United Airlines CEO says the airline will consider alternatives to Boeing's next airplane
United Airlines CEO says the airline will consider alternatives to Boeing's next airplane
The CEO of United Airlines is frustrated about ongoing manufacturing problems at Boeing, and his airline will consider alternatives to buying a future, larger version of the Boeing 737 Max.
The United Airlines CEO says he is “disappointed” in ongoing manufacturing problems at Boeing that have led to the grounding of dozens of United jetliners, and the airline will consider alternatives to buying a future, larger version of the Boeing 737 Max.
United Airlines CEO Scott Kirby said Tuesday that Boeing needs “real action” to restore its previous reputation for quality.
Kirby’s comments came one day after United disclosed that it expects to lose money in the first three months of this year because of the grounding of its Boeing 737 Max 9 jets.
United has 79 of those planes, which federal regulators grounded more than two weeks ago after a panel blew out of an Alaska Airlines Max 9 in midflight, leaving a gaping hole in the plane. Investigators are probing whether bolts that help hold the panel in place were missing or broke off.
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For medium sized airplanes there's Embraer.
Embraer's largest plane the 195-E2 fits 146 in an all economy configuration. Boeing's smallest plane the 737 max 7 has an all economy configuration capacity of 172. Embraer just doesnt make a plane in the same class as Boeing or airbus.
Believe it or not, this consolidation is almost certainly because of (good) regulation not capitalism.
The costs of building a new air frame are gigantic - the regulatory aspect in all countries is also gigantic. The barriers to entry are gargantuan - and the scale you need to be profitable is extreme.
But those regulations save lives. But they also keep competitors out.
Believe it or not, but companies outside of Boeing and Airbus are capable of designing airplanes.
It's not just "good" regulation holding them back either - in 2017 Boeing accused Bombardier of "dumping" some CSeries planes because they sold them to Delta at below the retail cost (about a 30% discount). The CSeries was/is a good plane, but took an incredibly long time to get through certification so Bombardier had been losing money and was desperate to sell them. Boeing complained about this discount to the US International Trade Commission who imposed a massive fine on Bombardier. Because of the delays, Bombardier couldn't afford to fight the fine so they ended up having to give up a 50% stake in the design to Airbus for only $1. The year after, the fines were appealed and overturned, but the damage was already done. Bombardier has since completely sold their stake in the CSeries (one less competitor), and Airbus gets the renamed A220 series for a massive discount.
As an aside, I can't argue that the FAA doesn't do more good than harm in this space generally, but I'm the last ~5 years it's becoming clear to me that they have a massive blindspot for Boeing in particular.
The Embraer E195-E2, Comac C919, and Irkut MC-21 are three non Boeing/Airbus planes that directly compete with the 737, and are currently being produced.
There is a duopoly in the larger aircraft. But narrow body jets are a pretty competitive market at the moment, despite the huge costs of aircraft development.
The E195 is a bit too small for mainline use, though a good aircraft otherwise. The others however I’m not sure are ready for the prime time.
The Comac has potential, it’s a completely new aircraft developed for the Chinese domestic market, I don’t know if it will be sold in the west though. One issue is that the aircraft market doesn’t lend itself to new players. Planes typically last 30 years give or take, so taking on a new type from an unproven manufacturer is a big risk. It could, however, be successful in the long term.
Irkut is majority owned by the Russian government, and given the war, is likely going to have issues. It has flown, but now they have to move to entirely homegrown parts, which will likely make the aircraft completely shit.
Speaking of, the Tupolev Tu-204. It is still in production, and since the war started it has begun to ramp up again. Unfortunately it still has significant problems. For an aircraft built today, it still uses a three person cockpit crew, and is very underpowered. It also has had nearly no changes since its introduction in 1989, and is way behind pretty much any aircraft of its size.
It’s worth considering how much room there is in the airliner market for more competitors. Since aircraft require a huge amount of R&D, you have to sell a lot of them to break even. So if there’s too many manufacturers vying for a finite market, it gets hard to find any RoI. This has happened a lot historically, it’s like streaming services except you can’t actually get anyone to buy duplicates and very rarely will anyone split their orders.
There are also smaller ones like Embrauer and Bombardier.
Airlines live off of equipment depreciation. They are taxed less on their airframes age. Considering that, US taxpayers make up for that shortfall I would rather that US carriers buy US made airframes built by US workers. So, Boeing would be my pick.
Fire the MBAs. Fire McKinsey. Fire Wall Street. Hire back the engineers.
Wait... You don't actually think the executives are actually going to switch from resource extraction mode to an invest in company strategy, right?
The world has become one big private equity firm. Barbarians in the throne room.
United CEO: It it's a Boeing, nobody's going.
? Over my head
Bring on the COMAC lolol