Issue No. 848
Boeing Looks to 2023
The Airframer Expects Another Year of Transition as it Battles Multiple Crises
Pushing Back: Inside The Issue
What happened to Boeing? One of the most storied companies in the U.S., and one of its largest exporters, now is foundering. Long known for its engineering prowess — it designed and built the 747 in record time — the company now is struggling to get approvals for its 787, 737-7s, and 777X aircraft. Part of that, of course, is increased regulatory scrutiny after the Max fiasco, but that isn't the only factor at play. Its customers, especially those waiting for 787s, are not happy. Meanwhile, Boeing's inability right now to design and build a middle of the market aircraft means Airbus is walking away with that part of the market. Given all this, Boeing reported a narrower loss this quarter than last year, but that's because last year its best-selling aircraft was still grounded. The company's executives counsel patience and say this year, too, will be a year of transition.
Just how long will we feel the effects of the Covid-19 pandemic? Most airline executives on earnings calls this month were optimistic that the disease is on its way to becoming endemic. That may well be, although public health officials have mixed opinions. Most U.S. airline executives believe demand will start to rebound in March and be strong through the summer, with a full recovery occurring next year or possibly in 2024. And then there's Southwest's Gary Kelly, ever the contrarian, who believes we could feel the effects of the pandemic for the next 10 years, and no part of the travel ecosystem — airlines, hotels, and tourism — will be immune. This echoes what he said about business travel earlier in the pandemic. While his peers have said business travel will rebound in a year or two, Kelly believes it could take five or 10 years to match 2019.
And speaking of Kelly, it's the end of an era. After more than 30 years at Southwest and 18 years at the helm, he steps down on February 1. As he wryly noted, he beat American Airlines one last time. American's former CEO Doug Parker is stepping down after 107 consecutive earnings calls, starting with his time at America West. Kelly said by his count, he's leaving after 134.
The Airline Weekly Lounge Podcast
Cathay Pacific is struggling under new travel restrictions from the Hong Kong government, and the lack of any significant support from the government means it’s back in the red. In this week's episode of the 'Lounge, hosts Edward “Ned” Russell and Madhu Unnikrishnan also discuss cargo’s continued growth in 2021, and Airbus’ plan to launch a new cargo carrier with its bulbous Belugas, and they wrap with the throughline from the U.S. Big 3’s results. A full archive of the podcast is here.