Last week I wrote that Scott Kirby told pilots that they still might take Airbus A350s.

• He said that they need to decide on a Boeing 777 replacement aircraft by the end of the year.
  
• United placed a firm order for 25 Airbus A350-900 aircraft in 2009, converted that to 35 Airbus A350-1000s in 2013, then to 45 Airbus A350-900s in 2017.
  
• Those planes remain on United’s order books, with deliveries pushed out to 2030 and beyond. It’s long expected that those would be cancelled, especially as United ordered more and more Boeing 787s.

Brian Sumers interviewed Kirby and asked about the economics of the A350 for United. They have a deal with Rolls Royce for engines that was signed 8 years ago (when Kirby was first President of the airline) that he describes as “a bad deal” at the time that’s become a “good deal” thanks to (1) ensuing inflation and supply chain challenges, and (2) strong airline demand.

Sumers says, “I have heard from insiders that the engine deal may significantly change the economics of the airplane — so much so that Rolls-Royce may be apprehensive about honoring it.”

And Kirby suggests the time could be now to add a plane type to the fleet, because they’ll be retiring Boeing 757s and 767s anyway which means incurring the pilot retraining cost that comes along with it either way.

By the time we get to the end of the decade, we will be well into retiring the 767. I’m reluctant to bring a new fleet type on — for all the cost and complexity reasons. But as we are retiring the 767 and 757, we’re going to have to retrain pilots. We’re going to have to go through a lot of that cycle anyway, and it’s a natural time to at least think about, should we now actually turn it into a real firm order instead of continuing to defer?

For the same reason Sumers says “Here’s why I think United could add A350s” I think United won’t add A350s. He’s probably right and I’m wrong, but nonetheless I find the reasoning odd.

Kirby has been talking up a ‘trade deficit’ in international travel. That’s brilliant framing for the current administration in Washington.

I want us to eliminate the trade deficit that the United States has in global long-haul service.

He told Sumers,

“Today, two-thirds of the long-haul international seats to and from the United States are on foreign flag carriers, even though 60 percent of the passengers are U.S. citizens,” he said. “We have a huge trade deficit in … long haul, international travel.”

…“The biggest reason is, by and large, international airlines are quasi-arms of the state,” he said. “They have various forms of state subsidies that allow them to fly a lot more seats, and … in most cases, they don’t have to do it profitably.”

Foreign carriers are often able to fly to the U.S. as artifacts of their government, and also need to fly to the U.S. because they’re more than commercial enterprises. In any case, U.S. airlines are incredibly subsidized as well. They don’t pay the full cost of airports or air traffic control. Nearly $100 billion was spent during the pandemic on direct grants and subsidies loans. U.S. airlines are protected from foreign competition (foreign ownership restrictions) and from new airline competition (government-granted slots at congested airports, scarce gates at government-owned airports).

But subsidies and protectionism notwithstanding, it’s correct that there are more long haul seats on foreign carriers than there are on U.S. airlines. And it’s also correct that there are more U.S. originating passengers than foreign ones (although there’s no reason why this should matter other than loyalty programs). Foreign carriers are often better, and while it’s easy to blame subsidies it’s also because U.S. carrier products are also frequent bad.

And the lack of U.S. long haul seats is in part because the once-world’s largest carrier American Airlines barely flies long haul and retired all their Boeing 757s, Boeing 767s, and Airbus A330s. Their Senior Vice President of Network Planning has said repeatedly that he prefers multiple flights on narrowbodies over widebody trips, and it’s been said of him that he travels all over Mexico looking for airports with paved runways to add destinations.

Regardless, the significance of the ‘trade deficit’ and ‘unfair trade’ rhetoric notwithstanding it’s clearly designed to paint United’s global ambitions favorably with the Trump administration.

Sumers believes there’s no reason to do this unless you have even bigger global ambitions, and the Airbus A350 serves different missions than the 787 and so there should be destinations that work with an A350 that wouldn’t with a Boeing 787 (although I’d argue it’s usually the opposite, that because the A350 is somewhat oversized there are fewer destinations that work with an A350 than do with 787s).

Ultimately though you don’t talk up a ‘trade deficit’ to play to the Trump administration and then further fuel the trade deficit with a big Airbus order. At a minimum they’d need to pair it with a big Boeing order. They Airbus A350s are already on the books, and any firming there could be done quietly. They aren’t scheduled for delivery until the 2030s so United doesn’t really have to do anything publicly about acceptance this early in the Trump administration.

United still has over 140 Boeing 787s on order. They could add more. If we treat the 50 Airbus A321XLRs United had ordered as 757 replacements (the 757 isn’t a widebody in any case) then they’ll need to replace 53 767s and 74 Boeing 777-200s. There are 101 other widebodies in the fleet today, and about 20 of the order for growth. They’ll eventually need more widebodies than the current order to fully fund replacements and continue international growth.