United Airlines CEO Smisek talks 787s and mojo

AP News
Posted: Sep 27, 2012 6:51 PM

For years, airline executives were criticized for falling in love with shiny new airplanes, to the detriment of their shareholders. United Continental Holdings Inc. CEO Jeff Smisek makes the hard-headed business case for the new Boeing 787 his company got this week. But it sure is pretty, too.

It's been a long time coming. Smisek recalled that a colleague had just had a baby girl when the plane was ordered. She's 8 now.

Smisek discussed the 787 and other topics on Thursday, a day before United was due to fly its first one to Houston to get it ready for passenger flights. His remarks are edited for length and clarity.

— Airline CEOs have been calling this plane a game-changer because of its fuel efficiency and better experience for passengers. Is that still true?

"We're pretty confident customers will love this airplane. It's got it all. It's a beautiful cabin, big windows, more oxygen, more humidity, bigger bins. I think you could actually sleep in those bins if you wanted to, but I don't think we'll let you do that."

It's a big deal for airlines "because it is so fuel efficient, it has such long legs," he said.

With 50 planes on order, "it's going to be a pretty big part of our international fleet."

The fuel-sipping plane makes possible routes like Denver to Tokyo. "A 787 just fits that market. And there are a lot of markets that are that way," he said.

— United struggled with customer complaints over the summer related to its integration with Continental, and just on Thursday said a key measure of passenger revenue would fall as much as 2 percent in the quarter that ends on Sunday. Has (United) solved those problems yet?

"We've put a lot of folks on that and we've got our operational mojo back. We're back above our on-time target this month, and we hope to pay an on-time bonus this month. But a couple of months of tough operations, it has an impact on your revenue."

— Superjumbos: For years, the Boeing 747 was the biggest passenger jet in the sky. United and Delta use them to fly passengers to Asia. European and Middle Eastern competitors are upgrading to the bigger Airbus A380 or Boeing's revamped 747-8. Are new superjumbos in United's future?

"While we haven't ruled out the A380, we don't see it now as the right kind of aircraft for United," Smisek said. "I wouldn't expect to see an A380 order from us anytime soon."

Its current 747-400s "are fairly inefficient aircraft by today's technology. And so over time you'll see us replacing those. We haven't ruled out the new model 747s," but haven't decided to order it, either. Between the 787s and new Airbus A350s, he said United has a lot of large planes on order already.