U.S. airlines have not responded well to a suggestion from the Boeing CEO that a major airline would go out of business by the end of the year.
Speaking on NBC’s TODAY show earlier this week, Boeing CEO David Calhoun predicted that at least one major U.S. airline would not survive 2020.
“Well, I don’t want to get too predictive on that subject, but yes, most likely. Something will happen when September comes around.”
When pressed, he declined to identify which one, noting instead the general challenges the industry faces.
You can watch the exchange here and note my initial commentary here.
The Wall Street Journal reports that American Airlines and United Airlines were not happy with the interview.
“American Airlines Group Inc. CEO Doug Parker called the Boeing chief this week to express surprise and disappointment.”
United Airlines also voiced displeasure, though it is not clear who conveyed the message to Calhoun.
You would think that the Boeing CEO would simply offer a mea culpa for misspeaking…it happens to the best of us. After all, how does it make sense to speculate about the failure of your customers?
But an unnamed Boeing “senior executive” told the Wall Street Journal that Calhoun had received a “range of feedback” from airline leaders and was just “telling it like it is”:
“Some weren’t keen on his sobering assessment of industry challenges ahead, but others appreciated him telling it like it is. It’s in his nature to be frank.”
Yes, frankness is a commendable in certain circumstances, but in this case? I’m not sure how “telling it like it is” is really the case when you warn that one of your customers will go out of business by the end of the year without any proof and during a time they are trying to raise additional financial support.
CONCLUSION
I’m certainly not calling for Calhoun’s head due to one gaffe. But I find the defense of his words by a senior Boeing executive to be puzzling at best, dismaying at worst.
Bye, United
Calhoun should have learned from his predecessor and kept his mouth or opinions to himself, this arrogant I know better attitude is what has gotten Boeing in trouble to begin with. This stupidity on his part will lead to tougher negotiations from the airlines, strained if they aren’t already relations and lost of jobs by workers due to lack of orders. Boeing has brought shame on American manufacturing workers which will require years or a decade or more to correct. Frankly Boeing needs to be investigated not by politicians but real investigators the Max is a disaster, then their space capsule malfunctioned why ? Software!
I thought I would never say this but BUY AB
Calhoun should learn from Musk. Oftentimes it is best to just muzzle up.
Curious that AA and United took it personally. With Kirby playing games with refunds and consumer trust I think UA will have a hard time getting bookings.
Barring another relief package, could we see mass Chapter 11 filings on Oct 1?
Boeing would already be in bankruptcy if it weren’t for their government contracts. This is nothing more than is poor attempt to deflect attention from Boeing’s struggles. The 787 is their only viable offering right now. And I challenge anyone to defend a 787 compared to an A350.
Of course there will be airline bankruptcies. The severity and length of low passenger demand is enormous. The airlines have assets and debt based on demand and load factors in the 80% range. With most majors having parked well over half of their fleets and load factors in the 10%-20% range, there is no way the revenue coming in can support the debt some of these airlines have. Those that do not see this simply do not understand the dire financial straights these airlines are in, nor the overall financial model of the airline industry.
This said, they have built up funding through loans and grants to get them through this year, but 2021 will be the year where they will have to re-organize.
The cluelessness of this guy is something to behold. The fact that some servile toadies seem to double down on it, an indication of just how far Boeing has fallen. You’d get better PR/message management from a small town shoe store.
Thanks, Matthew. Hadn’t realized there were comments coming from United and American.
As one parses Calhoun’s comment, he doesn’t say “Chapter 11” or “bankruptcy,” he says “not survive” which more likely means liquidation/Ch. 7.
As others noted, nothing like Boeing execs lining up behind the lead lemming, as they all toe the edge of the cliff, as they have for the past couple years.
It’s well past time for Boeing’s BoD to realize they need fresh eyes, fresh leadership, not more of the same rubber stamp acts from their internal cadre of good ole boys. Can this happen before Boeing declares Ch. 11 themselves? (TARP pushed out Rick Wagoner from GM in 2008…can a future bailout push several execs out of Boeing? Please?)
Not related as this is a different carrier, but I heard that Thai Airways TG just filed for bankruptcy 🙁 Matthew, could you please research and confirm?
What an idiot, I doubt any airline “the big 3” will fail or go out of business, seriously folks AA was declared too big to fail and ordered back to work by the Clinton administration. The CEO of Boeing should be fired. But so should Doug Parker. 1 for producing a miserable and unsafe aircraft and the other for making so miserable to ride on a Bus is a better option. The CEO of Boeing should be charged with treason. I can’t imagine 1 American carrier buying an aircraft from Boeing until he is gone. God I miss McDonnel Douglas. Thanks Boeing for ruining that for the flying public to.
Not sure where the US airline industry is headed, but there will be some dark quarters ahead no doubt. But what amazes me is doesn’t Calhoun realize Boeing has enough troubles of its own to be making predictions about the few customers he has left. Surely he knows the traveling public is booking away from any trip involving Boeing equipment because they can’t trust the product to be safe, not because of lax maintenance by the carrier, but ONLY because of shoddy design, manufacturing and QC from the company he leads. That’s not a good place to be.