United Invests in Future, Places Order for Next-Generation Aircraft

Orders 25 Dreamliners, 25 Airbus A350s


A4: The initial cash impact is minimal, ensuring that the order does not impede our ability to continue to build our liquidity and strengthen our balance sheet as the economy recovers. For both orders combined, United will have a cash outflow of just $60 million over the next three years. We have also secured deferral rights that provide us with further financial flexibility.

Q5: What are the benefits of placing orders with both manufacturers?

A5: Ordering aircraft from both Airbus and Boeing provides United greater financial benefits compared to choosing a single manufacturer. Neither manufacturer offers next generation aircraft sized to optimally serve all of the current and future markets in United's network. The mix of Airbus A350 and Boeing 787 aircraft give us the right range of aircraft sizes needed to replace both our Boeing 747 and 767 aircraft. The economic benefit of placing the right size aircraft into each market overwhelms any benefit from ordering from one manufacturer.

Furthermore, our international fleet replacement program will reduce our fleet complexity, and associated operating costs, by eliminating one fleet type as we transition from three widebody aircraft types (Boeing 747, 777, and 767) to two (Airbus A350 and Boeing 787).

Finally, the future purchase rights we have with both manufacturers enable us to fully compete the remaining aircraft orders required to complete the replacement of our entire international widebody fleet. This will ensure we are able to drive the best economic outcome for United throughout the fleet replacement program.

Q6: What new market opportunities are made possible by the next generation aircraft? What are examples of new routes that could be flown?

A6: The operating cost effectiveness and fuel efficiency of these next generation aircraft, combined with their extended range and more optimal aircraft size, will make many different international markets financially attractive while improving the economics on destinations we already serve. Airbus A350 aircraft have a range about 11% greater than our current Boeing 747 aircraft, and Boeing 787 aircraft deliver almost 32% greater range than our current Boeing 767 aircraft. The increased range of these aircraft will allow us to take full advantage of our well placed network of domestic hubs, allowing new nonstop service from our hubs to destinations throughout Africa, Asia Pacific, the Middle East and Europe, while improving the economics on international routes we already serve.

Q7: What flexibility do the aircraft orders provide United to address changing market conditions?

A7: The smaller size and improved cost and fuel efficiency of these aircraft offer substantially improved economics relative to our current fleet regardless of market conditions; however, we have also secured important deferral and substitution rights with both manufacturers that provide United with significant flexibility to manage changing market conditions throughout the replacement cycle. We have also secured considerable backstop financing from both manufacturers, which will protect us in the event of tight credit markets as new aircraft are delivered.

SOURCE United Airlines



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