travelBulletin

Weekly Wrap 13 Jan – A bad week for Boeing

Publisher DAMIAN FRANCIS discusses Boeing's latest incident and wraps up the past week in travel.

“If it’s Boeing I ain’t going.”

That colourful play on the classic line has been doing the social rounds this week as the fallout from yet another significant incident with a Boeing commercial jet took its latest turn.

The Federal Aviation Administration said in a statement, “This incident should have never happened, and it cannot happen again,” before asserting that 737 MAX 9 would only be allowed back in the sky when they complied with safety regulations.

Boeing itself has come out on the front foot admitting its failures. CEO David Calhoun spoke to Boeing staff at its Renton, Washington, facility where, according to the Sydney Morning Herald, he fought back tears.

“We’re going to approach this — No.1 — acknowledging our mistake. We’re going to approach it with 100 per cent and complete transparency every step of the way,” Calhoun told employees, before stating that no 737 MAX 9 would enter the skies again without the go ahead of chief safety officer, Mike Delaney.

Delaney’s role, unfortunately, was created in the aftermath of the fatal 737 MAX crashes of Lion Air and Ethiopian Airlines.

Calhoun was brought in after those disasters, when Boeing essentially acknowledged that its response and handling of that situation had not been good enough.

The new CEO himself was scathing of previous Boeing CEO Dennis Muilenburg, AXIOS reporting him saying “I’ll never be able to judge what motivated Dennis, whether it was a stock price that was going to continue to go up and up, or whether it was just beating the other guy to the next rate increase. If anybody ran over the rainbow for the pot of gold on stock, it would have been him.”

Now, though, Calhoun has a disaster of his own, and after strong statements like the above, the industry will be judging him on every action, every movement and every statement.

To make matters worse, the aftermath of the incident uncovered even more issues, such as a plague of loose bolts, which seems like a rather rudimentary issue for such a large manufacturer of jets to have.

Those who will be watching keenly are CEOs of customer airlines who have already gone on the attack.

Emirates CEO Sir Tim Clark told the Financial Times, “They’ve (Boeing) had quality control problems for a long time now, and this is just another manifestation of that. I think they’re getting their act together now, but this doesn’t help”.

And who can forget the 2022 spray from Ryanair CEO Michael O’Leary, one of Boeing’s most important customers.

“At the moment we think Boeing management is running around like headless chickens, not able to sell aircraft, and then even the aircraft they deliver, they’re not able to deliver them on time.

“I can understand why there may be various challenges manufacturing new aircraft, but aircraft that you built and made two years ago that all you had…to do was put petrol in them and f***ing fly them to Dublin, really I don’t understand why you’re taking two to three month delays on that.”

Importantly, that spray came when Calhoun had more than a year under his belt as Boeing’s top dog.

Then there is the awkward situation of the US$2.4 billion loss (and growing) on the Air Force One program and the continual delivery delays. That’s one customer you don’t really want to annoy.

The benefit that Boeing has is that it’s essentially one of the horses in a two horse race. It’s not in the industry’s interest to lose Boeing (not that I would suggest a situation like this would spell the demise of the business, but it certainly doesn’t help, and bigger businesses have fallen for less).

It would be a disaster in itself to have one business own the commercial skies. This is not a statement against Airbus but against monopolies.

But after a few years of calm, the 737 MAX 9 disaster has opened up old wounds which could be hard for airlines and their passengers to ignore, or at least put to one side.

Wounds like the internal communications released during the initial grounding of the 737 MAX showing an employee describing the jet as being “designed by clowns, who in turn are supervised by monkeys” and two other staff suggesting they would not allow their family members to fly on the plane.

Investors have been challenged by Boeing as well. Over the last 52 weeks it looked like the business was on a steady increase, hitting a high of US$267.54 just last month.

As I write, it sits at US$222.66. That’s still an 8% increase on where it was a year ago, but a 26% decrease on where it was a month ago.

There will be a lot more to come in the Boeing 737 MAX 9 saga. And if what Calhoun says Boeing will do (be communicative and transparent) turns out to be true, then I believe they will get through this relatively quickly.

Side note, as Travel Daily Editor Adam Bishop pointed out to me, there will be one party breathing a small sigh of relief. Qantas. It recently, of course, made some big bets on Airbus aircraft. An infrequent small win for the national carrier.

Would you fly a Boeing 737 MAX 9, or indeed any Boeing plane?

In other news… 

There has been a lot going on in the travel industry this week.

Adam picked out Wednesday’s lead story of John Simeone, Qantas SVP of Asia, taking on the role of Jetstar Asia CEO, as one of the biggest stories.

It’s a notable shake up, with current Jetstar Asia boss Barathan Pasupathi having filled the role for 12 years.

Meanwhile, Cruise Weekly Associate Editor Myles Stedman, chose Friday’s Ponant Kimberley news and the fact it will be continuing to commit two ships to Australia as the biggest story on the cruise front. It’s certainly a significant boon for the local economy and for Australian tourism in general.

And in positive news for Business Publishing Group, well-known travel journalist Matt Lennon rejoins the business as Deputy Editor. It’s great to have someone of his calibre in the team as we look to continue to build the publications.

He can be reached on [email protected] from Tuesday.

Thanks for reading and enjoy your Saturday.

Damian

Publisher – Business Publishing Group
[email protected]

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