United Airlines just reported a Q1 loss in 2024, but still posted surprisingly resilient numbers considering both the Boeing and maintenance dramas that have hit the airline hard. While United trying to break its dependence on Boeing is not news, its engine choice on an incoming batch of leased Airbus A321neos is also raising eyebrows as Pratt & Whitney continues to struggle with engine issues.
United Airlines Reports Resilient Q1 2024 Numbers
United says it would have been profitable if not for the $200 million loss it directly blames on Boeing (and is seeking compensation for). This comes as somewhat of a surprise considering United’s growth has been slowed by Boeing’s delivery delays and more recently due to regulatory intervention from the Federal Aviation Administration.
The numbers are looking good, with United reporting:
- a double-digit percentage increase in business demand quarter over quarter
- Atlantic (11%) and domestic (6%) markets both saw large passenger revenue per available seat mile (PRASM) increases year over year
- PRASM is calculated by dividing passenger revenue by available seat miles (empty or occupied)
- 9.1% capacity growth compared to Q1 2023
- 9.7% growth in operating revenue compared to Q1 2023 ($12.5 billion)
- $16.9 billion in cash on hand
United also reports that it now has 200 aircraft in its narrowbody fleet with retrofitted “United Next” interiors and further touts its strong operational performance and new labor contract for the airline’s 9,700 aircraft technicians.
This year United expects 61 narrowbody aircraft and 5 widebody aircraft to be delivered, down from its contractual commitment of 183 narrowbody aircraft. Growth will continue, but be slower. This also helps United to manage cash reserves and service debt.
35 New Airbus A321neos Coming To United Airlines – No Pratt & Whitney Engines
Most interesting to me, though, is that United has signed letters of intent with two lessors to lease 35 new Airbus A321neos with CFM engines expected in 2026 and 2027.
Focusing more on Airbus makes all the more sense as Boeing’s struggles continue and may serve as a wake-up call to the planemaker that it cannot take United’s business for granted. Interestingly, United will use CFM versus Pratt & Whitney on its incoming A321neos.
Just like fleet diversification, engine diversification creates maintenance complications. But while much of the spotlight is placed on Boeing, it has been a terrible season for Pratt & Whitney, particularly the PW1100G variant. The recent discovery that contaminated powdered metal was used in production for six years has led to inspections which have led to the discovery of cracks. That has prompted a scrupulous inspection process and unlike popping the car of an automobile to check out the engine, each inspection takes as many as 300 days.
CONCLUSION
United Airlines is sending a subtle (or perhaps not so subtle…?) warning to two of its greatest partners, Pratt.& Whitney and Boeing. Even with production backlogs, there are other options…and United will take Airbus A321neo planes with CFM engines, even with the added layer of complication that will entail.
On the whole, though, United had a strong quarter that offers another clue that United and Delta Air Lines are emerging not only as two more premium US carriers but also as the two most profitable.
image: United Airlines
What a difficult first quarter ( Boeing, dramatic headlines and FAA scrutiny ) but taking the right steps in the midst of crisis can turn things around. Hopefully this focus will continue.
Wow! Using the word “premium” in the same sentence referring to both United Airlines and Delta Airlines. Mathew, I think someone is going to be Dunn with you!
Honestly, I’ve flown a ton this year (so much more to write about it), and I do find UA and DL quite premium. I’ll have to discuss this in a future post.
I was surprised United ordered their NEO’s with P&W from the get go, they’ve been burned by them a couple of times before with the PW4000 and the 2000’s that they sent off to FedEx and the scrap heap and P&W hasn’t delivered a glitch-free solo jet engine in decades. I assumed it had something to do with their long relationship and shared corporate beginnings, or they got a killer deal.
Agree but I think those days are numbered. If not already gone. I think the straw that broke the camels back applies to both Boeing and Pratt. Airbus and GE are simply making better products these days.
United is leasing those 35 A321NEOs from a leasing company which is why they will have CFM engines instead of Pratt & Whitney. United has to go with the leasing companies engine choice since they are leasing instead of buying the aircraft outright. In the larger grand scheme of things United once all A321NEO/LRs deliveries are done United will have approximately 135 A321NEOs with Pratt and Whitney engines and only 35 with CFM engines and I fully expect those 35 frames with CFM engines will be returned to their lessor at the end of the contract if Boeing has it act together by then.
Obviously that’s the central reason why UA went with CFM here, but I still find it a warning to P&W becuase UA was willing to complicate things quite a bit for its mechanic with this new engine type.
No issue with CFM.. Whats going to complicate things ? Already a hugr operator of cfm’s
Ironically United, Boeing and Pratt & Whitney long ago were a single company!
Hopefully United blames PW instead of Boeing for the 2021-2022 777 grounding