According to airline executives speaking on Wednesday, United Airlines will fall short of its goal of updating every cabin in its fleet by the year 2025.
Chief Commercial Officer Andrew Nocella cited persistent supply chain bottlenecks in remarks made on the airline's conference call with investors following the first quarter's financial results.
"The supply challenges across the board, whether it's [in-flight entertainment], chips, seats, and many other things are just more challenging than they've ever really been," Nocella said. "Unfortunately, it looks like it will take a year or two longer than we anticipated to convert all the aircraft."
United said it will upgrade its entire fleet of current mainline aircraft when it launched its new cabin interior in 2021 along with an order for 270 narrow-body aircraft. Larger overhead lockers, a new LED lighting design, and personal in-flight entertainment screens with Bluetooth connectivity are all included in the redesigned cabins.
The upgrade program was supposed to be finished by 2025, according to airline executives, but that deadline was pushed back due to supply chain issues that also delayed the arrival of new aircraft.
United CEO Scott Kirby stated that the refit program had gotten off to a slower start than anticipated in December at an announcement for a second order of widebody aircraft. Even so, he had predicted that it would be largely completed by the middle of the decade.
At the time, Kirby observed, "Not much has been done so far. "It's on track to be, if not completely finished by 2025, then substantially finished by 2025,"
He continued, "There have been some supply chain [problems], but we've mostly wrestled those to the ground.
For the first time, United suggested in its comments from December that the project would probably take longer than 2025. In the next years, Nocella said, customers would notice "material progress" as a growing portion of the fleet was converted to the new interior, despite the extra year or two.
"The chances of boarding an aircraft with the United signature interior [are] going to go up rapidly," he said. "The tail will just take a little bit longer to finish,"
Compared to a loss of $1.4 billion in the first quarter of last year, United reported a net loss of $194 million overall for the quarter. Similar losses were recorded by Delta Air Lines, which released earnings last week.
With a slow travel period lasting from the holiday season to spring, the first quarter is typically the most difficult revenue season for airlines.
The need for business travel had slightly decreased during the call, but there had also been more significant macroeconomic turmoil.
According to Nocella, "The United network is more dependent on business traffic that has not yet fully recovered to pre-pandemic volumes." The East Coast trends and the United worldwide network are only more in line with the post-pandemic months of March through October, when leisure and premium leisure make up for a decline in typical business traffic.
According to Nocella, the need for business travel was higher in the upcoming quarters than in 2022. In the wake of the most recent banking crises, demand had decreased, but it has subsequently increased, he said.
However, Kirby said the airline was ready for a larger economic recession despite optimistic demand estimates, particularly for foreign leisure and business travel – to which United has more relative exposure than other airlines.
The macro dangers appear to be greater now than they were even a few months ago, according to Kirby. "A mild recession or soft landing is still our base case, which is consistent with what we're seeing in our bookings," the author writes.
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