Airline executives are frustrated with Boeing 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. plane maker.
Despite some public displays of alarm — United Airlines CEO Scott Kirby 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 plane maker 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.
WATCH | Is Boeing any safer 5 years after 737 MAX crashes?:
5 years after 737 Max crashes, is Boeing any safer?
1 day ago
Duration 13:46
Five years after a pair of deadly crashes involving Boeing 737 Max-8s and the mass grounding of the jets, the door blew off a Boeing jet mid-flight. CBC’s Susan Ormiston breaks down the aviation giant’s struggle to salvage its reputation after the Max-8 crashes and ongoing questions about the safety of some of its jets.
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 tumult at Boeing moved the company to look at Airbus’ A321neo jets as an alternative. Those talks raised the spectre of Boeing losing one of its most loyal customers.
However, Airbus’s order book is full through 2030. On Tuesday, Kirby said United wants A321 jets but is not willing to overpay for them.
Now, there is growing realization inside United that the carrier won’t be able to find one solution to its MAX 10 problem, a person familiar with the matter said.
Instead, United is looking to use the delayed Boeing order to extract better deals for other planes, the person said. United has asked Boeing to start building MAX 9s for delivery and plans to convert those orders into MAX 10s once that aircraft is certified, Kirby said.
No major issues had with Boeing, say Canadian airlines
Canada’s major airlines, Air Canada and WestJet, both have Boeing aircraft in their fleet.
According to its website, Air Canada’s fleet includes the Boeing 777-300ER and 777-200LR; the Boeing 787-8 and 787-9; and the Boeing 737-8 MAX, totalling 104 aircraft.
WestJet’s fleet, meanwhile, includes the Boeing 737-8 MAX, 737-700 NG and 737-800 NG; and the Boeing 787-9 Dreamliner, totalling 124 aircraft.
CBC News reached out to both companies to ask if they had any concerns regarding the safety of Boeing aircraft and if they were making changes to their fleet as a result.
A spokesperson for WestJet said that the company has “had no significant incidents with our Boeing aircraft and we maintain full confidence in the safety of our fleet and our industry leading safety standards.”
The airline works closely with Boeing on all aspects of aircraft delivery, the spokesperson added, and is in “constant communication” with the manufacturer and with the federal regulator, Transport Canada.
Air Canada told CBC News in a statement that it has operated Boeing aircraft for decades “and they have always performed reliably, comfortably and safely.”
“As well, we work closely with aircraft manufacturers on an ongoing basis and have a rigorous maintenance regime that complies with or exceeds the requirements of Transport Canada and other international industry and government agencies,” the statement read.
Tantamount to changing business model
Several weeks ago, American Airlines CEO Robert Isom blasted Boeing for its persistent quality issues, asking the jet manufacturer to get its act together. Last week, it placed its first-ever order for MAX 10 jets to secure an alternative to its Airbus A321 planes.
The Texas-based carrier has had to deal with Boeing’s delivery delays, including for the 787 Dreamliner, which not only hampered its efforts to capitalize on the post-pandemic travel rebound, but also drove up its costs.
A WestJet Airlines Boeing 787-9 Dreamliner is seen parked at a gate at Vancouver International Airport, in Richmond, B.C., on Jan. 21, 2021. (Darryl Dyck/The Canadian Press)
In return for a vote of confidence for the troubled MAX 10 program, American Airlines chief financial officer Devon May said American had negotiated options to convert those orders into MAX 8s or MAX 9s. Its supply contract also provides for financial compensation from Boeing for delivery delays.
For airlines like Southwest, one of Boeing’s primary customers, transitioning away from Boeing is tantamount to changing their business model. It would entail heavy investments in maintenance, training and technologies.
Airbus has long tried to woo Southwest with its smaller A220 as a substitute for Boeing’s delayed MAX 7. But CEO Bob Jordan said the cost of operating multiple fleets is “significant.”
“A strong Boeing is great for Southwest Airlines,” Jordan said at JP Morgan’s industrial conference on Tuesday. “It’s great for our industry.”
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
