Boeing CEO Dave Calhoun said Monday the U.S. aerospace company and airplane manufacturer does not expect 2019's level of flying to return for at least two to three years.
In a Monday morning statement to shareholders about air travel's future beyond the coronavirus pandemic, Calhoun also predicted it will likely take several more years after 2021-2022 before long-term growth trends recover to 2019 rates.
Boeing's sober estimate of the future of air travel comes just one day after its French counterpart, Airbus, sent a letter to its 135,000 employees warning them of potentially deep job cuts. Airbus said it is "bleeding cash at an unprecedented speed."
Boeing's stock bounced up Monday morning, despite its backing out of a long-planned, $4.2 billion joint venture with Brazil's Embraer corporation. The two-year-old deal was canceled Saturday.
Embraer blamed Boeing's 737 Max problems as well as the pandemic's effects on the airline industry worldwide. Embraer also said Boeing scrapped the deal on technicalities, in part because of its financial problems and the need to ask Congress for bailout money.
"You can't easily go to Congress and ask for support and spend the money on an acquisition," a senior industry source told Reuters Monday.
Boeing had been set to purchase about an 80 percent stake in the Brazilian jet maker. The pullback on the deal comes as airline industry experts predict that worldwide sales may likely drop as much as $300 billion this year. About 64 percent of the world's planes are parked in hangars and on tarmacs, as flight demand has been decimated by coronavirus lockdown orders.
On Monday, Calhoun stressed that air travel records set last year won't return for two to three years at a minimum. However, he said that the multinational company expects to deliver its first 777X jet in 2021 and that the aerospace industry will recover slowly at first, then later with "vigor."
Boeing is set to release its earnings on Wednesday, and analysts have predicted the company may trim its 160,000-strong workforce by up to 10 percent in the coming weeks. Airbus is expected to reduce its workforce by around 30 percent in the same period.
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
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Benjamin Fearnow is a reporter based out of Newsweek's New York City offices. He was previously at CBS and Mediaite ... Read more
