United fleet acquisitions (today's WSJ, p. A3)

From:         kls@ohare.Chicago.COM (Karl Swartz)
Date:         22 May 95 02:46:15 
Organization: Chicago Software Works, Menlo Park, California
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Today's Wall St. Journal has an article (page A3 in the Northern
California edition) which says that United expects to place orders
for about 40 aircraft later this year, totaling up to $2 billion.
These aircraft will be replacements for some older aircraft, which
United said a month or so ago would be retired by 1997 or 1998.
This includes all 18 747-100s, the remaining DC-10-10s, and the
737-222s.

The WSJ article says 15 of the aircraft would be large twins of over
180 seat capacity, undoubtedly Boeing but not certain which model or
models of 757/767/777 would be chosen.  This order is expected to be
placed by late summer, though some could be ordered sooner than that.
(United ordered 4 757s and 2 747-400s earlier this year, for delivery
in the first half of 1996.)

The remaining 25 aircraft would be in the 100-150 seat class, and
United expects a vigorous contest between Airbus and Boeing for the
order.  (26 of the 50 A320s United has ordered are in service, with
an option for another 50 not yet exercised.)  The article had some
interesting comments regarding United and Airbus:

    Ronald Woodard, president of Boeing's commercial-airplane group,
    has vowed repeatedly to other Boeing managers that he intends to
    dislodge the A-320 from United's fleet by convincing managers at
    the airline to shed the planes when lease agreements on them
    permit, according to people familiar with the situation.

    Mr. Greenwald [UAL Chairman] praised the A-320 planes, the only
    non-Boeing airliners among the newer planes in United's fleet, but
    remarked that "if we continue to buy Airbus, we end up with a more
    complex fleet.  What do we get to offset that?"

***

In my opinion, the order for 15 aircraft will be mostly for 757s and
probably won't include any 767s.  The aircraft will replace DC-10-10s
on domestic routes and 747-100s on international (and a few domestic)
routes.  United has turned the 767 into an international aircraft
except for a few transcon markets where there's a demand for premium
service, so they probably won't buy more for DC-10 replacement, and
they're too small to replace the 747-100s.  Although smaller, the 757
has already replace the DC-10 on a lot of domestic routes, and even
the A320 is now flying some former DC-10 routes.  With 33 777s already
on order (plus 1 delivered), it doesn't seem likely that United will
start buying more already, though they might try to move up deliveries
a bit.

The other 25 aircraft will be really interesting.  108-seat 737-500s
and 126-seat 737-300s are being pulled off feeder routes by Shuttle,
and this new order is in part to replace the 109-seat 737-222s, so
the A320, with 144 seats, seems too big.  There's always the A319,
but that would mean United would end up with two *totally* different
aircraft of around 125 to 130 seats.  United is traditionally pretty
conservative with regard to fleet complexity, and Greenwald's comments
suggest that he isn't likely to change this approach, so I expect UA
fully intends to buy 737s even though they'll use Airbus as a pawn to
whittle down the price.  Either -300s or -500s -- delivery times and
a desire for simplicity with such a small order will probably preclude
choosing the -600 or -700, at least this time.

--
Karl Swartz	|INet	kls@chicago.com
1-415/854-3409	|UUCP	uunet!decwrl!ditka!kls
		|Snail	2144 Sand Hill Rd., Menlo Park CA 94025, USA
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