It’s not surprising to hear that the airline industry as a whole won’t be recovering anytime soon. With global airfare cut drastically since before this coronavirus pandemic broke out, major airlines have seen their shares plunge as their business grinds to a virtual halt. In turn, many of these companies have asked the Trump administration for bailouts and other assistance to help prop up the industry. In light of all this, Boeing’s (NYSE: BA) CEO has gone on to warn that the airline industry likely won’t return to normal until sometime in 2022 or 2023.
David Calhoun, Boeing’s chief executive, went on to warn shareholders during a corporate meeting that the entire industry as a whole is in an arduous position that probably won’t fully recover for many years. Even after everything settles down with this pandemic, companies in the airline industry will still have to deal with a much different, as well as likely smaller, overall market as well.
“The health crisis is unlike anything we have ever experienced. It will be years before this returns to pre-pandemic levels. We are in an unpredictable and fast-changing environment, and it is difficult to estimate when the situation will stabilize,” said Boeing’s CEO at the company’s annual meeting. “But when it does, the commercial market will be smaller and our customers’ needs will be different.”
Boeing has been one of the hardest-hit companies in the industry, especially when one takes into consideration its earlier troubles with its MAX-737 jetliners. The company ended up suspending its dividend earlier this year, and likely won’t be reinstating its dividend for many years. Boeing’s CEO also went on to say that he would be giving up all pay for the rest of the year as well.
Another major planemaker, Airbus, has also warned that drastic changes need to be taken lest the company potentially go out of business. Airbus’ CEO, Mr. Faury, warned that the survival of the company itself is in question if it doesn’t begin taking major job cuts and cost reductions immediately. The planemaker already confirmed on Monday that it would be furloughing 3,200 employees effective immediately for at least three weeks, if not much more.
Whether or not these major plane makers will end up receiving government support is uncertain. What does seem clear is that the airline industry has never been in a worse situation.
Boeing Company Profile
Boeing is the world’s largest aerospace and defense firm. With headquarters in Chicago, the firm operates in four segments, commercial airplanes, defense, space & security, global services, and Boeing capital. Boeing’s commercial airplanes segment produces about 60% of sales and two-thirds of operating profit, and it competes with Airbus in the production of aircraft ranging from 130 seats upwards. Boeing’s defense, space & security segment competes with Lockheed, Northrop, and several other firms to create military aircraft and weaponry. The defense segment produces about 25% of sales and 13% of operating profit, respectively. Boeing’s global services segment provides aftermarket servicing to commercial and military aircraft and produces about 15% of sales and 21% of operating profit. – Warrior Trading News
