Ron Baur is Vice President of Fleet for United. He is responsible for developing and executing United’s Fleet Plan and overseeing all aspects relating to the acquisition and disposition of United’s fleet. Ron began his career at Continental Airlines in 1990 and has held various positions with increasing responsibility within Engineering, Finance and Fleet. He was a part of the team that transformed Continental’s fleet by retiring more than 350 older, less efficient aircraft and replacing them with an all new Boeing fleet, including being the first airline in the North America to order and operate the 787. Ron has an Aeronautical Engineering degree from the Georgia Institute of Technology and an MBA in Finance from California State University.
United Hub: How did your interest in aircraft begin?
Ron Baur: My dad worked for Pan Am, so I grew up around airplanes and used to fly around the world on Pan Am. For a period of time, my dad had a similar job to my current position where he ran Pan Am’s fleet group. I started my airline career cleaning airplanes (including United 737s) and working the ramp during summers when I was in college. As a kid, I remember reading the different brochures from Boeing and Douglas or reading his copy of Aviation Week. Even today when I hear a plane fly by, I usually look up and sneak a peek. I notice my two kids doing the same thing, so it could be hereditary.
Hub: Tell us about your responsibilities as Fleet VP. What does the job involve?
Ron: Our department is responsible for developing and executing our Fleet Plan, overseeing buying new aircraft and handling sales and lease returns of the aircraft we’ve chosen to exit from our fleet. Basically, we focus on two things: 1) fleet planning, which is forward-looking and involves examining our existing fleet and figuring out which aircraft to replace with new, more efficient aircraft, in addition to supporting our growth needs, and 2) fleet management, which focuses on executing our exit strategy for the outgoing fleet. The forward-looking part of fleet planning is challenging and fun because you have to evaluate new aircraft such as the 787 and A350 and compare them to existing aircraft. Also, since we are a large customer, we work closely with the manufacturers to help define what we want the next-generation aircraft to look like in terms of seating capacity, range and operating costs.
Hub: You have a degree in Engineering and an MBA in Finance. What inspired you to pursue those fields of study and how do the two areas of expertise inform your work?
Ron: I pursued a degree in Aeronautical Engineering based on my interest in aircraft. I thought it would be interesting to learn how to design and build airplanes. Most of the people in the Fleet group have a strong analytical and technical background combined with an MBA in Finance. Being in the business of buying and selling airplanes, it helps to have a broad understanding of both types of issues – technical and financial.
Hub: What goes into the decision to purchase a new plane?
Ron: When we plan to buy a new aircraft, we have to evaluate a number of things including operating costs, aircraft performance, range and seating capacity – as well as the onboard passenger experience and how the new airplane fits into our existing fleet. A hard part of the job is deciding if it makes sense to buy an aircraft that is available today versus waiting to take an aircraft that is still on the drawing board but could be a better aircraft. Some aircraft evaluations are relatively straightforward such as our decision to buy the 787 whereas our recent order for one hundred 737 MAX aircraft was more complicated and took almost a year to complete.
Hub: How many departments are involved in aircraft acquisition?
Ron: Almost all the fleet decisions have a long–term, lasting impact on the company’s bottom line and affect virtually every department in the company. We work closely with all the stakeholders – Network Planning, Maintenance, Flight Operations, In Flight, Marketing, Sales, Cargo Engineering and Finance – to make sure that all concerns and issues are addressed and that we have a consensus before we make a fleet recommendation. This is very important because most of these decisions involve multi-billion dollar commitments and the aircraft will be with us for the next 20 to 30 years.
Hub: What are the greatest challenges with fleet acquisition?
Ron: One of the biggest challenges is understanding and balancing the cost savings that a new aircraft can potentially bring versus adding a new fleet type to the existing fleet. The 787 and A350 are good examples of our being willing to introduce to the fleet a new aircraft type that is 20% more fuel efficient over acquiring more aircraft that we already have in the fleet. From an operational point of view, it would have been easier to add new 767s or 777s to the fleet because the 787 and A350 have unique spare parts, different engines and different training programs for our pilots, flight attendants and mechanics. However, the lower operating costs of the new generation of aircraft like the 787 or A350 greatly offsets this added complexity and cost.
We work closely with Boeing and Airbus to reduce this complexity as much as we can. For example, we were very vocal with Boeing that the 787 had to have common pilot rating with the 777, so our pilots can fly either the 777 or 787 with minimal training.
Hub: What does it take to retire an aircraft?
This is one of the more interesting – and fun – parts of the job. When you are selling old aircraft, you have to be creative.
When we decide to replace an aircraft, we typically target older planes that are fuel inefficient, less reliable or have maintenance costs that are increasing with age. We sell some of our aircraft to airlines or operators around the world. For example, we just spent the last five years phasing out our 757-500 fleet with new 737s and we will retire our last 737-500 next summer. What made this project a lot of fun was selling more than 45 aircraft to airlines based in Russia.
One of the airlines is based in Siberia and had never operated any aircraft built outside of Russia. Today, it is the largest 737 operator in Russia. By our standards, the 737-500 is a relatively inefficient aircraft, but the Russian airline used our 737-500s to replace its Tupolev 134s. (A Tupolev 134 requires 4 pilots and burns more than twice as much fuel per seat as a 737-500.) The Russian airline was incredulous about how much better the 737 was. Traveling to Siberia to explain this was interesting and developing a relationship with the airline was an experience I will never forget.
We have also sold aircraft to operators that are not airlines. For example, many years ago we sold some DC10s that were converted into “fire-bombers” to fight forest fires and we recently sold two parked 747s to a company called Scaled Composites which is involved with Strato-Launch. Strato-Launch plans to use the engines and major components from the aircraft to create the world’s biggest aircraft for use in launching rockets into space.
Hub: And for aircraft that aren’t “flyers”? What happens to them?
Ron: Unfortunately, not all aircraft are sold as flyers. With these aircraft, we break them down and sell them for parts. About ten years ago we realized that the value of parting out these aircraft is substantially greater than selling a non-flying aircraft as a whole. We formed a partnership with an airframe and engine part-out company through which we disassemble the aircraft and engines. To date, we have torn down more than 75 aircraft and more than 200 engines. This is definitely more labor intensive but a great way to maximize the value of our surplus aircraft.
It’s an exciting time to be a part of the Fleet team. Not only are we working on combining the fleets of both Continental and United, but we are introducing the game-changing 787 and A350 aircraft. These are once-in-a-lifetime events and the Fleet group feels fortunate to be contributing to aviation history.
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