Boeing CEO Warns A Major Airline Will ‘Most Likely’ Go Out Of Business This Year Because Of Coronavirus

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Isabel Togoh   Staff

Boeing

Photo: Boeing Airplanes Twitter

Boeing CEO Dave Calhoun has said he expects a major airline to go out of business this year as the coronavirus pandemic decimates demand for passenger flights.

KEY FACTS

- In an exclusive interview to be aired on NBC on Tuesday, Calhoun said that he doesn’t expect air travel to return to normal this year.

- Asked by NBC’s Savannah Guthrie whether an airline might have to fold this year, he replied: “Yes, most likely.”

- The U.S. government is providing $25 billion in support to hard-hit passenger airlines, in a bid to keep staff employed until at least September, as demand for flights in the U.S. slumped 95% as a result of the pandemic. 

- But Calhoun believes that this payroll support won’t be enough to stop airlines from having the made adjustments.

CRUCIAL COMMENT

Calhoun told Guthrie: “Something will happen when September comes around. Traffic levels will not be back to 100%. 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.”

BIG NUMBER

Such is the damaging impact of coronavirus on passenger flights, that Boeing is cutting 16,000 jobs—10% of its workforce—mostly in its commercial airline branch. “The demand for commercial airline travel has fallen off a cliff,” Calhoun said in April.

KEY BACKGROUND

The International Air Travel Association has revised its industry performance forecasts several times since the pandemic hit, and now estimates that airlines could report $314 billion in lost passenger revenues this year—a drop of 55%. Carriers around the world have dramatically cut their normal capacity and, according to IATA, demand for flights worldwide has dropped 82%. Aircraft orders have slumped or have been delayed as airlines seek to preserve cash. Even if flight demand does pick up, IATA says that social distancing could render most airlines “financially unviable” because of measures such as leaving the middle seat empty to keep passengers at a safe distance from one another.

Boeing has severely cut back on its production of commercial planes as a result of the coronavirus pandemic. In April, it shutdown its commercial aircraft production in Washington and South Carolina, but continued with the production of parts in the U.S., Canada and Australia.

The planemaker has been blighted by major crises over the past couple of years. Prior to the coronavirus pandemic that ground air travel to a halt, the airline had already grounded its 737 MAX model after two fatal crashes that killed 346 people.

TANGENT

Ryanair, Europe’s biggest budget airline by passengers, said on Tuesday that it hopes to be operating 1,000 flights a day from July 1. That amounts to about 40% of its pre-coronavirus capacity, and compares to just 30 flights a day it has been operating since March. 

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Isabel Togoh   Staff

I am a breaking news reporter for Forbes in London, covering Europe and the U.S. Previously I was a news reporter for HuffPost UK, the Press Association and a night reporter at the Guardian. I studied Social Anthropology at the London School of Economics, where I was a writer and editor for one of the university’s global affairs magazines, the London Globalist. That led me to Goldsmiths, University of London, where I completed my M.A. in Journalism.