United Buying Bigger Aircraft, Ditching 50-Seat Planes

CHICAGO (Chicago Tribune/TNS) —

Flying on United Airlines could get more comfortable starting in 2017.

The Chicago-based airline plans to buy 40 new Boeing 737-700 planes that will enter its fleet beginning in mid-2017. United said it expects to reduce by more than half the number of 50-seat aircraft 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 a statement.

According to United’s website, Boeing 737-700 planes have nearly 120 seats.

United Continental Holdings made the announcement as it reported financial results for the fourth quarter of 2015.

Participants in an investor call included United Chief Executive Oscar Munoz, who had a heart transplant Jan. 6. Last Friday, he said in a letter released by United that he was headed to his Chicago home from the hospital.

United has said Munoz is expected to return from medical leave at the end of the first quarter or the beginning of the second quarter. In the call Thursday morning, Munoz said he might return even sooner.

United also said that it will begin offering “entry-level” fares for “price sensitive” customers in the second half of 2016 to compete with budget carriers.

United reported a fourth-quarter profit of $823 million, or $2.24 a share, compared with $28 million, or 7 cents a share, a year ago.

Lower fuel costs helped United’s bottom line. Aircraft fuel expenses fell to $1.6 billion in the quarter from $2.5 billion a year ago.

Excluding one-time items, the company earned $2.54 per share, a nickel short of expectations by industry analysts, according to polls by both Zacks Investment Research and FactSet, The Associated Press reported. Revenue fell 3 percent to $9.04 billion, slightly below the $9.08 billion average forecast from the FactSet analysts, AP said.

Still, in midday trading, United stock was up 1.5 percent, about on par with the overall market.

United also noted that in 2015 it recorded $107 million of severance and benefit costs mostly related to a voluntary buyout program for its flight attendants. In 2014, more than 2,500 flight attendants chose to leave the company and get severance with a maximum value of $100,000 per participant, with retirement dates through the end of 2016.

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