The airline industry is bracing for another difficult year, with Boeing’s delivery delays and supply chain problems expected to continue into 2025, aviation consultants say.
Sunday marks one year since a door panel on a Boeing 737 Max 9 operated by Alaska Airlines was blown off, an incident that reignited questions about Boeing’s quality and safety standards.
Since then, the company has introduced a series of changes, including mandatory employee training and increased testing, according to a company statement released Friday. Boeing also said it has improved its “Speak Up” system to encourage employees to report workplace concerns.
But that’s not enough, Mike Boyd, president and co-founder of aviation consulting firm Boyd Group International, told Squawk Box Asia on Monday.
“The entire board should have been fired,” he said. “The new CEOs and the new people there are saying they’re doing something, but this is a very deep-seated problem.”
Mr. Boyd said that without aircraft deliveries from Boeing, airlines such as Southwest Airlines and Ryanair were spending money they “didn’t want to spend on overhauling aircraft that were going to be retired.”
“Fasten your seatbelts. It’s going to be a very eventful year ahead,” he said.
“Boeing is going to lose a lot of territory to its friend Airbus, there’s no question about that,” he said, adding that Boeing could become a “second fiddle” to Airbus in the future. He added that there is.
U.S. Transportation Secretary Pete Buttigieg said Monday that Boeing has “more” work to do, according to Reuters.
“Boeing’s culture transformation is ongoing,” he said. “The only way to fully evaluate that is to see if they can consistently improve outcomes.”
John Grant, chief analyst at aviation intelligence firm OAG, said concrete improvements at Boeing likely won’t materialize until the end of 2025 at the earliest.
“It may be premature to say things are getting better as regulators look around the company and new processes are established,” he said. “The good news is that from an operational standpoint, things are not getting any worse.”
However, “finance and labor relations are separate issues,” he said.
Boeing hasn’t made an annual profit since 2018. The company suffered another production slowdown after machinists began a seven-week strike that ended in November with workers securing a 38% pay increase.
A Boeing spokesperson told CNBC that the company is focused on stabilizing its operations and implementing its “safety and quality plan.” The spokesperson highlighted more than a dozen actions Boeing will take in 2024, from changing board leadership and acquiring Spirit AeroSystems to expanding its South Carolina site to increase production of the 787. did.
Beyond Boeing
Brendan Sobey, an independent analyst with Sobee Aviation, said the airline industry’s problems go beyond Boeing.
From spare parts shortages to engine maintenance, “this is an issue that touches the entire ecosystem of companies surrounding the industry,” he said.
“It’s been a very difficult period, and there are no signs that this situation is going to get better any time soon,” he said. “These are problems that will take years to solve, not one year.”
Sobie said airlines were particularly frustrated by reliability and maintenance problems at engine manufacturers Pratt & Whitney and Rolls-Royce.
Regarding Pratt & Whitney’s problems, he offered a positive sign for the industry, saying “the worst is probably behind us.”
What this means for travelers
Boyd said engine problems have forced many airlines, including Hawaiian Airlines and Spirit Airlines, to ground parts of their fleets.
“The engine doesn’t exist,” he said. “The EU’s Wizz Air has just grounded 40 aircraft for the year.”
As a result, it will be difficult to find deals on airline tickets in 2025, he said. “If you’re looking for really cheap fares, I don’t think even Mr. O’Leary at Ryanair can guarantee that,” he said, referring to Ryanair CEO Michael O’Leary.
Scott Keyes, founder of air travel website Going, said airfares are likely to rise in 2025. In a Dec. 30 post, Keyes outlined how airfares to, from, and within the U.S. have changed since the coronavirus pandemic.
2020: -17% 2021: -4% 2022: +36% 2023: -12% 2024: +5%
However, Sobie said capacity issues caused by grounded aircraft could be offset by increased air travel, especially in the Asia-Pacific region where the industry is still recovering from the coronavirus pandemic. said.
He said airfares are normalizing above pre-COVID-19 rates and below peak levels in 2022, but cost and supply chain issues have not. While there may be some improvement this year, “overall these challenges remain,” he said.
Correction: This article has been updated to correct an error regarding companies facing Boeing delivery delays. Previous versions provided inaccurate information and misrepresented companies.
