• Sunday, July 14, 2024
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How Boeing production delays hurt airlines

How Boeing production delays hurt airlines

Boeing’s recent series of scandals related to its 737 MAX aircraft have had a rippling effect on the airline industry, which may in turn affect future goals set in motion for the sector’s growth.

Boeing is dealing with a string of scandals related to cutting corners in production. According to Simple Flying reports, the Federal Aviation Administration (FAA) directive, which restricts Boeing from boosting 737 MAX production until quality issues are resolved, has led to a 36 percent drop in Boeing’s quarterly aircraft deliveries.

Given that the airliner industry is primarily dominated by a duopoly of Boeing and Airbus, any disruptions in these companies have significant repercussions throughout the industry.

Reports show that Boeing’s first-quarter results indicate a financial loss attributed to lower 737 deliveries and groundings of the 737-9 model. The company’s backlog has grown to a substantial $529bn, encompassing over 5,600 commercial airplanes. Despite these challenges, Boeing has pledged to undertake comprehensive actions to enhance quality and safety in its commercial operations.

The reduction in Boeing’s production has directly impacted its customers, leading to deferrals in aircraft deliveries. According to Simple flying, “United Airlines is now choosing to reduce risk by deferring some Boeing 737 MAX 9 deliveries due to a safety audit by the FAA.”

Similarly, Southwest Airlines now anticipates receiving only 20 Boeing 737 MAX aircraft in 2024 compared to the previously expected 46, attributing this adjustment to Boeing’s crisis. Lufthansa has indicated that its Boeing 777-9 deliveries may not occur until 2026.

The interconnected nature of the aviation industry means that disruptions at one level can have far-reaching consequences. With airlines unable to acquire the aircraft they require, scaling up capacity becomes challenging. This restrained capacity could ultimately translate into higher airfares for passengers, impacting the industry’s growth trajectory.

While Boeing grapples with its production challenges, its competitor Airbus has been capitalising on the situation. Airbus delivered twice as many commercial aircraft as Boeing in March 2024, and the company’s order books continue to expand. This shift in market dynamics underscores the competitive landscape within the industry.

Despite these challenges, Boeing remains a major player in the aviation sector, with its impact extending beyond civilian markets due to its substantial presence in defence contracting. However, the long-term implications of Boeing’s production delays and quality issues are likely to reverberate across the industry for years to come.