United replacing part of regional jet fleet with Boeing 737s

One of the world’s biggest airlines said Thursday that it was dumping part of its regional jet fleet and ordering more Boeing 737s instead.

In its fourth-quarter 2015 earnings announcement, United Airlines said it will buy 40 new 737-700s from Boeing. A Boeing spokesman confirmed it was a new order for the company.

That’s good news for Spirit AeroSystems in Wichita, which builds 70 percent of the single-aisle aircraft that has a 2015 list price of $80.6 million.

At that price, the deal is valued at $3.2 billion, though discounts are typically negotiated.

The Chicago-based airline said it expected to begin taking delivery of the airplanes in mid-2017.

Boeing’s popular aircraft will replace part of the passenger capacity offered by its regional airline partners, United said. It expects to eliminate by more than half the number of 50-seat regional jets in its fleet by 2019.

“Our customers have a preference for an improved travel experience, including first class seats, Economy Plus, and Wi-Fi,” Gerry Laderman, United’s acting chief financial officer, said in the earnings announcement. “These aircraft are an efficient way to meet those needs while reducing 50-seat flying.”

According to United’s website, it has 251 50-seat regional jets.

Airlines like United are beginning to shed parts of their regional jet fleets for a variety of reasons, including economic ones. Bigger aircraft such as the 737 “are less expensive to operate on a per-seat basis,” said airline consultant Robert Mann.

There also “is a desire to make the service, as much as possible, a main-line service and therefore not be subject to the vagaries of the reliability of regional operators,” Mann said.

The larger carriers generally perform better than the regional airlines that serve them when it comes to measures such as on-time performance and cancellations, Mann said. But, he added, the mainline carriers “arguably under-compensate” the regional airlines that serve as their feeders.

Mike Boyd, a Colorado-based airline consultant, said in the next two years he expects more 50-seat regional jets to be removed from scheduled airline service. And that will hurt small cities that can’t support aircraft with more than 100 seats.

“For smaller communities, you’re not going to have air service,” Boyd said, clarifying that he doesn’t consider Wichita one of those small communities.

“As far as Wichita goes, you’re out of the dogfight,” he said. “Wichita is a strong market.”

This story was originally published January 21, 2016 at 10:41 AM with the headline "United replacing part of regional jet fleet with Boeing 737s."