United Airlines (UA) recently announced that they’ve placed their largest order in history – that is a whopping 270 planes – with plans to add at least one plane every three days to their fleet in 2023.
On 29 June, UA announced their order of 270 new aircrafts which are sure to transform both passenger experience and UA’s current standing. This means they will be adding 200 Boeing 737 Max and 70 airbus 321neo aircraft to their fleet.
A Nose to Tail Transformation
UA aims to provide us with more. That is more options to fly, a more modern fleet with aims to provide a more comfortable in-flight experience.This new and improved in-flight experience to their narrow-body aircrafts includes: more premium seats than any other U.S. carrier, access to seatback entertainment, charging stations and power outlets behind every seat, personal wireless headphones to each screen (oh my goodness), Bluetooth connectivity, the industry’s fastest WIFI, larger over-head bins (including room for spares) and custom lighting for any time of day. Features we would expect to find on major long-haul carriers such as Emirates or Qatar. Features that give rise to their new motto ‘a nose to tail transformation.’
UA’s ambition does not stop there. As previously mentioned back in May this year, UA plan to train 5,000 new pilots by 2030, with at least half of them comprising women and people of colour.
So how is this all possible given the coronavirus crisis?
Needless to say, the coronavirus significantly hamstrung the aviation sector, its companies, operations and logistics, providing a hard time for airlines such as UA. Back in its first quarter of 2020, UA reported a devastating net loss of $1.7 billion and an adjusted net loss of $639 million (excluding special charges, nonoperating credit losses, and unrealized gains and losses on investments), and a daily cash burn averaging $40 million a day in the second quarter. This led UA to: reduce spending, variabilize its cost structure, and aggressively raise liquidity: a three-pillar structure.Given this dire backdrop, it is hard for us to imagine how UA could go on to generate further funds to purchase additional aircrafts and hire additional pilots, but by focusing on the financial loss and gains, made possible by the three-pillar structure, UA has now been able to stabilise their financial foundation, which picked up in the third quarter of 2020.
There UA annouced in their financial reports that they raised over $22 billion through commercial debt offerings, stock issuance and loans and grants such as the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), and gained a pay roll support program grant. Furthermore, they reduced operational costs and offered flexible time for staff to reduce furloughs etc – leading them to hold $21 billion in liquidity in the first quarter of this year, 2021.
The lifting of travel restrictions and an increase in passenger travel enabled a positive core cash flow in March this year. According to Investopedia, most of UA’s revenue is generated by ticket sales (including passenger ancillary fees) with ‘‘UA offering single route schedules to maximise its value’’ and cargo (that is freight and mail services) – a service which is indispensable for the transportation of medical supplies such as vaccines.In January 2021, UA exclaimed: ‘‘Having stabilized its financial foundation, the company expects 2021 to be a transition year that’s focused on preparing for a recovery. United has resumed heavy maintenance and engine overhauls, investments that are essential to recovery when demand returns.’’ Investments which we can clearly see in UA’s ambition to provide us with more, more, more. More aircrafts, more seats, more pilots etc.
Although the coronavirus has caused substantial cutbacks and problems for the aviation sector, it could be said that it provided a great challenge to industry experts on how to manage a company amid a crisis. That in rebuilding and restructuring a company comes a better, more solid foundation to work from – as we have seen with UA. A nose to tail transformation indeed.
Featured image: | © United Airlines
What are your thoughts on United Airlines’ incredible transformation and rise from the ongoing coronavirus crisis?