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Economics of 100-seaters ‘don’t work’ for United: president

This story has been updated to reflect that United could add up to 70 more 76-seat regional jets, not up to 35.

United Airlines president Scott Kirby says the economics of a 100-seat aircraft “just don’t work” for the carrier’s mainline fleet.

“We basically need to spread mainline costs over the greater number of seats in the bigger airplanes,” he said in a discussion with employees at United’s Chicago O’Hare hub earlier in January.

Kirby’s comments were in response to a question over whether the Chicago-based carrier could add smaller jets flown by its mainline pilots, a weekly employee newsletter shows.

United is in the midst of a fleet review covering both its existing aircraft and orderbook. Moves since the review began include converting its order for 65 Boeing 737-700s to larger variants and accelerating the retirement of its 20 remaining Boeing 747-400s to the fourth quarter.

Prior to Kirby's joining the airline in August 2016, executives repeatedly discussed a need for a small mainline narrowbody aircraft to close the gap between the 76-seat regional jets in its feeder fleet and the smallest mainline aircraft with around 128 seats.

“There is a natural need for a small mainline narrowbody,” said Gerry Laderman, treasurer of United and then acting chief financial officer, in November 2015.

The carrier ordered the 737-700s, which beat out the Bombardier CS100 and Embraer 190, to meet this need in early 2016.

However, in the first major fleet action since Kirby joined United, the airline converted the 737-700 order to four 737-800s and 61 737 Max in November 2016. It will take the -800s this year and the Maxes at a yet-to-be-announced date in the future.

“Our aircraft are going to be in our fleet for several decades, so it’s better to wait a little longer and get the more efficient aircraft, rather than take delivery sooner,” said Kirby at the employee event.

United plans to increase utilisation and deploy aircraft more effectively to achieve its short-term growth targets, he says.

However, the carrier continues to look for used narrowbodies to meet some of its short-term fleet needs. A point repeatedly mentioned by Kirby, as well as chief financial officer Andrew Levy, to employees and investors during the past two months.

The airline will add six used Airbus A319s leased from AerCap to its fleet this year, complementing the three that it added in 2016.

Levy has extensive experience in the used aircraft market. Prior to joining United, he was a key member of the team at Allegiant Air that built the carrier into a strong domestic ultra low-cost carrier using solely used aircraft.

One point not mentioned by Kirby in the newsletter is the fact that United can add up to 70 more 76-seat regional jets to its feeder fleet if it adds a new small mainline narrowbody under a scope clause provision in its pilots contract.

Neither Kirby, nor other executives, have said whether they see a need for additional large regional jets in United's feeder fleet beyond the current 255 aircraft cap.

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