, adding that "this is where we expected to be" at this point.
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Kirby told investors that business travel is accelerating, and while it is still 60% below pre-pandemic levels, that's an improvement from a 90% drop earlier this year.
International travel is still limited, and many countries still restrict cross-border travel, but Kirby and other United executives expect record international travel next year.
Still, aircraft deliveries will remain slow this year and next.
United said in a presentation Tuesday that it expects the first of the jets in Tuesday's order to arrive in 2023. The order includes 150 units of the newest version of the 737 Max, the Max 10, which had its first test flight to earlier this month and he's not yet certified to fly passengers.
Plans to add 25,000 jobs
United plans to add about 25,000 jobs over the next five years to the 68,000 front-line positions it now has, hiring pilots, flight attendants, mechanics, gate agents and other personnel needed to handle the surge in passengers it expects.
The airline cut about 22,000 employees last year during the recession, though it has already called in some of those employees to deal with a surge in leisure travel.
It is by far the largest order for the 737 Max, as it stood idle for 20 months starting in March 2019 after two fatal accidents in which 346 people died.
Southwest, which owns more Max jets than any other airline, has ordered an additional 134 737 Max jets since the Federal Aviation Administration approved the plane to be flown again.
But even with United's orders on Tuesday, Boeing has not recovered the more than 1,000 canceled orders for its best-selling jet since the March 2019 grounding.
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As much as this is a significant vote of confidence for Boeing and the 737 Max, demand for aircraft remains relatively low, depressing the prices that aircraft manufacturers can charge.
Boeing cut production of its planes, closed a factory in Washington state that had built the 787 Dreamliner wide-body jet and cut staff.
United had already placed orders for an additional 50 737 Max aircraft since the grounding was lifted last November, 25 of which were among those built during grounding, but they were never delivered because the original orders were canceled.
United also said it will revamp the interiors of all of its existing full-size jets, adding seatback entertainment systems, larger luggage compartments, and more "Economy Plus" seats that come with extra legroom and higher fares. high.
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