Capital expenditure for aircraft acquisition
United’s capital expenditure in the first six months of 2014 totaled $953 million. This was primarily related to the purchase of aircraft as well as facility and fleet-related costs. The management estimates $650 million of capital expenditure in 3Q14 because it plans to take delivery of four 737-900ER aircraft, two 787 aircraft, and 12 Embraer 175 aircraft. In order to reduce capital expenditure and boost returns on invested capital, United plans to explore the used aircraft market. According to the management, some aircraft such as 737-800 aren’t priced low even in the used aircraft market. As a result, the company should be constantly on the lookout for good deals to derive the benefit from the used aircraft market since it depends on the type of aircraft under consideration. United’s competitor Delta Air Lines already uses the used aircraft market to optimize returns on invested capital. For more details on how it affects cost refer to the Market Realist series Delta’s capacity: Current size and future purchase commitments. United’s return on invested capital as of June, 2014, was 10.3%.
Replacement of 50-seat regional jets
United is undertaking many flight restructuring initiatives to improve its operational efficiency.
The Embraer 175 aircraft are newly added because they’re supposed to be highly fuel efficient and spacious 76 seat aircraft that will replace less-fuel efficient 50-seat regional jets. The company plans to replace 38 50-seat aircraft by end of 2014 and add 70 76-seat aircraft by 2015. It’s also installing new economy class seats that are 10%–15% lighter and enable the addition of one or two more rows per aircraft. These seats are installed on 240 aircraft.
Future aircraft delivery schedule
View attachment 5629
The table above lists the aircraft that are scheduled to be delivered between 2014 and 2025. United’s total capital expenditure related to acquisition and improvements of aircraft, spare engines, acquisition of information technology, and assets is estimated to amount to $23.3 billion. Out of this $1.7 billion will be due in the second half of the year and $2.9 billion in 2015.
source: Market Realist By Tejeshwari Chandrappa
August 14, 2014 1:00 PM
United’s capital expenditure in the first six months of 2014 totaled $953 million. This was primarily related to the purchase of aircraft as well as facility and fleet-related costs. The management estimates $650 million of capital expenditure in 3Q14 because it plans to take delivery of four 737-900ER aircraft, two 787 aircraft, and 12 Embraer 175 aircraft. In order to reduce capital expenditure and boost returns on invested capital, United plans to explore the used aircraft market. According to the management, some aircraft such as 737-800 aren’t priced low even in the used aircraft market. As a result, the company should be constantly on the lookout for good deals to derive the benefit from the used aircraft market since it depends on the type of aircraft under consideration. United’s competitor Delta Air Lines already uses the used aircraft market to optimize returns on invested capital. For more details on how it affects cost refer to the Market Realist series Delta’s capacity: Current size and future purchase commitments. United’s return on invested capital as of June, 2014, was 10.3%.
Replacement of 50-seat regional jets
United is undertaking many flight restructuring initiatives to improve its operational efficiency.
The Embraer 175 aircraft are newly added because they’re supposed to be highly fuel efficient and spacious 76 seat aircraft that will replace less-fuel efficient 50-seat regional jets. The company plans to replace 38 50-seat aircraft by end of 2014 and add 70 76-seat aircraft by 2015. It’s also installing new economy class seats that are 10%–15% lighter and enable the addition of one or two more rows per aircraft. These seats are installed on 240 aircraft.
Future aircraft delivery schedule
View attachment 5629
The table above lists the aircraft that are scheduled to be delivered between 2014 and 2025. United’s total capital expenditure related to acquisition and improvements of aircraft, spare engines, acquisition of information technology, and assets is estimated to amount to $23.3 billion. Out of this $1.7 billion will be due in the second half of the year and $2.9 billion in 2015.
source: Market Realist By Tejeshwari Chandrappa
August 14, 2014 1:00 PM