Boeing CEO Dave Calhoun believes a major U.S. carrier will “most likely” go out of business. Which one did he have in mind?
Calhoun will appear on NBC’s TODAY Show later this morning. All we have is a teaser at this point, but here’s what Calhoun told host Savannah Guthrie:
GUTHRIE: Do you think there might be a major U.S. carrier that just has to go out of business?
CALHOUN: Yes, most likely. You know, something will happen when September comes around. Traffic levels will not be back to 100% then. They won’t even be back to 25%. Maybe by the end of the year we approach 50%. So there will definitely be adjustments that have to be made on the part of the airlines.
You can watch the clip below:
EXCLUSIVE: @SavannahGuthrie speaks with Boeing CEO Dave Calhoun about the future of the company, the coronavirus pandemic & more.
Tomorrow on @TODAYshow
GUTHRIE: Do you think there might be a major U.S. carrier that just has to go out of business?
CALHOUN: Yes, most likely. pic.twitter.com/ef6PRSDBay
— NBC News PR (@NBCNewsPR) May 11, 2020
Now maybe he will elaborate upon that this morning, but that won’t stop me from speculating before the fact! š
Honestly, I don’t see a major carrier going out of business?
Alaska? Nope.
Allegiant? Nope.
American? Nope.
Delta? Nope.
Frontier? Nope.
JetBlue? Nope.
Southwest? Nope.
Spirit? Nope.
United? Nope.
Now Miami Air and Ravn Air certainly went out of business, but the question was “major” and I just cannot see any of the airlines above going out of business.
CONCLUSION
I’ll update this post if Calhoun shares any interesting insight, but I think this was a misstatement. Calhoun should focus on his own company, which has a bigger hole to climb out of than many U.S. airlines.
Matthew, do you think it’s possible we might see any mergers among the airlines you listed?
@ Matthee — It will be United. They already ditched their pension plan on the PBGC, which makes the government’s exposure smaller now. They have the weakest hub system. They are the weakest of the Big3.
Not true at allInited is in far better shape than American which was in trouble even before Covid came along.
They dumped their pension plan 18 years ago when they declared bankruptcy – how would that have any relevance in 2020 other than they’ve saved $millions that they didn’t have to shell out. I’m collecting United’s “pension” from the PBGC and it’s about 50% of what I should be getting as a decades long employee – but I guess I can’t complain – I’m happy to get something. Other retirees have fared much worse. Nevertheless, they’ve made billions since then and see no need to restore what they promised us a long time ago.
AA and DL have not dumped their pension plans on PBGC. So these 2 airlines would be more expensive to the federal government if they were allowed to fail.
Before COVID-19, the fares to Hawaii have been on pretty much an all time low for the past two years which certainly didn’t help Hawaiian Airlines to build up cash reserves. The depend mostly on leisure travel but are a much bigger operation then for example Allegiant. Apart from inter-island flights they only have medium- to long-haul flights on which the profit margin tends to be lower and operating costs are higher. Thus, I think it depends on when Hawaii is lifting its stringent 14 day quarantine rules, because people will be eager to travel domestically at first and Hawaii could see a surge in demand. However, if the 14 day rule persists for several months, I could see trouble for Hawaiian Airlines in the near term future.
Isn’t it bad for him to say a major airline will go bankrupt because airlines are his buyer??? I wonder how his comments will be interpreted by the well street lol
He gave no specific prediction. It would have surprised me if he had. No benefit to him or Boeing to do so.
Isn’t it more likely that Boeing will go out of business?
I think he chose the wrong road to go down, certainly given what Boeing’s current position is with hundreds of planes grounded and still after all these months no fix, nor does there appear to be a final sign off coming anytime soon. Boeing’s management in the past few years has if anything rival’s many a failed company and frankly worthy of a Federal investigation one only has to look at their tanker contract.
+1. Glass houses and all that.
I think it’s more likely that a major LCC would go under. Their margins are smaller, their target market will be the least eager to fly again soon, and relying on full planes and quick turns is going to be a much harder business model going forward. There will likely be a lot more overhead costs going forward too, cleaning, longer boarding and deplaning, more airport fees too. Flying will be more expensive, and the LCCs, catering to price sensitive leisure travelers, will be impacted the most.
Too bad you are completely wrong – it’s well known that the LCCs do quite well margin-wise compared to the legacy carriers
That’s where you are absolutely wrong. Go read why Ryan Air refuses to consider flying with social distancing. LCCs have margins thinner than most legacy and their debt to cash flow ratio is off the charts high.
Data and actual info is a wonderful thing:
https://centreforaviation.com/analysis/reports/ryanairs-fy2019-results-a-warning-to-europes-airlines-474311
https://www.bizjournals.com/chicago/news/2018/06/19/ultra-low-fare-airlines-are-among-most-profitable.html
LCCs outpunch legacy carriers margin-wise
I predict Boeing will file for chapter 11. The 737 Max is a disaster.
@ All — Boeing will not fail. It is backed by the US government.
Whyās this guy running his flap jaws, he should resign or be fired immediately. Making statements like that is detrimental not only to the economy, but the airlines and Boeing itself. I hope the board hands him his walking papers. They have a piece of crap plane that is miserable to fly on that nobody wants to buy or fly on. Itās been grounded for 14 months and counting. Iād rather fly on a 38 year old MD-80 than that thing. So this dumbass that lives in a glass house should not throw stones, especially at his customers.