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.
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“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
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There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.