UAL

United CEO says airline building fleet plan without Boeing's 737 MAX 10 jets

Credit: REUTERS/CHRIS HELGREN

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Jan 23 (Reuters) - United Airlines UAL.O CEO Scott Kirby said in a CNBC interview on Wednesday the company was going to build a fleet plan that does not include Boeing's BA.N 737 MAX 10 jets, citing delivery delays.

In the best case scenario, MAX 10 deliveries are five years behind their original delivery date, Kirby added. United in 2021 placed orders for 150 MAX 10s .

"I think the MAX 9 grounding is probably the straw that broke the camel's back for us," Kirby said in an interview with CNBC's Squawk Box on Tuesday.

United on Tuesday warned of a hit to its first quarter, as its entire fleet of Boeing BA.N 737 MAX 9 jets were grounded earlier this month.

The U.S. Federal Aviation Administration (FAA) grounded Boeing's MAX 9 jets indefinitely for safety checks after a cabin panel of an Alaska Airlines plane blew off mid-flight on Jan. 5.

Kirby's remarks open the possibility of United cancelling MAX 10 orders, though in practice large airlines rarely cancel outright and tend to juggle their order books.

Boeing did not immediately respond to a request for comment.

United has already effectively suspended an order for larger Airbus A350 jets through repeated deferrals.

But industry executives say United turning its back on Boeing's largest single-aisle model, mired in certification delays, would be a severe setback to Boeing and increase pressure on Airbus AIR.PA to increase production of its heavily sold-out A321neo.

Airbus was not immediately available for a comment.

It is also the first concrete sign that Boeing's woes with the MAX 9 have weakened its position on the larger benchmark MAX 10, where most of its future revenue concentrated.

Concerns over the MAX-9 have raised questions on whether it could delay regulatory approval and delivery of MAX 10, the largest jet from the MAX family.

U.S. planemaker Boeing has said it expects the MAX 10 to be certified in 2024. The FAA was, however, not immediately available for comment on the matter.

United, which was forced to ground 79 jets for which it had sold seats, is "incensed" with a supplier with which it shares corporate roots, people familiar with the matter told Reuters earlier this month.

The company, however, forecast an upbeat 2024 profit despite an impact from grounding, sending its shares up 6.8% in premarket trading on Tuesday.

Major Boeing customer Ryanair RYA.I CEO Michael O'Leary said recently he was not sure that MAX 10 would be certified before 2025. The airline had ordered 150 units of MAX 10.

(Reporting by Shivansh Tiwary, Allison Lampert and Tim Hepher; additional reporting by Rishabh Jaiswal; Editing by Shinjini Ganguli)

((Shivansh.Tiwary@thomsonreuters.com; +91 9708363192;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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