Southwest warns of plane delivery delays
Supply chain issues still hamper production of Boeing and Airbus
Airplane delivery delays are emerging as a major constraint for airlines trying to ramp up flying to meet strong consumer demand.
Dallas-based Southwest and Fort Worthbased American are among carriers finding that Boeing and Airbus, the industry’s major plane makers, can’t deliver jets as fast as they need them. The delivery woes compound airlines’ yearlong efforts to get enough pilots into planes to fly passengers.
Southwest Airlines reported a $277 million profit on $6.2 billion in revenue Thursday, with a strong outlook for the rest of the year and hopes of restoring its flight network heading into 2023. But the second half of next year is clouded by ongoing delays at Boeing blamed on broader supply chain issues, largely in engines.
Southwest now expects to get 66 new 737 Max jets this year, just over half of the 114 that Boeing is contractually required to deliver. That means it will retire fewer of its older, 737 NG model jets, which are louder, less fuel efficient and carry higher maintenance costs than new planes.
“We continue working with (Boeing) to finalize our 2023 aircraft delivery plans; however, we currently expect aircraft delivery delays to persist into 2024,” Southwest CEO
Bob Jordan said in a statement Thursday.
Southwest’s sentiments have been echoed across the industry during the last two weeks as airlines report their quarterly results. While an industrywide shortage of pilots is still holding airlines back and limiting the number of flights during the 2022 holiday season, carriers have begun to work through training delays to get some shortterm relief.
American Airlines chief financial officer Derek Kerr said last week that it has had to reduce the number of 737 Max jets it expects in 2023 from 27 to 19.
American is also eagerly awaiting the delivery of more Boeing 787 Dreamliner jets, long-haul planes the company needs for flying over the Atlantic and Pacific oceans, along with some cross-country flights. American has blamed the delay of several international routes on 787 delays, including a flight from DFW International Airport to Auckland, New Zealand that was supposed to start last year. It’s now expected to take its first flight on Saturday.
Deliveries on those wide-body jets didn’t resume until August.
The problem isn’t isolated to Boeing. Jetblue said on Tuesday that it similarly expected to get 29 jets from Airbus in 2023 but now thinks it will get 22.
Boeing CEO David Calhoun
said one of the supply chain holdups is from casting suppliers that provide parts for engines for GE and CFM, two of the major engine makers.
“I am confident that the industry will step up, but it will take more time than I probably had hoped when we started these conversations,” Calhoun said. “And I suspect it won’t be until we get to the sort of end of next year before we can really make sizable rate increases with respect to that constraint.”
Boeing is also facing troubles with a deadline on its new 737 Max 10 jet, a longer version of the plane. Boeing has been sparring with pilot unions and negotiating with the Federal Aviation Administration over an older model cockpit alert system that doesn’t comply with new federal guidelines.
Changing that system could increase costs for Boeing not only in manufacturing but in training for airline pilots. Boeing needs congressional approval to extend the existing cockpit alert system, but it hasn’t come yet.
United Airlines CEO Scott Kirby said last week that a confluence of shortages — pilots, planes and air traffic controllers — are making it harder for airlines to get up to hoped-for flight levels.
“There is a real pilot shortage that is real. It’s going to take years to resolve,” Kirby said. “It’s not the only one, by the way — Boeing and Airbus are probably two to three years away from getting back to producing airplanes at the same rate.”