United Airlines announced the purchase of 270 new Boeing and Airbus aircraft — the largest combined order in the airline’s history and the biggest by an individual carrier in the last decade, it said in a statement.
“The ‘United Next’ plan will have a transformational effect on the customer experience and is expected to increase the total number of available seats per domestic departure by almost 30%, significantly lower carbon emissions per seat and create tens of thousands of quality, unionized jobs by 2026, all efforts that will have a positive, ripple effect across the broader U.S. economy,” the company said in a statement.
United’s new aircrafts include 50 orders of 737 MAX 8s, 150 orders of 737 MAX 10s and 70 orders of A321neos. They “will come with a new signature interior that includes seat-back entertainment in every seat, larger overhead bins for every passenger’s carry-on bag and the industry’s fastest available in-flight WiFi, as well as a bright look-and-feel with LED lighting. The airline expects to fly the first 737 MAX 8 with the signature interior this summer and to begin flying the 737 MAX 10 and the Airbus A321neo in early 2023,” according to the statement.
United Airlines CEO Scott Kirby wrote in a Linkedin post that “the last 15 months have been the most disruptive period in our company’s history, and it’s forced us to adapt like never before.” He also said that the company expects to create 25,000 jobs through 2026 because of this growth.
“These are unionized jobs at United that are paid above the federal minimum wage and come with company-sponsored medical coverage, company-funded retirement programs, paid sick leave and vacation and flight benefits,” Kirby added.
According to the company, the new jobs will be in each of the airline’s seven major U.S. hubs and include Newark (EWR), with up to 5,000 jobs; San Francisco (SFO), with up to 4,000 jobs; Washington, D.C. (IAD), with up to 3,000 jobs; Chicago (ORD), with up to 3,000 jobs; Houston (IAH), with up to 3,000 jobs; Denver (DEN), with up to 3,000 jobs and Los Angeles (LAX), with up to 1,400 jobs.
United Airlines, which is betting on a rebound of the travel industry, received $4.5 billion through the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) Loan Program, according to a previous statement.
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The company “expects to generate positive adjusted pre-tax income in the month of July 2021, which would be the first month with positive adjusted pre-tax income since January 2020, before the start of the crisis. The COVID-19 pandemic caused the most severe drop in demand for travel in the history of aviation and this expected performance would mark an important financial milestone as the Company is turning its focus to the future of United Airlines,” according to a Securities and Exchange Commission filing.
Colin Scarola, vice president of equity research at CFRA, tells GOBankingRates that “United’s new order is certainly a positive sign of how management is viewing the recovery of global air travel demand. But it’s important to keep in mind the new planes ordered this week won’t start arriving until 2023 and stretch through 2026, so the impact on the stock from this order is years away, in our view.”
Scarola adds that CFRA’s buy rating on the stock has much more to do with demand over the next year recovering faster than the market is currently pricing in.
“And the stock being very conservatively valued. There is a lot of fear in the market right now that business and international travel will be permanently depressed even after COVID ends globally. We’re seeing evidence from around the world indicating this won’t be the case, though, and think a year from now United passenger counts will be fairly close to pre-pandemic levels, or higher. This recovery will take the fear factor out of the current valuation and lift the stock considerably over the next year, in our view,” Scarola adds.
The stock was up 0.6% this morning, at $52.50.
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Last updated: June 30, 2021