After political and production challenges for the two jets this year, the Chicago-based airline’s order for 200 airplanes, valued at approximately $43 billion at list prices, is a significant win for the American aircraft manufacturer.
By exercising its options to buy 44 737 MAX aircraft for delivery between 2024 and 2026 and 56 additional MAX aircraft for delivery between 2027 and 2028, United said it will be able to fulfill its recent order for 100 737 MAX aircraft. Currently, United has 443 MAXs on order in total.
United’s significant investment in the 787 is a reflection of forecasts for ongoing growth in long-haul travel demand as well as a need to replace ageing aircraft.
However, the substantial aircraft deal has raised questions about United’s balance sheet. Over the following two years, it is anticipated to require $20 billion in capital investments. According to analysts at Jefferies, United would likely spend $50 billion on capital expenditures via the delivery of 700 new aircraft. Without a doubt, this order was necessary, but they noted in their note that “elevated leverage is a severe headwind moving forward.”
However, the Chicago-based carrier stated in a regulatory filing that it is “dedicated” to providing a sound balance sheet and its debt reduction plan.