Boeing’s ongoing 737 MAX grounding has almost become old news, as the world struggles to come to terms with the full impact of the COVID pandemic. CEO of Emirates, Tim Clark, told media today that he sees Boeing as a ‘stricken company,’ casting doubt not just on the 737 MAX program, but also the 777X.
A double whammy of difficulty
US planemaker Boeing has faced some of its toughest times to date. With the first glimmer of light at the end of the tunnel of the 737 MAX grounding came a global pandemic that has knocked the wind out of the entire industry.
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In a telephone interview with Seattle Times, Emirates CEO Tom Clark branded Boeing a ‘very stricken company’ saying that the confluence of the dual crisis of the MAX and COVID had thrown it into a downward spiral. He said,
“The MAX was probably the single biggest problem in Boeing’s history, until the pandemic came along. Add the two together and you have a very stricken company.”
It’s a damning assessment by the airline executive, but probably an accurate one.
The new problem with the MAX
The ongoing grounding of the MAX has presented additional issues for the manufacturer. While undergoing extensive scrutiny, testing and assessment, time has moved on. Unfortunately for Boeing, this means many airlines have now passed the ‘one-year delivery delay’ date, after which they have the right to cancel orders with no penalty.
And the cancellations have been trickling in since the start of the year. Last month alone, 60 orders for the 737 MAX were canceled. Although not as disastrous as the 150 in March or the 108 in April, it’s still significant, and representative of some $7 bn plus of business for the manufacturer.
The issue is not that airlines no longer want the MAX in itself. After all, it’s a gamechangingly efficient, long-range narrowbody which is sure to be in high demand over the coming years. However, the serendipitous impact of a global pandemic and the projected long-term effects of this on aviation means many airlines are looking to reduce CapEx any way they can.
For Boeing, this piles on more pressure at a time when the planemaker is facing a very uncertain future. Future aircraft demand is likely to be slugging for some time, forcing it to cut production rates. And it might not only be Boeing’s narrowbody range that suffers.
What’s the outlook for the 777X?
Unrelated to the issues with the MAX, Boeing’s flagship 777X has faced problems of its own. Difficulties with the GE9X engines meant entry into service was pushed back to 2021. Emirates is expected to be the launch customer of the type, but according to Clark, that could change.
Emirates is reportedly in negotiations with Boeing to push delivery back to 2022. There is also some talk of switching out some of the 126 777X on order for smaller 787 Dreamliners instead. In the Seattle Times interview, Clark said,
“One doesn’t really know when it will be delivered. It may suit both parties to push it back. Much will depend on that negotiation.”
With the issues around oversight of the 737 MAX still ringing in the ears of the world’s regulators, the 777X is likely to be subjected to yet more in-depth prodding before being allowed into service. However, this is unlikely to delay the product’s entry to the market enough for Emirates.
Other 777X customers are also in crisis, including Qatar, who previously said it would not take any deliveries next year. As such, Boeing could find the launch of its biggest aircraft goes down like a bit of a damp squib.
