What Did He Just Say?': Boeing CEO's Prediction Irks Airlines
May 14 2020 - 12:38PM
Dow Jones News
By Andrew Tangel and Alison Sider
Boeing Co. Chief Executive David Calhoun's prediction of a major
U.S. airline's demise has prompted complaints from some of the
plane maker's biggest customers as they grapple with fallout from
the coronavirus pandemic, people familiar with the matter said.
American Airlines Group Inc. CEO Doug Parker called the Boeing
chief this week to express surprise and disappointment after Mr.
Calhoun told a television interviewer that a major U.S. airline
would most likely go out of business by this fall, one of these
people said.
Mr. Calhoun's comments weren't well-received at United Airlines
Holdings Inc. either, people familiar with the matter said. United
also conveyed displeasure to Boeing over Mr. Calhoun's remarks,
these people said.
In an interview that aired Tuesday on NBC's "Today" show, Mr.
Calhoun said he expected demand for air travel to bounce back to
2019 levels in three to five years. Asked if he thought a major
U.S. carrier might go out of business, Mr. Calhoun said: "Well, I
don't want to get too predictive on that subject, but yes, most
likely. Something will happen when September comes around."
"What did he just say?" is how one person described the initial
reaction among some executives at American, which is based in Fort
Worth, Tex.
Some industry leaders said Mr. Calhoun's comments left them
wondering why the plane maker's CEO would speculate about a
customer's potential failure while carriers are negotiating
financing deals, including with the U.S. Treasury for taxpayer
stimulus.
Boeing spokesmen said Mr. Calhoun was speaking generally about
the challenges faced by the industry and not any particular
airline. They said the full context of his comments included his
assessment of the industry's outlook, expressions of optimism for
an eventual recovery and support for airlines.
A senior Boeing executive said Mr. Calhoun had received a "range
of feedback" from aviation industry CEOs. "Some weren't keen on his
sobering assessment of industry challenges ahead, but others
appreciated him telling it like it is," this executive said. "It's
in his nature to be frank."
Boeing's board appointed Mr. Calhoun CEO in December 2019,
ousting Dennis Muilenburg from the top job, in part to repair
relationships with customers and regulators after two 737 MAX
crashes that took 346 lives. But Mr. Calhoun has at times made
Boeing's problems worse. He previously irked senior Federal
Aviation Administration officials and antagonized his own
leadership team by claiming Boeing's problems were worse than he'd
imagined.
Airlines are facing what executives have described as their
greatest challenge in decades. Even with $25 billion in government
aid aimed at paying employees through the summer and another $25
billion in federal loans, carriers say the situation remains dire.
Major U.S. airlines, including American, United, Delta Air Lines
Inc. and Southwest Airlines Co. have sought government assistance.
U.S. passenger air traffic is about 90% lower than a year ago as
public officials ordered people to stay home to slow the spread of
the virus.
An American Airlines spokesman said the carrier and the plane
maker have had a long, successful partnership. "They are friends
who we are rooting for and, likewise, we know they are in our
corner," the spokesman said.
Write to Andrew Tangel at Andrew.Tangel@wsj.com and Alison Sider
at alison.sider@wsj.com
(END) Dow Jones Newswires
May 14, 2020 12:23 ET (16:23 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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