Lufthansa Backs Boeing as Planemaker Faces Growing Engineering Challenges

Photo credit: Lufthansa expects its first Boeing 787, pictured here in the paint shop, delivery later in 2022. Lufthansa

Lufthansa Group CEO Carsten Spohr sees Boeing recovering from the series of problems the planemaker faces, a sentiment not shared by many of his peers.

“Boeing will get back on its feet,” he said at the International Aviation Club in Washington, D.C., on May 19. He cited the repeated ability of the company, and the U.S. more broadly, to overcome market challenges from the growth of Japanese firms in the 1980s to competition with the Soviet Union during the Cold War.

Others have not been as kind to Boeing. Ryanair CEO Michael O’Leary called Boeing a “headless chicken” in comments on May 16. “I think they’re losing market share hand over fist to Airbus and don’t seem to be responding appropriately … Seattle needs a reboot, it needs a reboot quickly,” O’Leary said.

Aircraft lessors have raised similar concerns. Air Lease Corp. Executive Chairman Steven Udvar-Hazy said earlier in May that Boeing’s multiple challenges getting the 737-10 and 777X certified, as well as sign off for 787 deliveries to resume, is “taxing on the organization.” Concerns about the Boeing’s engineering capabilities also extend to its defense and space businesses. The Air Current reported May 18 that even Pentagon officials have doubts about the airframer.

Spohr acknowledged the concerns but noted that they also make it a “great time to negotiate prices” with Boeing. Earlier in May, Lufthansa ordered seven additional 787-9s for its passenger business and 10 777 and 777X freighters for its cargo operation.

Lufthansa’s Boeing orders come as the airline prepares for a busy summer. Bookings, particularly for flights across the North Atlantic between the U.S. and Europe, are robust, and fares are up, Spohr said. He was not concerned about the possibility of new Covid variants or another geopolitical conflict, like the war in Ukraine, disrupting summer travel. And, at least to date, Lufthansa has been able to pass on rising fuel prices to travelers through higher fares. However, he declined to provide an outlook for the fall or winter citing uncertainty over the virus, and potential for a recession in Europe.

Spohr also called for the U.S. government to drop its pre-departure testing requirement for travelers arriving from abroad. The rule hits U.S. demand for transatlantic travel more than European demand because, as he put it, Europeans only get stuck at home if they test positive; Americans get stuck wherever they are traveling. Spohr did not provide a timeline for when the requirement could be eased but said he expects something in “a matter of weeks,” particularly as demand ramps up for the summer.

“Short-term, it has no big impact,” Spohr said of the benefit to removing the rules. “The fall will come, the winter will come, we see inflation … so I think we’ll see a positive impact after the peak, peak season is over after the summer holidays.”

U.S. airlines have been pressuring the Biden administration to ease the rules since at least February. A recent analysis by Airlines for America (A4A) found that dropping the requirement would bring an additional 4.3 million foreign travelers to the U.S.