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LeadershipAviation

Your summer travel plans just got thrown up in the air as airlines scramble for alternatives to anything but Boeing 737s

By
Anthony Palazzo
Anthony Palazzo
,
Julie Johnsson
Julie Johnsson
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Ryan Beene
Ryan Beene
, and
Bloomberg
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By
Anthony Palazzo
Anthony Palazzo
,
Julie Johnsson
Julie Johnsson
,
Ryan Beene
Ryan Beene
, and
Bloomberg
Bloomberg
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March 18, 2024, 2:18 PM ET
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Boeing Co.’s disastrous start to 2024 is spilling over to airlines and their passengers as production delays exacerbate a shortage of single-aisle jets.

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United Airlines Holdings Inc., Southwest Airlines Co. and Ryanair Holdings Plc are among the companies scrambling to respond to reduced deliveries from Boeing as the planemaker focuses on fixing quality lapses exposed by the Jan. 5 accident on an Alaska Airlines flight.

With the busy summer travel season in view, carriers say they’re trimming schedules and looking for alternatives to 737s they’ve already ordered, while also contending with issues afflicting narrowbodies from Airbus SE. Even Boeing seems uncertain when the planes will be ready as an army of US inspectors sift through its factories, meaning the company can’t make any firm predictions when things might return to normal.

“All they’re saying is as you’d expect: ‘We are working as hard as we can. We are sorry for your disruption. We’re doing the best we can,’” said John Plueger, chief executive officer of aircraft leasing company Air Lease Corp. “‘As soon as we have certainty, we will advise you.’ They are saying that.”

Airbus, Boeing’s main competitor, is largely sold out through the end of this decade, so there isn’t an obvious place for airlines to turn. Like Boeing, the European planemaker has been struggling to raise production back to pre-pandemic rates. A separate engine-wear issue has grounded hundreds of Airbus planes, further denting aircraft availability at a time when demand from airlines is particularly hot.

Boeing said in a comment that the company is “squarely focused on implementing changes to strengthen quality across our production system and taking the necessary time to deliver high quality airplanes that meet all regulatory requirements. We continue to stay in close contact with our valued customers about these issues and our actions to address them.”

“This is not just a this-year problem. This has been a multiyear issue,” Steven Townend, who heads aircraft lessor BOC Aviation Ltd., said in a Bloomberg Television interview on March 15. “It is going to take several years to really catch back up again.”

For passengers, this will mean fewer flight options and potentially higher prices on at least some popular routes. The shortages chiefly affect single-aisle workhorses like the Boeing 737 and Airbus A320-family jets that fly short to midrange distances and make up the bulk of the global fleet. As a result, domestic and regional flights are seeing more of an impact than longer-distance journeys.

Airlines haven’t added seats between New York and Los Angeles quickly enough to match demand, according to Amex Global Business Travel. The agency projects business-class fares will rise as much as 8.5% on the busy coast-to-coast route during the peak summer season.

Between Seattle and San Francisco, prices in both business and economy are forecast to surge as much as 18% during the first half of the year, according to Amex GBT, while fares between Chicago and Las Vegas may rise by 9.6%.

The broader outlook for ticket prices is less definitive. US fares skyrocketed in 2022 and early 2023 when travelers stormed back to the skies, but then fell back through most of last year as domestic demand weakened.

The latest US government data shows fares rose 3.6% between January and February, the biggest monthly increase since May 2022.

“You’ll see less flights and more full aircraft” during summer, said Air Lease’s Plueger. “It will probably mean higher fares.”

There is some good news for the flying public. Hopper, which tracks pricing trends, doesn’t expect summer fares to rise significantly above where they were in 2019 — the last normal travel year before the pandemic.

Pandemic-related production delays at Airbus and Boeing deprived airlines of as many as 4,000 new planes over the past three to four years, estimates Townend, of BOC Aviation.

Boeing’s recent problems are further widening the gap between supply and demand. United now expects to receive less than a third of the 157 Max planes it contracted for this year, based on its regulatory filings. The airline is near a deal to replace some of those with at least three dozen Airbus A321 jets secured from aircraft lessors, Bloomberg has reported.

Boeing Chief Financial Officer Brian West is expected to share an update in a March 20 presentation on the planemaker’s work to boost its quality controls and the effect on factory output.

Southwest, which operates an all-Boeing fleet, last week rolled back its growth plans for this year and halted most hiring in response to the slowdown in deliveries. The airline said it doesn’t expect to get any of the yet-to-be certified 737 Max 7 aircraft this year, and that deliveries of other Boeing models will come in at just 46 units, down from the 79 previously anticipated.

“As you would expect, this is all very fluid,” CEO Bob Jordan said. 

In Europe, Ryanair has said it will be short 17 Boeing jets that it had anticipated before the end of June. That will result in a slimmer summer schedule and 5 million fewer passengers this year. The carrier plans to raise prices by up to 10% and cut back on services from Dublin, Milan and Warsaw.

Alaska Air Group Inc. also said its schedules are in flux with Boeing deliveries uncertain.

Boeing isn’t the only reason flights are crowded. Airlines including Deutsche Lufthansa AG and Wizz Air Holdings Plc have been forced to trim growth plans due to repairs required on Pratt & Whitney geared turbofan engines that sit under many A320 wings.

At Boeing, the outlook for the rest of 2024 is tough to predict. Regulators are limiting 737 production to 38 per month for the time being, but Boeing delivered a total of just 42 of its 737s in the first two months of 2024. Company officials have said they expect to get closer to the target in the second half of the year.

This month, Boeing did manage to pull off a major order with American Airlines Group Inc. for the largest 737 variant, the Max 10. The model is important to Boeing because it’s been selling well and is the planemaker’s only defense against Airbus’s lineup of larger A321s that have gained popularity as they can handle more passengers on longer routes

American Chief Financial Officer Devon May said at the time that the order was a “vote of confidence” in Boeing.

At the same time, he noted that the carrier also purchased options with Airbus  — in case of further delays with the Max 10.

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