Commentary

Boeing CEO Presents Bleak Outlook For Airlines

Two days after terminating an agreement to establish two joint ventures with the Brazilian aerospace manufacturer Embraer, Boeing CEO David Calhoun predicted yesterday that the airline industry will not rebound to last year’s levels for two to three years.

“The health crisis is unlike anything we have ever experienced. It will be years before this returns to pre-pandemic levels,” Calhoun, who assumed the position in January, said at a virtual annual meeting of shareholders.

“Calhoun laid out the coronavirus pandemic’s toll on the industry: Global airline revenues are set to drop by $314 billion this year. In the U.S., more than 2,800 planes are idled. Passenger demand is down 95% from last year,” Andrew Tangel and Doug Cameron write for The Wall Street Journal.

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“Calhoun offered few specifics about production cuts or planned job cuts, leaving more details for Wednesday, when Boeing reports first-quarter results. Boeing has been weighing production cuts and layoffs and has recently been considering a plan to cut its workforce by about 10%,” they add.

“Boeing is scrambling to cut costs amid a weak market for new jetliners. That evaporating demand as air travel is largely on hold around the world, is a problem for both Boeing and its main rival, Europe’s Airbus, which has cut production rates by a third,” writes  CNBC’s Leslie Joseph.

“Air travel demand in the U.S. is about 5% of what it was a year ago and airlines have parked more than a third of the country’s fleet, while some carriers are planning to defer orders of new planes,” Joseph continues.

“We are in an unpredictable and fast-changing environment, and it is difficult to estimate when the situation will stabilize,” Calhoun said during the webcast. “When it does, the commercial market will be smaller, and our customers’ needs will be different.”

In an editorial yesterday, the hometown Seattle Times posited that “Boeing made the right call terminating its $4.2 billion purchase” of Embraer’s commercial jet business.

“The deal had strategic value and Boeing may have to pay a $100 million breakup fee, or more now that it’s being sued by Embraer for backing out. But that’s a small price to end a deal that would cause more harm than good to Boeing at this point. Two years after the acquisition was announced, aviation is in shambles, Boeing is on the ropes and the merger approval remains in limbo,” it continues.

In other aviation news, Jet Blue yesterday became the first U.S. airline to mandate that passengers wear face coverings during airport check-in, on the plane and when they get off the plane. The policy starts May 4 and Jet Blue will have a limited number of masks available for passengers who don’t bring their own, Dawn Gilbertson reports  for USA Today.

“Wearing a face covering isn’t about protecting yourself it’s about protecting those around you,” Joanna Geraghty, JetBlue's president and COO, states  in the release announcing the requirement.

The Association of Flight Attendants-CWA applauded the action and revealed  that it is lobbying Trump administration officials “to implement new, stronger measures to protect flight crews and passengers from the spread of COVID-19, including mandating all crews, employees and passengers wear masks onboard and in the airports.”

AFA president Sara Nelson “posted a photo of a flight this weekend on Twitter, which showed a plane crowded with passengers not wearing masks,” David Slotnick writes  for Business Insider.

A woman flying an American Eagle flight from New York to North Carolina, “was upset to find lack of masks and crowded conditions on her flight. She took a video and posted it to Twitter saying she'd never felt less safe or cared for,” WRAL’s Amanda Lamb reports.

American Airlines yesterday said it will require flight attendants to wear masks starting May 1.

“The Fort Worth-based carrier said it will also start distributing face masks and sanitizing wipes to customers boarding airplanes. It joins United Airlines, which said last week that it would require flight attendants to wear face masks,” writes  Kyle Arnold for The Dallas Morning News, joining Frontier and Delta.

“American said it also will more thoroughly cleanse planes between flights, the kind of cleaning previously reserved for overnight crews. That includes wiping down all armrests, tray tables and handles on overhead bins. The airline has been cleaning kiosks and stanchions in airports more frequently, too,” Arnold adds.

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