3,300 departures per week, 160 destinations around the globe.
20.03.2024 - 04:13 / forbes.com / Scott Kirby / Airlines
The airline industry barely survived its last black swan event, the COVID-19 pandemic. In April 2020, U.S. passenger numbers dropped by almost 95%. By June of that year, some 16,000 planes had been taken out of service.
The Federal government put $50 billion dollars of taxpayer money in the carriers and airports, airlines sold junk bonds based on their frequent flyer programs, and the COVID-19 vaccine began restoring public confidence in travel.
After two years of recovery, global passenger traffic in 2024 is finally predicted to surpass the 2019 level. Estimates are that world passenger traffic will hit 9.7 billion passengers, a record and 106% of the 2019 level.
The stocks of US airlines even started something of a recovery. What could go wrong? Unfortunately, the black swan this year appears to be Boeing.
On March 11, 2024, the stock prices of US airlines, particularly Southwest, plunged again. This time the X-factor was the inability of Boeing to deliver 737MAX aircraft on time and get the aircraft certified. Safety concerns after a door flew off an Alaska 737MAX on January 5 are also prominent. Alaska is asking a judge to dismiss it from possible passenger claims, directing the blame to Boeing and its supplier
Southwest Airlines, (LUV), all of whose 820 aircraft are Boeing 737 models, was hammered hardest. On March 8 Southwest closed at 34.26. On Monday, March 11, after a weekend of worry about Boeing, Southwest closed at 28.76, a decline of 5.50 or more than 15%. A week later, the stock has not recovered, closing March 19 at 28.17.
Southwest Airlines cut its 2024 capacity forecast and said it was reevaluating its earnings guidance for the year as it will get fewer MAX aircraft than expected. Southwest, which was trying to put delay and cancellation headaches behind it, now anticipates far fewer Boeing deliveries than it previously expected this year. The airline may get as few as 46 Boeing 737 Max planes, down from 79.
Adding to airline woes, the popular booking engine Kayak has a filter option which will remove any aircraft you don’t like from consideration. Since Jan. 6, the day after the Alaska incident, Kayak has seen an increase of 15 times in the number of searches trying to exclude Boeing 737 Max 9 aircraft.
Among other issues, a recent CBS News story says that Boeing’s 737 MAX engine issues can cause the anti-ice system to overheat and damage the engine. Pilots apparently have sticky notes in the cockpit, reminding them not to run the de-icing system for more than five minutes.
The issues are leading Boeing to limit the number of planes that it builds.
United Airlines CEO Scott Kirby said the airline told Boeing to stop building the 737 Max 10 aircraft they have on order and instead
3,300 departures per week, 160 destinations around the globe.
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