United Airlines will miss its target by 2025 to retrofit its entire fleet with new, modernized cabins, airline executives said Wednesday.
In comments during the airline’s first-quarter earnings call with investors, chief commercial officer Andrew Nocella blamed continued constraints on the supply chain.
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“Widespread supply challenges, whether it’s [in-flight entertainment]fries, seats and more are more challenging than ever,” said Nocella. .”
unified launch new cabin interior in 2021 along with an order for 270 narrow-body aircraft, said it would retrofit its entire existing fleet of major aircraft. The new cabin feature personal in-flight entertainment screen with Bluetooth connectivity for headsets, larger overhead lockers and new LED lighting scheme.
Although airline executives initially suggested that the retrofit program be completed by 2025, supply chain constraints – which also affect deliveries of new aircraft – made the goal of that target missed.
In December, in an announcement of a separate wide-body aircraft order, United CEO Scott Kirby told TPG that the retrofit program has started slower than expected. However, he has said that it will be largely completed by the middle of the decade.
“So far not much has been done,” Kirby said at the time. “It’s on the right track, if it’s not 100% done by 2025, it’s going to be basically done by 2025.”
“There are already several supply chains [issues]but we almost got those animals to the ground,” he added.
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December’s comment was the first time United suggested the project would likely slide beyond 2025. On Wednesday’s conference call, Nocella said that despite an extra year or two, clients should see “progress” material” in the coming years as fleet market share increases. converted to new furniture.
Read more: With Boeing order, United reveals and doubles down on its plans for the next decade
“The ability to board a plane with a United’s signature interior [are] will add up quickly,” he said. “It’s just that the tail will take a little longer to complete.”
Overall, United posted a net loss of $194 million for the quarter, compared with a loss of $1.4 billion in the first quarter of last year. Delta Air Lines, reported earnings last weeksimilar to posting losses.
The first quarter tends to be the toughest revenue season for airlines, with a slow-moving period extending from the holiday season through spring.
During the call, United executives noted a slight drop in business travel demand coupled with greater macroeconomic uncertainty.
“United’s network is more dependent on business traffic that has not fully recovered to pre-pandemic volumes,” said Nocella. “United’s global network and East Coast trends are simply better suited for post-pandemic March-October, where high-end entertainment and leisure offsets traditional business traffic less than.”
Nocella said demand for business travel in the coming quarters is higher than in 2022. He noted that demand fell after the recent banking crises but has since recovered.
However, despite optimistic demand projections, especially for international leisure and business travel – to which United is more exposed than other airlines – Kirby said the airline is prepare for a broader recession.
“Clearly the macro risk is higher today than it was a few months ago,” Kirby said. “As a result, our base case remains a mild downturn or a soft landing, which is consistent with what we’re seeing in our bookings.”
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