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Yesterday, Boeing CEO David Calhoun made a comment that sent shockwaves through the airline industry.
With airlines grasping for any form of revenue, including playing games with passenger refunds, the statement could prove catastrophic as share prices fell sharply overnight.
THE INTERVIEW
In an exclusive interview with ‘Today” anchor Savannah Guthrie, Calhoun was asked ”Do you think there might be a major US carrier that just has to go out of business?”
”Yes, most likely,” he replied.
”Something will happen when September comes around,” continued Calhoun in reference to when bailout money and payroll protection for employees under the CARES Act is expected to run out.
Calhoun did not expand on his comments and name a specific airline but speculation has run wild since the comments were made.
The 7 minute interview can been seen below:
WHO IS THE WEAKEST AIRLINE?
I want to be clear in saying that I have no insider information but there is one airline that many (including myself) see as the weakest….United Airlines.
I have not written about all the drama that has been taking place at UA but the airline has:
- cut employee hours despite receiving bailout funds from the CARES act (we’ll see if the anyone holds them responsible for that)
- raised partner award ticket costs
- made it harder to earn elite status on partner airlines and;
- has been a leader when it comes to denying passengers refunds for cancelled flights (despite it being against the law).
And all of this has taken place within the last 60 days. Ouch!
I trust you’ve also seen the photos that went viral this week of the transcontinental United flight that was completely full and uncovered the United sham of blocking middle seats.
In short, the airline has been the most inefficient, has the most problems, and the least amount of reserves (relative to its size).
In late 2019, it was also announced that Scott Kirby would be officially taking over as CEO of United Airlines on 20 May 2020 (yes, next week), replacing the current CEO Oscar Muñoz. This plan has continued despite the airline industry suffering an unparalleled collapse.
BUT WHAT DOES “GOING OUT OF BUSINESS” MEAN?
If United failed, the next step would be filing Chapter 11 bankruptcy which doesn’t mean ceasing operations and/or vanishing but, rather, means abandoning contracts, freezing obligations and restructuring debts.
FINAL STAMP
While the comment may have upset the stock market, it’s going to be difficult for airlines to go lower than they are at the current moment.
Since taking over the CEO position in January 2020, Calhoun has been considerably outspoken on aspects of the airline industry including a scathing report about the previous Boeing CEO and the failure of the 737MAX.
It’s worth noting that, both, Boeing and Airbus have felt the pressure due to coronavirus. Many airlines around the world have cancelled hundreds of new plane delivery orders for the immediate future which will definitely affect the manufacturers bottom line.
What do you think of the CEOs comments? Do you have any other predictions?
1TattedPassport 
I don’t have any predictions but I have dealt first hand with UA playing games with refunds. I was scheduled for a flight from Miami to Lisbon with a connection in Newark next week. Obviously that’s not happening. But UA tried tried to be so slick. They dropped the Newark/Lisbon flight both ways and just left me with a round trip to Newark for $600. I felt this was their way of trying to force a credit as if they didn’t truly cancel the trip. *Insert extreme eye roll*. I booked through Chase so after about a 50 min phone conversation I’m expecting a full refund. But UA certainly tried it. I didn’t want a UA credit Bc I never even fly them. They just so happened to be $1,000 cheaper than everyone else on this flight at the time I booked.
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Stay tuned. I have a similar story coming to the blog soon.
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As with everything right now, this is crazy. I remember reading some articles late last year that talked about Boeing’s struggles with the Max and how that could be a real drag on the US economy. Seems like small potatoes compared to what’s happening now. Living in Denver, I’d hate to see United go under just because of the amount of people they employ but it doesn’t sound far fetched at this point.
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Yeah, Boeing is feeling the heat. I’ll be highlighting a few more details soon concerning United. Stay tuned.
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