United Airlines adjusts aircraft orders as Boeing problems hit profits

United Airlines has an average of 13 weekly flights to South Africa on three routes. Picture: David Ritchie/Independent Newspapers

United Airlines has an average of 13 weekly flights to South Africa on three routes. Picture: David Ritchie/Independent Newspapers

Published Apr 18, 2024


UNITED Airlines has recorded lacklustre results in the quarter ended 31 March 2024 after taking a body blow from the delayed delivery of its fleet of Boeing Aircraft following the manufacturer's turbulent recall issues.

United, which predominantly flies Boeing aircraft, yesterday said it would alter its strategy to meet the output of manufacturers, and expected to bring fewer aircraft into its fleet this year after the US government grounded Boeing 737 Max 9 jets and placed limits on their production.

The US airline said it had reworked its orders on other aircraft and had agreements in place to lease a few dozen more jets from Airbus.

The company had a pre-tax loss of $164 million (R3.1 billion), a $92m improvement over the same quarter last year; and an adjusted pre-tax loss of $79m - a $187m improvement on an adjusted basis over the same quarter last year.

These earnings reflected the approximately $200m impact from the Boeing 737 MAX 9 grounding, without which the company would have reported a quarterly profit.

In the quarter, the company generated $2.8 billion operating cash flow and free cash flow of $1.5 billion.

Atlantic and domestic markets both saw large passenger revenue per available seat mile increases year over year, with 11% and 6% growth respectively while capacity is up 9.1% compared to first-quarter 2023.

United said due to manufacturing and certification delays from prior years, by the end of 2023 the airline's contractual aircraft commitments for 2024 had increased to 183 narrow body aircraft.

At the beginning of 2024, these delays were anticipated to continue and the company expected 101 narrow body deliveries.

Following the 737 MAX 9 grounding and the Federal Aviation Administration’s announced significant production capacity constraints on Boeing, the company now anticipates 61 narrow body aircraft and 5 wide body aircraft to be delivered in 2024.

“The demand environment remained strong with a double-digit percentage increase in business demand quarter over quarter, as compared to pre-pandemic,“ it said.

“Additionally, the company was able to take advantage of a number of opportunities to adjust domestic capacity which drove meaningful improvements in first quarter profitability.”

United Airlines has an average of 13 weekly flights to South Africa on three routes.

It operates daily flights from Newark Liberty International Airport to Johannesburg with the Boeing 787 Dreamliner.

It has two routes to Cape Town, with three weekly flights from Newark and three weekly from Washington Dulles with its B777s.

In the quarter United Airlines CEO Scott Kirby announced upcoming services to three new destinations, with flights between Marrakesh, Morocco and New York/Newark;

"We've adjusted our fleet plan to better reflect the reality of what the manufacturers are able to deliver,“ Kirby said yesterday.

“And, we'll use those planes to capitalise on an opportunity that only United has: profitably grow our mid-continent hubs and expand our highly profitable international network from our best in the industry coastal hubs.”

United and Delta are currently the only airlines with non-stop passenger flights from the US to South Africa. They serve both Johannesburg and Cape Town, providing five direct routes for South Africa-bound travellers.

The increased number of flights on the route reflects American interest in visiting South Africa as a whole, particularly Cape Town, which many people include in their safari itineraries.

The nonstop service during the summer vacations in the US is a tremendous boon to South African and regional tourism.