United Continental Postpones Boeing 737 Jets

United Continental Holdings Inc. said Tuesday that it would postpone receiving dozens of new Boeing Co. jets to trim spending.

The third-largest U.S. airline will defer 61 planes from a 65-jet order for 737-700s and convert them into the new Max model with yet-to-be-determined arrival dates. Boeing will switch the remaining four to the larger 737-800 model for delivery next year.

The airline, among four U.S. carriers that have recently attracted investment from Berkshire Hathaway Inc., also announced a push to boost its share of budget-conscious travelers with a new no-frills fare class. The basic economy class entitles fliers only to an under-seat bag and is also intended to avoid the delays caused by passengers stowing overhead baggage.

The move are among a parade of planned changes unveiled by United Chief Executive Oscar Munoz and his new management team that include cost cuts and revenue-boosting initiatives designed to increase profits by $4.8 billion by 2020.

The fleet changes are among the industry's largest since Southwest Airlines Co. in June reached a deal with Boeing to defer 67 of its 737 Max deliveries scheduled for the 2019-2022 period until 2023 and beyond.

Boeing and Airbus Group SE have order books for their best-selling jets stretching out for several years of production, and typically overbook knowing that some planes will be canceled or deferred.

Both jet makers have said that cancellations and requests to push back deliveries remain below their historical average. Boeing had no immediate comment on United's move.

Chicago-based United is also buying 24 175 Embraer jets from the Brazilian manufacturer rather than leasing them from an unidentified regional airline, with the Boeing fleet changes expected to cut capital spending over the next two years by $1.6 billion.

United also plans changes to flights at its three big hubs in Chicago, Newark and Houston that it hopes will add $900 million in incremental revenue by 2019.

Write to Doug Cameron at [e-mail]

(END) Dow Jones Newswires

November 15, 2016 08:05 ET (13:05 GMT)

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