Boeing Woes Create Plane Shortage, Hitting Airlines and Related Businesses

Any business owner who reacts to news of Boeing’s ongoing industrial troubles as too removed from their own activities to worry about may want to reconsider. Reduced production and deliveries of the manufacturer’s troubled 737 MAX craft mean its airline customers are cutting cut flight schedules and asking pilots to take unpaid leave. The squeeze on air traffic will also likely push airfares up while fewer travelers will crimp the incomes of countless companies that rely on travel and tourism.

Though the drumbeat of bad news out of Boeing seemed to have quieted since the March 25 announcement that CEO Dave Calhoun and other top officials will be leaving, the pounding has begun again–this time from the customer side. On Monday, unions at United Airlines revealed the company had asked pilots to volunteer for unpaid leave in May to offset lower deliveries of 737 MAX planes than planned.

The airline’s decision to furlough staff hearkens back to the darkest days of the pandemic–and those reductions could extend beyond May. Reports quote United as saying the request was issued because “our forecasted block hours for 2024 have been reduced,” leading the carrier “to reduce excess staffing.”

So why might that not begin and end in May? Because there still won’t be enough new airplanes coming from Boeing, thanks to the Federal Aviation Administration (FAA) decision to cap production of the 737 MAX airliner at 2023 levels. That came after one of the planes flown by Alaska Airlines lost a side door panel as it ascended from Portland International Airport on January 5. The Alaska Airlines flight turned around and landed safely. 

Subsequent discoveries of systemic safety lapses deemed responsible led regulators to impose the production cap until they’re convinced the flaws have been resolved. That resolution seems increasingly remote with each new negative development surrounding the company and its suppliers.

United’s pilot sidelining qualifies as another event on a lengthening list of problems, which now include several troubling mechanical incidents involving the airline’s Boeing planes. The carrier, meanwhile, is only one of many airlines scrambling to deal with reduced 737 MAX deliveries.

True, with 81 percent of its main fleet made up of Boeing aircraft, United is the manufacturer’s biggest customer. But about half of American and Delta Airlines’ planes are Boeings, and they’ve been similarly warned about delayed 737 MAX deliveries–in some cases until 2027. Meanwhile, Southwest is only expected to receive 46 of the 79 737 MAX planes scheduled for delivery this year, causing it to pare back flight plans in turn.

Multiply those aircraft shortfalls–and resulting downward schedule reductions–across every airline in the U.S. and the globe, and pair them against forecasts of a record-setting 4.7 billion people expected travel by air this year. The clash of those two factors is behind anticipated hikes in airfare on the way, as well as cargo rates on goods deliveries that businesses and customers have come to rely on.

“Capacity is going to be tight and that leads to higher ticket prices,” AeroDynamic Advisory managing director Richard Aboulafia told CNN last month, as the first negative effects of reduced Boeing production on airlines and elsewhere emerged. “(And) what you’ll probably see is the reduction in high fares we were hoping to see doesn’t happen.”

The prospect of the FAA’s 737 MAX restriction being lifted anytime soon took an additional blow Tuesday, with a Wall Street Journal investigation detailing the recurring safety dysfunctions that led to the January 5 side panel blowout. The “missed procedures, confusion, and delays” it documented were so widespread, ingrained, and disturbing it seems unlikely that even top management changes–including the CEO–could replace what may be a complete, costly, and time consuming production overhaul needed.

That judgment is up to the FAA, and it doesn’t appear ready to permit Boeing to increase 737 MAX production again to levels able to alleviate airline, travel industry, passengers, or businesses that rely on them anytime soon.