United Airlines Holdings Inc. Chief Executive Officer Scott Kirby says a lack of new aircraft is impeding his plans to modernize the fleet and cash in on booming premium travel.
Engine shortages and supply-chain snarls have slowed deliveries from Airbus SE, while Boeing Co. struggles with certification delays and production curbs on models like the 777X and 737 Max 10 jet, which United had ordered in large numbers.
As a result, the biggest US airline is flying out-of-production aircraft, including Boeing’s 757 and 767, on lucrative long-haul routes — a major setback for United, which has invested heavily in building a premium product as a key driver of passenger loyalty.
“The Max 7, the Max 10, the 777X are always kind of six to 12 months away — 36 months ago they were six to 12 months away, and today they’re six to 12 months away,” Kirby said in an hour-long interview in New York on Tuesday.
United Airlines CEO Scott Kirby says demand for air travel is improving which signals a stronger economy. Speaking on “Bloomberg The Close,” Kirby also discusses the current pricing environment, improving the flying experience and the company’s growth strategy.
United has since shifted those orders to the smaller Max 9 model that is already flying. The airline may also firm up a longstanding order of Airbus’s A350 jets this year, though deliveries wouldn’t start until the end of the decade, Kirby said.
The new aircraft are needed to fully implement Kirby’s plan to attract premium, brand-loyal customers. The airline is adding Polaris lie-flat seats, Elon Musk’s Starlink internet service, and spending $150 million to improve in-flight catering.
“There is a larger market of brand-loyal customers than we thought,” Kirby said, as the industry splits increasingly along travel experience versus a focus on schedule and price.
“We’re getting customers that want value, that care about the product,” he added. “But being a brand-loyal airline is harder than and more expensive than just being a cost-conscious airline.”
United was forced to revise its ambitions after Boeing was plunged into crisis last year following a near-fatal accident on one of its aircraft. While Kirby said the US manufacturer has since turned a corner on 737 Max production, United still isn’t sure when the largest 737 Max 10 variant or the smallest Max 7 will be certified.
Boeing has also raised fresh concerns about the entry into service for its large 777X model, with CEO Kelly Ortberg saying last week that the certification timeline may slip even further for an aircraft that’s already five years behind schedule.
The carrier has changed plans to launch transcontinental services from New York’s John F. Kennedy Airport using the Max 10 to the Airbus A321neo model, which will feature the lie-flat seats, Kirby said.
Given delays, that service — which will use slots from JetBlue Airways Corp. — will only begin in 2027, he said.
Kirby said the A350 aircraft would join the fleet once United has retired its Boeing 767 jets at the end of the decade because the carrier doesn’t want to add too much complexity to its fleet.
“That’d be the right time to do it,” Kirby said. “About at the end of the decade, which is how long it would take for Airbus to produce the aircraft anyway.”
The existing Airbus widebody order, which United originally placed in 2009 and then expanded and amended over the years, is for 45 units. Kirby said United could need more, depending on how the airline plans to use the plane.
Kirby predicted that the jet-engine shortage that’s afflicting airlines and aircraft manufacturers alike will probably last until the end of the decade.
About 700 new-generation aircraft around the world are grounded and waiting engine repairs, Kirby estimated, adding that engine makers such as General Electric Co. and RTX Corp.’s Pratt & Whitney unit are struggling to meet demand.
Despite these setbacks, Kirby said he’s optimistic that air travel has rebounded, alongside United’s ability to protect its profit margins and maintain a strong balance sheet.
United has paid down debt since the pandemic and carries three times the amount of cash that it did before the coronavirus grounded airlines around the world, in order to insulate it from any future shocks.
Still, the carrier faces significant hurdles that are beyond his control, including America’s aging air traffic control system and flight reductions after system glitches at its Newark Liberty International Airport hub near New York.
“Perception may lag reality,” Kirby said of travelers’ willingness to return to the airport. “For us, bookings have mostly returned to normal.”