Boeing’s bad quarter: Company delays 777X, 737 MAX timeline as COVID hits business
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
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.
Hawaiian is in “productive” talks with Boeing on rescheduling its 787 deliveries, says CEO Ingram. First deliveries not likely until 2022 or 2023.
The jets were due to enter service next year: https://t.co/S5yiE3BgYX $HA https://t.co/hmbk3Ojt0F
— Edward Russell (@byerussell) July 28, 2020
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
Featured image by Zach Wichter/The Points Guy.
Sign-up Successful!
Welcome to The Points Guy!
Earn 50,000 bonus miles and 5,000 Medallion® Qualification Miles (MQMs) after you spend $2,000 in purchases on your new card in your first three months of card membership. Plus, earn up to $100 back in statement credits for eligible purchases at U.S. restaurants with your card within the first 3 months of membership.
With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.
- Earn 50,000 bonus miles and 5,000 Medallion® Qualification Miles (MQMs) after you spend $2,000 in purchases on your new Card in your first 3 months.
- Plus, earn up to $100 back in statement credits for eligible purchases at US restaurants with your card within the first 3 months of membership.
- Accelerate your path to Medallion Status, with Status Boost®. Plus, in 2021 you can earn even more bonus Medallion® Qualification Miles (MQMs) to help you reach Medallion Status.
- Earn 3X Miles on Delta purchases and purchases made directly with hotels.
- Earn 2X Miles at restaurants worldwide, including takeout and delivery and at U.S. supermarkets.
- Earn 1X Miles on all other eligible purchases.
- Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. *Payment of the government imposed taxes and fees of no more than $75 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
- Enjoy your first checked bag free on Delta flights.
- Fee Credit for Global Entry or TSA Pre✓®.
- Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
- No Foreign Transaction Fees.
- $250 Annual Fee.
- Terms Apply.
- See Rates & Fees
Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.
Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.