United Airlines decision to shift 10 Boeing 777-200s to its domestic operations from international is the “right decision” for its network, says chief revenue officer Jim Compton.
The move is part of a cascade of fleet changes that includes removing 130 50-seat regional jets by the end of the year – and more in the years to come – returning some transatlantic-configured Boeing 757-200s to North American operations, refurbishing 21 Boeing 767-300ERs for continued transatlantic flying, basing new Boeing 787-9s in Houston and shifting the 777-200s to domestic, he says on the sidelines of the Phoenix International Aviation Symposium on 8 May.
“It’s a lot of moving pieces that allows us to stay capacity disciplined, less reliant on regional [and] optimise the profitability of the network – ie, the 767s on transatlantic and using the 777s in the right market,” says Compton.
United announced the plans during an earnings call on 23 April, raising some eyebrows in the capacity-discipline favouring Wall Street analyst community.
“The thought of ‘domestic widebodies’ may spook some,” wrote Jamie Baker, an analyst at JP Morgan, after the announcement in April. However, he added that it “makes sense” for United when considered with all of the other fleet changes.
Compton elaborates on United’s rationale and plans for the 777-200s.
The 10 aircraft will all be 777-200 “A” models, which are all early vintage models that lack the range capabilities of the 777-200ER, or “B” model, he says. They currently operate across the Atlantic to Europe.
The shift on the transatlantic will allow United to downgauge certain 777 routes and upgauge select 757 routes to more suitable 767-300ERs, which are the “right profitability decision”, says Compton.
“That’s one aspect of why the 767-300 just makes much more [sense] from a profitability point of view and an ownership point of view,” he says.
United operates 19 777-200 As that date from 1995 to 2000, the Ascend Fleets database shows. It also operates 55 777-200ER Bs.
The 777-200s will be configured with 360 seats, which is just slightly denser than 344-seat 777-200s that the airline already operates to Hawaii. The Hawaii aircraft have 32 first class seats and 312 economy seats.
United will use the 777s to consolidate frequencies on hub-to-hub flights – for example Houston to Newark or Chicago O’Hare to San Francisco – and on routes to Hawaii, says Compton.
“That 777 can replace the 179 seats [each] of two [Boeing] 737s, [which] become freed up to cascade down to somewhere else,” he says, referring to periods where they have multiple hub-to-hub departures within 60min or 90min of each other.
Ownership costs do factor into United’s decision making. The carrier owns all of 777-200s and 20 of its 35 767-300ERs, Ascend shows, limiting the capital costs of keeping them in its fleet to just refurbishment expenses.
“We need to be prudent on how we manage our capital so we are able to keep our capital allocations pretty consistent,” says Compton. “It does come with lower ownership costs and it does make the 767, extending the life of it, very much competitive versus, in theory, another [new] aircraft.”
Compton also pushes aside any suggestions that low fuel prices are driving the airline’s decision to keep the 767-300ERs and 777s around.
“We don’t plan at current fuel prices, so the question about where fuel plays into it is not part of that decision,” he says.
Performance of the 737-900ER is not an issue for United, says Compton when asked about the possibility that it may not be able to meet the 757s performance on shorter runways or to hot and high airports.
“We’re really careful with it,” he says. “Obviously you have to manage some held seats and so forth depending on the route. The great thing about our fleet, we have the -700 that can offset some of that.”
United will also add 49 Embraer 175s to its regional fleet, amid all of the mainline fleet changes, this year. This will bring its fleet of the 76-seat aircraft to 89 by the end of December and 130 by the end of 2017.
Source: Cirium Dashboard