Airline industry takes offense with Boeing CEO’s doom and gloom comments

Written by: Jayson Derrick
May 15, 2020
  • Boeing CEO Dave Calhoun said in an interview this week at least one major airliner will likely go bankrupt.
  • Airline executives were not pleased with his comments.
  • Boeing believes it will take up to three years for air travel to return to 2019 levels.

It goes without saying the airline and tourism industry is among the hardest hit from the global COVID-19 pandemic. But talking about it publicly and speculating the demise of at least one major airliner is now a faux-pas, The Wall Street Journal reported.

‘Most likely’ a major carrier will fold

Boeing Co (NYSE: BA) CEO David Calhoun said in late April he believes it could take up to three years for air travel to fully recover to pre-pandemic levels. Boeing has been proactive in its attempt to preserve cash through the pandemic, most notably through a 10% workforce reduction.

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But in a more recent NBC interview this week, Calhoun who was appointed Boeing CEO in early 2020, expanded on his outlook and said it is “likely” at least one major U.S. airline carrier will go out of business. He didn’t provide any specifics or speculate on potential casualties.

The CEO said expectations for a swift return to 2019 travel levels anytime soon is unrealistic. By September, global traffic will “won’t even be back to 25% and “maybe” approach 50% by the end of 2020.

“So there will definitely be adjustments that will have to be made on the part of the airlines,” he said.

Airliners aren’t happy

A Boeing spokesperson attempted some damage control and communicated to media outlets Calhoun remains supportive of the industry and remains optimistic the industry will recover. But this hasn’t stopped airlines from voicing their displeasure privately.

Calhoun’s comments drew irk from United Airlines Holdings Inc. (NASDAQ: UAL) and the sentiment conveyed to Boeing. American Airlines Group Inc CEO (NASDAQ: AAL) CEO Doug Parker personally called Calhoun to express his disappointment and surprise.

Nevertheless, an American Airlines spokesman told WSJ the bond between the carrier and airplane maker remains strong. The two companies are considered “friends” and it is well understood Boeing is “in our corner.”

Boeing acknowledges feedback

An unnamed Boeing executive was quoted by WSJ as saying Calhoun listened to a “range of feedback” across aviation industry CEOs. Some executives “weren’t keen” on the doom and gloom outlook but other executives “appreciated him telling it like it is.”

“It’s in his nature to be frank,” the executive also said.

Separately, a Boeing spokesman told CNBC the company enjoys a “long-standing personal relationship” with its airline partners and they are all “high valued customers.” The comment also read that the industry as a whole will “get through” the pandemic only to emerger “stronger in the end.”