In an effort to meet a surge in passenger demand United Airlines has purchased 19 used B737-700s.
The Points Guy revealed yesterday the signing of an agreement between the Chicago-based carrier and an unknown supplier. The hand-me-downs are expected to be delivered in December.
Speculation followed that the purchase was a direct consequence of the grounding of Boeing’s MAX fleet. Furthermore, United’s recent announcement on Friday that it expected the MAX grounding to last until the end of the year was, for some, seen as another reason for the snap buy.
However, United was adamant that its order had “nothing to do with the grounded 737 MAXs.” A spokesman told us that the purchase was led by nothing more than an “opportunistic” motive and was “consistent with our strategy [of] the last 18 months.”
Strategy of growth
Last year, United declared that its plans for the fleet aligned with its strategy to grow capacity by careful amounts in each of the following three years. It also aimed to improve traffic flow in and out of its hubs.
On July 16th, 2019 the airline revealed that, as a result of the implementations, it had delivered “two straight quarters of solid pre-tax margin growth”. That suggests to some that the MAX’s grounding, which has entered its fifth month, is having little impact on UAL’s re-shaping the capital costs of its operating fleet.
Despite cancelling around 2,400 flights in June and July the airline expects to boost capacity between 3% and 4% this year.
United’s MAX cancellation
Following the worldwide grounding of the MAX, airlines have hastened to meet demand by amalgamating flights and fine-tuning route schedules. United had previously expected to return its 14 MAX jets to ops by August. But instead, it is now forced to readjust summer manifests to cater to customer demand.
“We are continuing to work through the schedule to try and swap and upgauge aircraft to mitigate the disruption caused by the grounding of the MAX,” the carrier said in a statement.
It is still unclear whether the MAX will fly by the end of the year.
It is unlikely the nearly-new arrivals have been bought to fill the MAX gaps. United’s motivation for the purchases, at least publicly, appears to fit with its long-term implementation of a profit-building strategy. That strategy includes the aggrandizement of its 737-700 fleet by 50%.
A used 737-700 will not, in any case, be a suitable substitute for the MAX since it is slightly smaller with a capacity of 126 seats compared to the MAX’s 179. But the extra planes will certainly help to boost United’s growth, especially in the face of increasing demand.
United has previously enlarged its owned fleet by the purchase of used aircraft. It considers buying aircraft more financially sensible than leasing them. Last year, the carrier bought 20 used A319s from an undisclosed source. Those aircraft make up over 50 used aircraft purchased by United to date. Most recently, the airline bought three Boeing 767-300ERs from Hawaiian Airlines and 25 A319s from AerCap.
Despite the issues surrounding the MAX grounding, United announced a steady incline in financial stability. According to its own financial statement in July, the carrier declared unprecedented passenger numbers in the second quarter, serving almost 43 million customers.