United Airlines is "very seriously" looking at small mainline narrowbody aircraft, chief financial officer Andrew Levy tells FlightGlobal.
The Chicago-based carrier is evaluating the Bombardier CSeries and Embraer E-Jet-E2 family, as well as the Airbus A319neo and Boeing 737 Max 7, for its future fleet needs, he said on the sidelines of an industry conference in San Diego this week.
The aircraft, which could seat in the range of about 110-130 passengers, would help United meet its 4-6% annual capacity growth target through 2020, and could be used as a bargaining chip in its upcoming contract negotiations with pilots.
The airline will fuel its growth this year with the addition of 40 Bombardier CRJ200s but executives call the fleet additions "temporary" with the hope that they can win some form of scope relief from pilots to replace them with larger 76-seat regional jets.
"We can wind up turning 50 seaters into larger regional jets, but we make some kind of commitment to [pilots], whether it's a growth commitment or jobs," said Scott Kirby, president of United, in January.
United's current pilot contact caps the number of regional jets with 70 to 76 seats in its regional fleet at 255, a number it hit in 2017.
The carrier is weighing the benefits that the CSeries, E2 or other models could provide in terms of scope relief against the added cost of flying them with mainline pilots, says Levy. It aims to have an "informed" view on the segment by the time it enters contract negotiations with the Air Line Pilots Association (ALPA) later this year.
United and ALPA can begin negotiations in May to replace the contract that becomes amendable in January 2019.
The airline has flip-flopped on adding a small mainline aircraft in recent years. It ordered 65 737-700s to address this need in 2016, however, a change in management later that year prompted the deferral and conversion of those aircraft to larger 737-800s and 737 Max 9s.
Then last year, Kirby appeared to kill the idea when he called the economics of the aircraft class "really challenging".
"We're in a world where flying bigger and bigger airplanes is just better," he said in August 2017.
An order from United would be a big win for either Bombardier or Embraer. Both the CSeries and E2 have failed to attract any major new customers in the past two years, with Air Canada's order for 45 CSeries in June 2016 the last major commitment to either type, Flight Fleets Analyzer shows.
The CSeries' US prospects have brightened since a favourable ruling in a trade dispute with Boeing by the US International Trade Commission earlier this year. The import duties could have effectively killed its prospects in the country, at least until a proposed assembly line in Mobile, Alabama, opens after 2020.
When asked, Levy says the ITC's ruling has not influenced United's decision to evaluate the CSeries.
United plans to grow by 4-6% annually through 2020, with much of the growth this year driven by the CRJ200 additions. While the small jets serve a niche in the regional fleet, they are inefficient and will be a unit cost headwind in 2018, Levy said in January.
Shifting to larger gauge aircraft, whether 76-seat regional jets or 110-seat mainline aircraft, would reduce unit costs compared to the 50-seaters and create new revenue opportunities, for example ancillary fees from passengers who buy up economy plus or first-class seats.
"It's another type that adds a lot of complexity so we need to see if it fits for our network," says Levy on one issue United faces if it adds either the CSeries or E2.
Delta Air Lines, the only major US carrier with a sizeable fleet of 110-seat aircraft, manages that complexity while also outperforming United on a margin basis. The airline operates the Boeing 717 and has orders for the CS100, while also operating the A320, 737 family, and Boeing MD-88 and MD-90 families.
In the fourth quarter of 2017, the operating margin at Delta was 14.4% compared to 7.7% at United.
Embraer declines to comment on United's interest. Bombardier was not immediately available to comment.