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United pauses fleet upgauging with 50-seater additions

United Airlines is hitting pause on its fleet upgauging programme in 2018, as it plans the "temporary" addition of 40 Bombardier CRJ200s to support growth.

The Chicago-based carrier will add 40 CRJ200s operated by Air Wisconsin and one Embraer ERJ-145 to its feeder fleet this year, a fleet plan released on 23 January shows. The net increase in small regional jets is 38, after it removes its final three Embraer ERJ-135s.

These jets are in addition to the 24 mainline aircraft due in 2018. United plans to add its first 10 Boeing 737 Max 9s as well as three used Boeing 767-300ERs – understood to come from Hawaiian Airlines – four Boeing 777-300ERs and seven Boeing 787s to its mainline fleet this year.

The regional and mainline aircraft will help drive a 4-6% increase in capacity in 2018, as the airline continues to focus on boosting higher-yield connections over its hubs.

"A big chunk of our growth in 2018 is actually this temporary surge in regional jets, which doesn't last," said Scott Kirby, president of United, during an earnings and investor presentation on 23 January.

Fleeting or not, the 50-seat jet additions break from the carrier's strategy over the past few years. Its small jet fleet shrank by 66 aircraft to 256 at the end of December 2017 compared to the end of 2014, while the number of two-class regional jets increased by 69 to 255 aircraft.

Andrew Levy, chief financial officer of United, says the upgauging strategy "pauses" in 2018 with the 50-seat jet additions before resuming in 2019 and 2020.

United also expects the additional regional aircraft to result in a roughly half percentage point negative unit cost (CASM) excluding fuel, special items, profit sharing and third-party expense impact in 2018. However, the metric is still forecast to be flat to down 1% year-over-year.

Both Kirby and Levy indicate that there is flexibility in the 50-seat aircraft contracts that could allow them to be replaced by two-class jets in the near future.

Replacing the small jets with larger aircraft would require scope relief from pilots. United's pilots contract, which becomes amendable in January 2019, caps the number of 70- to 76-seat aircraft at 255 – where the fleet stood at the end of 2017.

"We can wind up turning 50-seaters into larger regional jets but we [need to] make some kind of commitment to them," says Kirby on scope relief from pilots. "Whether it's a growth commitment or jobs."

Another possibility floated by Levy is the addition of a new small narrowbody to United's mainline fleet.

"Our hope is that we can replace our 50-seaters with bigger regional jets or, in some cases, maybe a small narrowbody mainline airplane. Stay tuned," he says.

United's pilots contract allows it to add up to 65 more large regional jets, for a total of 320, to its feeder fleet with the addition of a small mainline narrowbody.

However, Kirby has repeatedly pooh-poohed the idea of a small mainline aircraft since he joined United in 2018.

"The economics of a 100 seater are just really, really challenging," he said on the topic in August 2017. He cited the additional complexity of adding a new aircraft type that does not have commonality with United's narrowbody fleet of both Airbus A320 family and 737 family aircraft.

United will have to continue to add aircraft, or increase utilisation, in 2019 and 2020, to meet the annual 4-6% capacity growth forecast it set this month.

The airline is scheduled to take 22 aircraft in 2019, and 38 aircraft in 2010, Flight Fleets Analyzer shows. Deliveries include 737 Max and E175s in 2019, and 737 Max, 787 and E175s the next year.

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