Boeing’s struggles are rippling throughout the airline industry
Another day, another Boeing headache. The plane manufacturer’s nightmare year — kicked off by a door plug blowout in January — is starting to hurt airlines’ businesses. The FAA’s probe into Boeing’s manufacturing processes is slowing down plane deliveries, resulting in fewer 737 MAX jets for airlines. This is causing them to cut flights and change growth plans.
- Southwest has announced it would cut flight capacity and reduce pilot hiring by 50% to account for lower revenue as the company, which only flies Boeing 737 jets, expects to receive 41% fewer MAX 8 deliveries this year.
- Alaska Airlines is facing uncertainties in its flight plans because of Boeing’s delays, and the company has reported a $150M profit loss due to the grounding of MAX 9 jets after a door blew out in-flight.
Union talks begin: Making matters worse, Boeing is set to begin labor discussions soon. Negotiating a new union contract to avoid potential walkouts or strikes later this year is critical. However, given Boeing’s current quarrels with regulators and customers, it may have limited bargaining power. Therefore, it’s likely to accept the union’s proposed 40%+ pay hike instead of risking more disruptions.
