Fall flop slashes return of Boeing 737 Max | Instant News



As leisure travel bookings improved in May and June, the nascent recovery in demand came to a halt in July amid a resurgence of coronavirus outbreaks across America, Southwest said Thursday in reporting a net loss of $ 915 million in the second quarter. As a result, the company now feels that it is offering too many flights in August and September compared to demand. “We will be adjusting our flight schedule aggressively and frequently in response to this volatile demand environment,” Kelly said in a statement. And that will likely mean flying a few Max jets for now. The pessimistic outlook provides a dose of reality for Boeing’s rally on signs of progress for the Max jet on the ground. The Federal Aviation Administration said this week that it was preparing to issue formal legal guidelines for the repairs to the aircraft, indicating that the agency is finally comfortable with the proposed fixes around 16 months after the second of two fatal crashes prompted regulators around the world to ban the plane from commercial flying. The public has 45 days to comment on the FAA’s action and there are some final additional steps in the grounding process, which likely pushes the plane’s return to October. This will hurt Boeing’s plans to resume deliveries in the third quarter, but such a delay hardly matters at a time when airlines are cutting capacity again. New planes aside, Southwest doesn’t even expect to bring back one of the 34 Max jets it already has in its active fleet until at least December, given the time it takes to retrain pilots. On the bright side for Boeing, American Airlines Group Inc. CFO Derek Kerr said on Thursday the airline plans to take delivery this year of 17 Max jets already built or under construction, pending approval. regulatory. The carrier reportedly warned Boeing that it would cancel orders for a dozen Max jets if funding negotiations failed. In a brief released Thursday, American said it now had funding commitments in place for all scheduled deliveries in 2020 except for three Boeing Max jets, and Kerr said ongoing discussions had been “good.” . But American, like other airlines, can’t take deliveries of the Max until regulators clear it to fly again. The carrier had removed the Max from its schedule until September 9, but it will likely need to make further adjustments given the current timeline for regulatory approval. Delivery of the 17 Max jets could enter the first part of next year, Kerr acknowledged, pushing back a potential source of cash for Boeing. American is also revising its capacity plans after a more aggressive summer push than its peers. Some 40% of the airline’s post-Labor Day traffic is related to business travel, and there is currently only “token” demand on that front, said Vasu Raja, US revenue director, on a call to discuss the second trimester. results. Net bookings are currently trending down from 75% to 80%, a marked difference from the months of May and June which were supported by economic reopenings in the Sun Belt, Raja said. So Americans now expect third-quarter capacity to be 60 percent lower than a year earlier, in line with its July flight schedule. Regardless of the Max’s return, Boeing cannot start rebuilding its cash flow without a significant recovery in the airlines. And that seems to have been put on ice for now. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. Brooke Sutherland is a Bloomberg opinion columnist covering transactions and industrial companies. She previously wrote an M&A column for Bloomberg News.



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