United dumps 65 737-700 orders

[underfire]

For those of us who were wondering about the decision to order 737-700's....

"In early 2016, legacy carrier United Continental (NYSE:UAL) surprised investors by ordering 65 737-700 aircraft from Boeing (NYSE:BA). Industry analysts concluded that Boeing had offered United an extremely low price, perhaps as low as $22 million per aircraft, a 73% discount to the list price. (Discounts of around 50% are more typical.)
On Tuesday, United Continental shocked investors again. Management revealed that United no longer wants these Boeing 737s -- and that they weren't as cheap as most third-party observers had guessed, anyway."
In conjunction with its investor day on Tuesday, United Continental announced that it no longer wants these 737-700s. It has converted four orders to the larger -- and much more cost-efficient -- 737-800. The other 61 orders will be deferred indefinitely and converted to the new 737 MAX."

http://www.fool.com/investing/2016/11/16/about-those-cheap-boeing-737s-united-continental-d.aspx

[mickjoebill]

Alternative headline,
United order 60 new Boeing 737s.

[underfire]

That wasnt the point...the point was why United ordered 700's...

The other 61 orders will be deferred indefinitely and converted to the new 737 MAX.

waiting for the Boeing word on these orders.. it is vague on the conversion, and the lazy B would be crowing if they got 61 new MAX orders...


"Deferring the 61 737-700s was an easy call, Levy said, because of the jet’s small size and older technology. United also is considering the more advanced 737 MAX 8 or the MAX 9 models as replacements, Levy said.
Levy likes Bombardier’s C Series jets but until a review of United’s entire fleet is completed he’s unsure “if there’s a place for a 100- to 120-seat airplane.”
United placed the A350-1000 order in 2013, upgrading an earlier deal. It has a value of $12.4 billion at list prices before big discounts that are customary for major airlines. Levy wants to look at whether United should swap out some or all of those aircraft for other wide-body jets, such as the A350-900, which can fly longer routes, or the smaller A330."
Not a done deal by any means.

[barit1]

Meanwhile back at the ranch:

Another carrier (SW unless memory fails me) a month or two ago contracted to retrieve a few dozen 737-700 from desert semi-retirement, rehab them and put them back in service.

[West Coast]

Alternative headline,
United order 60 new Boeing 737s.


it's much more nuanced than that. The 700s were a part of UA's plan to reenter markets it had largely ceded to its express carriers, using larger aircraft with lesser frequency. There were grumblings from the communities who enjoyed having 5-7 flights a day with RJ's to now being limited to perhaps 2 flights a day. It could also mean good things for Embraer and Bombardier with their larger products.

[peekay4]

Not a done deal by any means.
It is a "done deal" in that the 61 orders will be converted to MAX orders (eventually).

Any future deals with Embraer or Bombardier or Airbus will be in addition to the converted MAX orders, not instead of.

Aviation Week had a good writeup when this was first announced back in November.