The Game Of Chicken Shakes Companies from United To Boeing

Once upon a time United ordered 61 of Boeing's 737-700 as an astounding validation for that type of aircraft. The 737-700 ripple hardly breached the beach until it did a 180 on its single aisle long order when talking Boeing into a side order from those same 737-700's making a 737 Max Cake. United played chicken, then blinked and reconfigured its order book and cash position in one announcement.

This time the world noticed the nuance. United had changed direction in its business model addressing its competitors like Delta and American Airlines that it would compete at a higher level of performance. It also deferred strained capital flows going into the next ten years. The five Billion ordered with Boeing and then deferred gets United into a stronger cash position going forward with much more precision from its perspective.

Precision is not by model selection but only in a strategic fashion over its competitors. No one knows how United will parley the deferral into its plans. Both the 737-Max-8's and Max-9's are in play coming from the 61 deferred 737-700's already booked. Production slots and cash flows were main objectives of United. They weren't ready to spring its trap on the competitors. 

Now the game is afoot wondering how and when all will come together, making it too late for the competition to respond in a timely manner. United will steal production spots as Airbus' is quagmire d in its own backlog. United calls chicken on its competitors and Boeing remains booked with different models once it is announces what it intends.

The change of heart was never intended by United to be "a real change of heart", only a feign, and now known as the play action fake hand-off turning into a long pass over its rivals. The how’s and why's of United's playbook while holding its closely held secrets even as its stocks took a dip by 1.8 percent of value today. 

The five billion deferral is a definite pivot by United, allowing Boeing a small production window opening as Boeing arranges its factory floor. Boeing no longer seems quite as swamped with orders as it once claimed when upping a production pace near 52 single aisle aircraft a month. Boeing will proceed as planned but with a little more slack to get it right. United will need its fleet replacement/renewal in the next five years while adjusting its business model. 

This play action pass by United, almost certainly will result in a preponderance of 737-8 Max ordered before all is considered and made finale.

United needs additional seats for expanding its market presence in the domestic arena. A paced delivery bodes well for United's capital position. The synergy between additional seats sold, upgraded customer satisfaction and efficient operations pushes United to the head of the class. However, holding five Billion in orders is too much at this time for United to swallow.