3/13/2024

Boeing reports more delivery delays

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Key points:

  • US aviation companies are in crisis due to Boeing delivery delays.
  • Shares of United Airlines fell 1.7% and Southwest Airlines fell 15%.
  • Boeing is under regulatory scrutiny following the 737 MAX 9 incident.

US carriers have faced obstacles to their capacity expansion plans. The reason for this was delays in the delivery of aircraft from Boeing, which negatively affects the entire aviation industry. Boeing, in turn, is experiencing a crisis related to safety issues.

Due to Boeing’s problems, the aviation industry was forced to lower its aircraft delivery forecasts for the current year. This, in turn, has made it difficult to meet record demand for air travel.

Boeing has been under regulatory scrutiny since the Jan. 5 incident involving Alaska Airlines. The mid-air explosion of an aircraft panel triggered reviews of the safety standards and quality of the company’s manufacturing process.

On the back of these developments, shares of United Airlines fell 1.7% and Southwest Airlines fell 15% after the company adjusted Boeing’s delivery forecast for this year. Boeing shares also fell 4.3%, down 29% year-to-date.

Incident investigation

The National Safety Council has announced a public hearing on August 6-7 to investigate the Alaska Airlines incident.

NTSB Chairman Jennifer Homendy previously said the hearing will include testimony from Boeing employees, fuselage maker Spirit AeroSystems, Alaska Airlines and other interested parties.

Alaska Airlines confirmed that the Boeing 737 MAX 9 involved in the incident was scheduled for maintenance on January 5. On three previous flights, warning lights came on, indicating high pressure in the system, which became the basis for the cancellation of planned long-haul flights.

Delivery delays negatively impact the aviation industry

Following the Alaska Airlines incident, the Federal Aviation Administration limited Boeing’s plans to expand 737 production, and certification of the MAX 7 and 10 was further delayed due to design changes. United said earlier this year that it would be putting together a fleet plan excluding the MAX 10, its largest model.

Rival Southwest, the largest customer of the smaller MAX 7, said Tuesday it expects 42% fewer MAX deliveries this year from Boeing than previously expected, a move that will likely lead to cuts to its 2024 capacity.

This is the second time Southwest has cut its delivery forecast this year. A large backlog of orders has made it difficult for airlines to transfer orders to Airbus, the world’s only major commercial aircraft manufacturer.

Alaska Airlines also said its 2024 capacity plans are still in flux due to the Boeing crisis.

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