Analysis-Airlines try to leverage Boeing woes despite lack of alternatives
By Rajesh Kumar Singh
NEW YORK (Reuters) — Airline executives are frustrated with Boeing (NYSE:BA) as its safety crisis has upended their business plans. But in a tight market for large aircraft supplied by two companies, they have little choice but do business with the U.S. planemaker.
Despite some public displays of alarm — United Airlines CEO Scott Kirby (NYSE:KEX) flew to France to talk with Airbus as Boeing's latest crisis erupted — carriers are still negotiating new plane orders, looking to leverage Boeing's delays to secure better terms.
Boeing's delivery schedule faces extended delays following a Jan. 5 mid-flight cabin blowout that exposed problems with safety and quality control in its manufacturing processes. But rival Airbus already has a backlog of orders that makes shifting over a non-starter.
Instead, airlines are adopting a variety of strategies to try to stay in the game with Boeing, using orders of one type of plane as a placeholder to possibly take deliveries of a different model. They also are negotiating harder, looking to use production delays to get discounts from the planemaker on new orders and compensation for financial losses.
«Boeing customers don't have much option but to stick with Boeing whether they like it or not,» said Scott Hamilton, managing director at aviation consulting firm Leeham Company.
Kirby has been among the most vocal in expressing frustrations with Boeing. He met with Airbus after regulators grounded all of United's Boeing 737 MAX 9 fleet and put a big question mark over certification of the larger variant MAX 10, which was due for deliveries this year and was to be the cornerstone of United's fleet.
United has ordered 277 MAX 10 jets with options for another 200, but the
Read more on investing.com
