‘The straw that broke the camel’s back’: United CEO’s frustration with Boeing’s problems
Originally Published: 23 JAN 24 07:11 ET Updated: 23 JAN 24 10:49 ET By Chris Isidore, CNN
New York (CNN) — United Airlines, one of the biggest buyers of Boeing jets, is losing patience with the troubled aircraft maker.
“I’m disappointed that… this keeps happening at Boeing. This isn’t new,” said Scott Kirby, CEO of United, in an interview Tuesday on CNBC. “We need Boeing to succeed. But they’ve been having these consistent manufacturing challenges. They need to take action here.”
Kirby made his comments after the airline warned investors that it will report a larger-than-expected loss in the first three months of this year because of the grounding of all 737 Max 9 jets after a door plug blew off on an Alaska Air flight on January 5, leaving a massive hole in the side of the plane.
The plane landed without any serious injuries, but the Federal Aviation Administration ordered the grounding and additional inspections of the more than 200 jets of that model worldwide.
United Airlines said it now expects its fleet of Boeing Max 9 jets to remain grounded through the end of this month, and that the company will report a first quarter loss in the range of $116 million to $262 million. That’s more than the $138 million loss already forecast by analysts surveyed by Refinitiv.
United has 79 of the Max 9s, more than any other airline, and had originally scheduled nearly 8,000 flights with the plane for this month before the incident, according to Cirium, an aviation analytics firm.
Beyond the current 737 Max 9 problem is what this means for Boeing’s orders for the 737 Max 10, a newer, larger version and more expensive version of the 737 Max that has yet to be certified by the FAA. It will be at least five years in a best case scenario before Boeing can delivery those Max 10 jets to United, Kirby said, and the airline is now no longer counting on getting that plane in the future.
“I think the Max 9 grounding is probably the straw that broke the camel’s back for us,” said Kirby. “We’re going to build a plan that doesn’t have the Max 10 in it.”
“We’re still going to be the fastest growing airline,” he said. “But we’re not going to be as fast growing as we planned.”
Boeing has had a series of quality issues that have dogged the aircraft maker for the last five years, ever since two fatal crashes of the 737 Max 8 in late 2018 and early 2019 led to a 20-month grounding of the jet.
United believes it is getting close to the completion of the inspections it needs to get approval to fly the 737 Max 9 once again, Kirby said.
“I have a lot of confidence in the safety of these airplanes, particularly since we know what happened with this Max 9,” he said. “I think we’re near the end game of getting that [model] back flying.”
United did say it expects full year earnings of between $9 to $11 a share, a range which would include the current estimates of full-year earnings of $9.45 a share according to analysts, as well as 2023 earnings of $10.05 a share that it reported Monday.
And it reported fourth-quarter earnings of $2.00 a share, topping the $1.69 a share forecast by analysts.
The earnings beat and the full-year guidance helped to lift shares of United more than 5% in trading Tuesday.
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