Boeing woes hit airlines’ growth as output stalls
Boeing’s crisis of confidence is spreading to the airlines that buy its jets. Major carriers from United Airlines to Southwest, Delta, and Alaska Airlines gathered at an industry conference on Tuesday, and most of them had a similar story about how Boeing’s troubles are bleeding into their businesses. Most notably, airlines lack the aircraft they had previously planned on receiving in 2024 because Boeing has slowed output.
And the troubles run deeper than just this year. At the JPMorgan investor event, United chief executive Scott Kirby said he’d gone as far as telling Boeing to stop building 737 Max 10 jets for the carrier because the timeline for certification of the largest variant of the single-aisle jet has become so uncertain.
Southwest said it doesn’t expect to receive any of its long-awaited 737 Max 7 aircraft this year, and will receive only 46 Max 8 models. It had previously anticipated 79 planes. The airline plans to cut capacity in 2024 and it’s reducing most hiring — including 50 percent fewer pilots and 60 percent fewer flight attendants — as it reviews its spending plans in response to reduced deliveries from Boeing.
Alaska Airlines, the carrier that suffered the accident on Jan. 5 with a Boeing 737 Max 9 that started the plane maker’s current woes, said Tuesday its capacity outlook remains “in flux” because of uncertainty around deliveries.
International customers are also being hurt. Irish discount carrier Ryanair said on March 1 that its annual passenger forecast will drop to just under 200 million, compared with a previous goal of 205 million, because it will only receive 40 Boeing planes, rather than originally anticipated.
Top executives across the airline industry have implored Boeing to urgently address its growing problems. The company needs to “get the issues understood and get the issues fixed,” Southwest chief executive Bob Jordan said at the conference. “We all need Boeing to be stronger two years from now, five years from now, 10 years from now. That takes precedent over delivery delays. We all need Boeing to be better.”
The crisis has created a massive bottleneck in an industry where there are only two main suppliers to choose from: Boeing and rival Airbus. Kirby said he’d seek a deal with Airbus for their A321neo, but with the European company’s order book stretching well into the next decade, patching up the holes left by Boeing will be hard even for the most dedicated buyers.
Boeing, for its part, is trying to navigate an increasingly thorny path to recovery. It has been ordered by the Federal Aviation Administration to cap output of its bestselling 737, denying it vital cash flow while Airbus charges ahead with its competing A320 family. Those diverging tracks were laid bare on Tuesday, when Boeing unveiled that it handed over 27 airplanes to customers in February, lagging the 49 notched by Airbus in the month.
Investors are increasingly spooked. Boeing stock has lost 29 percent in value this year, by far the worst performer on the Dow Jones industrial average.