Boeing CEO David Calhoun echoed his customers’ grim assessment of air-travel demand at the planemaker’s annual meeting today, saying “it will be years before this returns to pre-pandemic levels.”
Calhoun, a Boeing board member who became CEO in January, told shareholders: “Airlines are cutting back operations dramatically. As they assess their businesses, they are making difficult decisions that result in grounding fleets, deferring airplane orders, postponing acceptance of completed orders, and slowing down or stopping payments. They are also accelerating aircraft retirements and requiring fewer services.”
He also joined major customers, such as United, in warning that Boeing could be smaller, too.
"It is difficult to estimate when the situation will stabilize. But when it does, the commercial market will be smaller and our customers’ needs will be different. We will need to balance supply and demand accordingly as the industry recovers.”
But that’s unlikely to happen quickly: “Based on what we know now, we expect it will take two to three years for travel to return to 2019 levels and an additional few years beyond that for the industry’s long-term trend growth to return,” Calhoun said. “But there is no doubt people will start flying again.”
Calhoun acknowledged that the recent national, if not global, experiment in working from home will have an impact. “No doubt it takes longer to do things,” he said during a question-and-answer session. “Most of us have been surprised how much we can get done working virtually. There will be some long-term implications for us.”
The biggest unknown for the industry is when travelers will feel safe getting back on airplanes. “They will have to be as safe or safer in our environment than they are at home.”
Calhoun also said he expects domestic air travel will rebound more quickly than international travel, which presents a challenge for Boeing. Its main domestic aircraft, the 737 Max, still hasn’t been approved by the FAA and other regulators to return to service since it was grounded more than a year ago, following two fatal crashes.
Boeing shareholders elected all 12 directors, despite recommendations from proxy-advisory services that they vote against several longtime directors.
Shareholders did, however, narrowly approve a recommendation that Boeing have an independent chairman. The vote is largely symbolic, however. Boeing separated the chairman and CEO jobs last year, and board member Larry Kellner is chairman now.
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April 27, 2020 at 09:33PM
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Boeing CEO: Aviation rebound will take years - Crain's Chicago Business
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