Boeing’s recent crisis involving its Max aircraft is prompting major reconsiderations among some of its key clients regarding their growth strategies for the present year and potentially beyond, according to several airline CEOs speaking on Tuesday.
The remarks underscore the impact Boeing’s challenges have had on its foremost purchasers, including escalating quality control issues, a sluggish uptick in production, and the protracted certification process for new aircraft.
Southwest Airlines, exclusively operating Boeing 737s, has revised down its 2024 capacity projections and is reassessing its financial guidance for the year. This adjustment follows a reduction in expected Boeing deliveries, with only 46 Boeing 737 Max planes anticipated compared to the previously estimated 79.
“Boeing needs to enhance its operations, and deliveries will subsequently align with those improvements,” remarked Southwest Airlines CEO Bob Jordan during a JPMorgan industry conference on Tuesday.
Similarly, Alaska Airlines stated on Tuesday that its 2024 capacity forecasts are uncertain due to the unpredictability surrounding aircraft deliveries, exacerbated by increased scrutiny from the Federal Aviation Administration (FAA) and the Department of Justice regarding Boeing’s operations.
United Airlines CEO Scott Kirby revealed during the same JPMorgan conference that the airline has requested Boeing to cease production of Max 10 planes, which remain uncertified by the FAA, and instead focus on producing more Max 9s, which are already in service.
“The certification timeline for the Max 10 remains unclear,” said Kirby, noting that in January, the airline had made plans excluding the Max 10 due to delays.
In response to delayed deliveries, United announced last Friday that it would temporarily halt pilot recruitment this spring, as reported by CNBC.
Tensions among airline executives have been simmering in recent months, stemming from Boeing’s latest crisis triggered by a midair door panel incident on a Max 9 plane during an Alaska Airlines flight in January. This incident intensified scrutiny on Boeing, with a preliminary investigation by the National Transportation Safety Board indicating issues with the attachment of bolts on the door panel originating from Boeing’s factory in Washington state.
“We are fully committed to implementing changes to bolster quality throughout our production system and ensuring the delivery of high-quality aircraft that meet all regulatory standards,” Boeing stated in an email response. The company continues to keep close communication with its valued customers regarding these matters and its remedial actions.
The FAA has halted Boeing’s planned production increases, citing non-compliance issues in Boeing’s manufacturing processes, parts handling, storage, and product control identified during a recent audit.
Boeing’s CEO Dave Calhoun and other executives have pledged to address quality control issues and have initiated various work pauses to address concerns with employees.
Stan Deal, CEO of Boeing’s commercial airplanes unit, informed staff on Tuesday about the company’s plans to collaborate with employees flagged for non-compliance issues during the audit. This collaboration includes ensuring full comprehension of work instructions and procedures, implementing weekly compliance checks, and scheduling additional audits this month.
In a memo to staff, Deal emphasized the imperative of adhering precisely to manufacturing procedures and processes, as well as remaining vigilant for potential safety hazards. Employees were encouraged to report any concerns promptly through appropriate channels to mitigate risks effectively.
