Low-cost carrier Southwest – the third largest airline in the US – announced a series of operational changes in April after reporting poor financial results in the first quarter. After achieving a net loss of $231 million (CZK 5.4 billion), the company announced the termination of operations at four airports and the elimination of 2,000 jobs. For now, the company doesn’t want to hand out layoffs directly, it wants to achieve a reduction in staff through natural departures “and other voluntary programs.” The manufacturer Boeing contributed a lot to the problems – especially with delayed deliveries.
“Recent shakeup at Boeing sends shockwaves through airline industry,” Matt Spooner of Kinaxis, an aerospace supply chain management firm, told Newsweek. Other experts also warn that the problems at Boeing and Southwest could be a bad sign for other airlines. In the case of Boeing, some of the troubles have been going on for decades, and now the airlines are paying the price for relying too much on a single manufacturer.
2024 has been an eventful year for Boeing so far. In January an unused exit plug fell off during an Alaska Airlines flightwhich alerted authorities to safety issues in the production of 737 MAX 9 aircraft. In March, a Boeing 787-9 Dreamliner en route from Sydney, Australia to Auckland, New Zealand experienced a technical problem resulting in the plane suddenly plunged more than a hundred meters, injuring 50 people on board. And there were many minor incidents, including fuel leaks, wheels falling off and engine problems.
In 2018 and 2019, Boeing suffered a major reputational blow when two of its new MAX planes crashed in one year, killing a combined 346 people. The accidents in Indonesia and Africa were almost identical and both were related to the new Maneuvering Characteristics Enhancement Systems (MCAS).
Serious aircraft manufacturing
Seemingly chronic problems are causing widespread complications for several carriers. The Federal Aviation Administration (FAA) has now ordered Boeing to produce no more than 38 737 MAX planes per month – but according to a Reuters report in April, the actual number of planes produced is even significantly lower.
Likewise, the South Carolina 787 plant will experience unexpected delays. “The FAA opened an investigation into Boeing after the company voluntarily informed us in April that it may not have performed required inspections on some 787 Dreamliners to confirm adequate bonding and grounding where the wings join the fuselage,” cites the Ars Technica website from the statement of the office.
“It is being investigated whether Boeing performed checks and whether company employees falsified aircraft records. Boeing is re-inspecting all 787s in the production system and must also develop a plan to deal with the machines already in service.”
Boeing reported that one of its “colleagues” had reported a violation, namely that manufacturing records were falsified for inspections that did not actually occur. “He told his supervisor about it, who brought it to the attention of management,” praises Boeing Vice President Scott Stocker. “As you all know, we have zero tolerance for not following the processes established to ensure quality and safety,” the vice president added in an email to all employees. But this kind of ignoring of safety regulations was pointed out by several so-called whistleblowers – employees who were ignored by their superiors, so they reported it to the authorities and the media. Two whistleblowers have died suddenly under strange circumstances in recent months.
Also, American Airlines (AA) announced in early May that it will cut some flights to European destinations this year and in 2025 because Boeing is unable to fulfill orders. He now expects to receive three dreamliners instead of six this year. “Due to recent Boeing delivery delays, our projected flight hours have been reduced and we are offering our pilots voluntary redundancy programs for the month of May.” an AA spokesman said.
Similarly, United Airlines asked its pilots to take unpaid leave in early April due to a shortage of planes caused by Boeing’s delivery delays. “United Airlines estimates that grounding Boeing 737 Max 9 aircraft cost $200 million (CZK 4.6 billion) in the first quarter of 2024. Given that United Airlines suffered a loss of $164 million over the same period, it would have been profitable if the grounding had not occurred,” Professor Kivanc Avrenli, an aviation safety researcher at Syracuse University, told Newsweek.
Tools under the floor
European low-cost carrier Ryanair also told investors on March 1 that it expects to deliver only 40 of the planned 57 Boeing B737-MAX8200s this year. As of the end of March, it says on its website that it has 584 machines. Of these, 27 are Airbus A320s, the rest are 737s: the older Next Gen and the newer MAX, which it calls the Gamechanger (perhaps because of the bad reputation of the MAX name).
“We were finding little things like tools forgotten under the floorboards, in some cases missing seat mounts and things like that,” Ryanair CEO Michael O’Leary described the troubles with the new machines in March. “It shows a lack of attention to detail, a quality problem at Boeing.”
Canceled revolution 737
At the root of today’s problems are past strategic changes at Boeing. 25 years ago, the company launched the massive Yellowstone project – a plan to replace aging aircraft models with brand new ones. The medium-sized 767 was replaced by the Boeing 787 Dreamliner. The larger 747 (Jumbo Jet) and 777 are to replace the 777X; the prototype has already flown, but deliveries are still delayed. On the contrary, in the case of a smaller model, the project was stopped and the 737 MAX was announced in 2011, instead of a replacement, only an improvement of the existing design.
But even that meant a tremendous amount of change and innovation, including hiccups in production and supply chains. “They underestimated the complexity,” Chad D. Cummings, a lawyer who previously worked for American Airlines, told Newsweek. “Each change required changes in other systems.”
“Every aircraft launched has its troubles in the beginning, the MAX and the 777X are no different. To be clear, there is no indication that MAX is inherently dangerous, as evidenced by the number of successful and trouble-free flights since MAX’s first flight in 2016,” Cummings added. “It is not difficult to imagine that Boeing will continue to work to resolve these issues and regain public trust.”
However, this will take time. Airlines are now turning more to the European Airbus, but it cannot handle such an increase in demand. Nowhere else are big airliners now being produced, only in China is the production of machines for shorter flights starting.
“We put customers in a predicament,” acknowledged Boeing CFO Brian West in March and emphasized that they are trying to communicate with airline customers. “And they understand everything we’re trying to do to improve safety and quality. We also communicate regularly and very transparently with Southwest and they know exactly where we are and what progress we are making. At the same time, we need to understand what their needs are when they think about their flight schedules and their passengers.”
There are no exact official statistics on how many Boeings and how many Airbuses the airlines have around the world. In the USA, however, Boeing dominates there. Southwest has an entire fleet from him – 815 planes, almost the same at United, they only have a few Airbus A319 and A320 models. Delta has a more even balance: 417 Airbuses and 519 Boeings. Previously, the American Airlines group also relied exclusively on Boeing, but in 2011 it also ordered hundreds of Airbuses (and later others) and its orders for the following years look similarly balanced.
“Such reliance on one company is unprecedented and exposes an incredible vulnerability across the industry that is likely to continue to create problems as we head into the high travel season.” predicts analyst Spooner.