Boeing's bad quarter: Company delays 777X, 737 MAX timeline as COVID hits business
Travelers looking forward to flying on Boeing's next wide-body jet will have to wait a little longer. The coronavirus pandemic that's wreaked havoc on the airline industry has also hit Boeing, affecting aircraft timelines across the planemaker's commercial jets division.
Chicago-based Boeing slid the introduction of the 777-9X, an updated and re-engined version of its venerable 777 wide-body, into 2022. The company cited the pandemic among a myriad of causes for the delay during its second-quarter earnings call Wednesday. The shift from 2021 was expected following comments by Emirates to Bloomberg earlier in July.
The 777X is not the only Boeing program delayed by COVID. The 737 MAX re-certification is also taking longer than it otherwise would have due to the virus. The expected return-to-service date is now in the fourth quarter pending regulator approval, the planemaker's CEO Dave Calhoun said Wednesday.
Sign up for the free daily TPG newsletter for more airline news!
"The current challenges we have are of unprecedented proportion," Calhoun said, referring to the pandemic and the on-going grounding of its breadwinning 737 MAX family. The planemaker lost $2.4 billion during the second quarter, a period when it only delivered 20 planes from its commercial division and wracked up more cancellations than new orders.
Looking forward, Boeing said it is using the crisis to re-evaluate its production "footprint," including the possibility of consolidating 787 production in ether Everett, Washington, or North Charleston, South Carolina. This would allow it to reduce costs in a way that executives say it could not before the pandemic.
"I don't want to predispose any answers… we're taking a very serious effort," Calhoun said about speculation Boeing could move all Dreamliner production to South Carolina.
Related: Boeing's 777X completes its maiden flight
Things may not get better for Boeing in the short term. Calhoun acknowledged that the resurgence of COVID infections in the U.S. since the end of June, as well as elsewhere around the globe, has delayed the recovery in air travel and thus the need by many airlines for new jets.
Boeing is in talks with all of its customers about the status of their commitments, said Calhoun. This includes delays and re-timing of deliveries to outright cancellations. Aircraft leasing company AerCap, for example, said Wednesday that it had cancelled orders for 15 MAXes.
Against that backdrop, Boeing is cutting production rates. The 737 MAX will only resume to 31 aircraft a month by 2022; the 777 and 777X will drop to two planes a month from five next year; and the 787 will drop to six jets a month from 10 in 2021, pending a return in demand for wide-body long-haul aircraft.
Related: FAA move could have Boeing 737 MAX flying again this fall
Boeing can count five of the largest U.S. airlines among its customers: Alaska Airlines, American Airlines, Hawaiian Airlines, Southwest Airlines and United Airlines. All have outstanding orders for either 737 MAX or 787 jets and are working to restructure future deliveries as they manage through the crisis.
On Tuesday, Hawaiian CEO Peter Ingram said the airline has had "productive" talks with the planemaker regarding the status of its order for five 787-9 jets. The first aircraft are unlikely to arrive before 2022 or 2023, instead of next year, though nothing has been finalized, he said.
Gary Kelly, CEO of Dallas-based Southwest and also the largest global operator of 737s, stood by the MAX during the airline's own earnings call earlier in July. He called the carrier's all-737 fleet "more appropriate than ever for the current environment," and said the airline looks forward to returning the MAX to service before the end of the year.
But standing by the jet does not mean Southwest wants lots of them right away. The airline has already delayed 75 of the 123 MAXes it was scheduled to take through 2021, and executives now say that they may slow the remaining 48 deliveries even more.
Boeing plans to deliver all of the roughly 450 737 MAXes that it has in storage within a year of re-certification — or by the end of 2021 — said Calhoun.
Related: Global air travel unlikely to recover until 2024 as COVID remains 'issue' in US, elsewhere
TPG featured card
at American Express's secure site
Terms & restrictions apply. See rates & fees.
| 3X | Earn 3X Miles on Delta purchases. |
| 1X | Earn 1X Miles on all other eligible purchases. |
Pros
- Delta SkyClub access when flying Delta
- Annual companion ticket for travel on Delta (upon renewal)
- Ability to earn MQDs through spending
- Various statement credits for eligible purchases
Cons
- Steep annual fee of $650
- Other Delta cobranded cards offer superior earning categories
- Earn 100,000 Bonus Miles after you spend $6,000 or more in purchases with your new Card within the first 6 months of Card Membership and an additional 25,000 bonus miles after you make an additional $3,000 in purchases on the Card within your first 6 months, starting from the date that your account is opened. Offer Ends 04/01/2026.
- Delta SkyMiles® Reserve American Express Card Members receive 15 Visits per Medallion® Year to the Delta Sky Club® when flying Delta and can unlock an unlimited number of Visits after spending $75,000 in purchases on your Card in a calendar year. Plus, you’ll receive four One-Time Guest Passes each Medallion Year so you can share the experience with family and friends when traveling Delta together.
- Enjoy complimentary access to The Centurion® Lounge in the U.S. and select international locations (as set forth on the Centurion Lounge Website), Sidecar by The Centurion® Lounge in the U.S. (see the Centurion Lounge Website for more information on Sidecar by The Centurion® Lounge availability), and Escape Lounges when flying on a Delta flight booked with the Delta SkyMiles® Reserve American Express Card. § To access Sidecar by The Centurion® Lounge, Card Members must arrive within 90 minutes of their departing flight (including layovers). To access The Centurion® Lounge, Card Members must arrive within 3 hours of their departing flight. Effective July 8, 2026, during a layover, Card Members must arrive within 5 hours of the connecting flight.
- Receive $2,500 Medallion® Qualification Dollars with MQD Headstart each Medallion Qualification Year and earn $1 MQD for each $10 in purchases on your Delta SkyMiles® Reserve American Express Card with MQD Boost to get closer to Status next Medallion Year.
- Enjoy a Companion Certificate on a Delta First, Delta Comfort, or Delta Main round-trip flight to select destinations each year after renewal of your Card. The Companion Certificate requires payment of government-imposed taxes and fees of between $22 and $250 (for itineraries with up to four flight segments). Baggage charges and other restrictions apply. Delta Basic experiences are not eligible for this benefit.
- $240 Resy Credit: When you use your Delta SkyMiles® Reserve American Express Card for eligible purchases with U.S. Resy restaurants, you can earn up to $20 each month in statement credits. Enrollment required.
- $120 Rideshare Credit: Earn up to $10 back in statement credits each month after you use your Delta SkyMiles® Reserve American Express Card to pay for U.S. rideshare purchases with select providers. Enrollment required.
- Delta SkyMiles® Reserve American Express Card Members get 15% off when using miles to book Award Travel on Delta flights through delta.com and the Fly Delta app. Discount not applicable to partner-operated flights or to taxes and fees.
- With your Delta SkyMiles® Reserve American Express Card, receive upgrade priority over others with the same Medallion tier, product and fare experience purchased, and Million Miler milestone when you fly with Delta.
- Earn 3X Miles on Delta purchases and earn 1X Miles on all other eligible purchases.
- No Foreign Transaction Fees. Enjoy international travel without additional fees on purchases made abroad.
- $650 Annual Fee.
- Apply with confidence. Know if you're approved for a Card with no impact to your credit score. If you're approved and you choose to accept this Card, your credit score may be impacted.
- Terms Apply.
- See Rates & Fees