United Airlines Places Their Largest Order to Date

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United Airlines (UA) recently announced that they’ve placed the largest order in their 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.

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.

| © [United Airlines]

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.

| © [United Airlines]

There 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.

| © [United Airlines]

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.

What are your thoughts on United Airlines’ incredible transformation and rise from the ongoing coronavirus crisis?