ISTAT Jetrader - Winter 2019 - 12

PERSPECTIVES

Jetrader: For United, what would the
ideal "middle of the market" plane
look like?
GL: It depends. We're looking at all the
different options available to us. For
us, this middle of the market aircraft
will be a 757/767 replacement largely
flying trans-Atlantic. We were one of
the first airlines to fly the 757 transAtlantic, and it worked great for routes
that didn't have the demand to justify a
larger widebody aircraft. The limitation
has been range. The replacement
needs to have both better economics
and fly further. The A321XLR and NMA
should accomplish this. There isn't one
perfect solution for every need, so we
will look for the best solution while
minimizing complexity.
With respect to one- or two-engine
manufacturer options, that's always
a debate. Some leasing companies
and airlines greatly value the ability
to compete the engine manufacturers
against one another. We actually found

that it doesn't matter as much and, in
some cases, having just the one engine
option like on the 737 can simplify
negotiations without impacting price
leverage. However, even if there is no
engine choice, we always make sure
we have a satisfactory offer for support
from the engine manufacturer before
signing up for the aircraft.
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Jetrader: The used large twin-aisle
market is not looking too healthy
at the moment. The A340 and
747-400 are already almost "dead
and buried." The 777-200/ER has
fallen of the cliff and the 777-300ER
is very challenging to place in
secondary market. Where do you
see the main issues?
GL: We have looked at the used
twin-aisle market but have generally
found it less attractive, even at today's
prices. The problem is that since the
interiors tend to be very unique by
carrier, the cost of reconfiguration can
be substantial. When we looked at
some used 777s, after factoring in the
cost of reconfiguration to incorporate
our new United Polaris business class
cabin, it was more economical to buy
new aircraft. The only used twin-aisle
aircraft we have acquired in the last
few years were three 767-300s where
the combination of acquisition and
reconfiguration costs were reasonable.

Since Boeing's not building new
767s, it ended up being an attractive
transaction for us.
Jetrader: Do you think long haul
single aisles (A321NEO XLR) could
cause a revolution in the networks,
similar to what the 767 did to the
747 years ago?

GL: We already demonstrated the value
of long-haul single aisles with our
trans-Atlantic 757 flights we started
many years ago. At the time, there
was concern over whether passengers
would be willing to fly that far in a
single-aisle aircraft. It turned out
that they would rather do that than
have to connect through one of the
European hubs.
Jetrader: What would you like to see
in the regional aircraft segment?
Any room for a new 50-seater (prop
or jet)?
GL: Any new 50-seater would have to
provide the customer comfort that the
current generation of 70-76 seaters,
like the Embraer 175, can provide.
The Embraer 175 is a terrific aircraft
from a customer standpoint because it
provides all the amenities customers
have on mainline aircraft, including
choice of cabin, plenty of overhead
bin space, Wi-Fi and streaming
entertainment. We are starting to
provide these amenities in the 50-seat
category with the introduction later
this year of the CRJ 550, where a CRJ
700 is being recertified as a 50-seat
aircraft and reconfigured to match
the comfort and convenience of the
larger aircraft.
Jetrader: Professionally, what's
keeping you awake at night?
GL: My No. 1 concern is the
macroeconomic environment. I think
that is on the mind of most companies.
However, it doesn't keep me up since
we are comfortable that we can
adjust our business to successfully
manage through the full economic
cycle. If you asked me this question
10 years ago, I would have told you
my top concern was fuel volatility.
However, over the last few years,
there have been real changes in fuel
supply dynamics, which have kept
prices moderate. While oil spikes could
happen, there is less risk today of
seeing oil at $100 a barrel than any
time in recent memory.
ISTAT Jetrader - Winter 2019

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