United’s Plan to Use Larger Jets to Control Rising Costs
Photo Credit: Over the next six years, United will use bigger planes in place of smaller ones, allowing them to add more seats per flight. Pixabay / kikkuru0606
Skift Take
Fun fact: What airlines refer to as costs is not an absolute measure of how much a carrier spends. A massive global airline like United can spend a lot more money from quarter to quarter and still keep its costs in check so long as it grows capacity during the quarter.
No U.S. airline is on a better financial trajectory than United Airlines. But investment analysts are paid to worry, and they have asked whether United is spending too much money, a habit that could hurt the company if this long-rumored economic downturn occurs sooner rather than later.
But speaking Wednesday on their third quarter earnings call, United's executives said they have a simple plan to combat cost creep. Over the next six years, they said, United will use bigger planes in place of smaller ones, a strategy called "increasing gauge." Larger jets allow United to add more seats per flight.
"We have large hubs in big cities across the country, and because of that, we should be the airline with the highest gauge," United President Scott Kirby told analysts. "But at this point, we're not. In fact, United is seven-to-eight years behind our large competitors in gauge growth with approximately 13 percent fewer seats per domestic departure compared to Delta.”
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