British Airways said it will immediately retire its entire Boeing 747 fleet as a result of the travel slowdown. But that is the least of Boeing’s problems – it also has the coronavirus pandemic and its troubled 737 Max to deal with.
“It is unlikely our magnificent ‘queen of the skies’ will ever operate commercial services for British Airways again due to the downturn in travel caused by the Covid-19 global pandemic,” said the British airline in a statement n Friday.
British Airways was the largest operator of 747-400s with 31 aircraft, making up about 10% of its fleet.
The airline had planned to retire the planes in 2024 but brought forward the date due to the damage the coronavirus has done to air travel. Boeing had already said it plans to stop making the plane, which first rolled off its production line in 1969, in two years.
Boeing’s Cancelled orders
British Airways currently only operates a shadow service at the height of the peak summer season. In April, it said it plans to cut 12,000 jobs, about 30% of its workforce, while shares in its parent company IAG have plummeted 65% this year to around 220p.
Most airline chief executives talk openly about it taking up to four years for the industry to get back to 2019 levels of traffic.
And that is the trouble Boeing finds itself in, stuck in the aviation value chain. Airlines are flying fewer flights, which leads to less demand for new planes and cancelled orders.
The Seattle-based planemaker is in the process of cutting staff by 10%, or 16,000 jobs.
On Tuesday Boeing said that 60 orders were cancelled in June.
This means so far this year the company has been handed 843 cancelled or uncertain orders, compared to only 59 new orders.
However, Boeing still has more than 4,500 jet orders on its books, enough to keep its factories working for years.
Fixing the 737 Max
The firm’s 737 Max, has suffered 355 cancelled orders this year, the troubled jet, has been grounded since March 2019 following two fatal crashes that killed 346 people.
Fixing the 737 Max and getting it back in the air is crucial for Boeing. The aircraft maker has made its focus clear as it works on getting the 737 Max approved to fly again, which is expected to happen later this year.
When it comes to getting planes out of its warehouse, Boeing delivered just 20 jets in the second quarter, the lowest quarterly number since 1963. By contrast, it delivered 149 jets in the second quarter of 2019.
Deliveries are important because most of the money that Boeing gets for building a jet comes at the time of delivery.
“Our commercial airplane deliveries in the second quarter reflect the significant impacts of the Covid-19 pandemic on our customers and our operations that included a shutdown of our commercial airplane production for several weeks,” said Boeing chief financial officer Greg Smith on Tuesday.
Given the low demand for air travel during the pandemic, passenger airlines have little need or desire to accept delivery of jets. Only about 60% of the roughly 20,600 jets in global fleets are now in service, according to travel and analytics expert Cirium.
Boeing’s stock has fallen about 46% this year to just under $180, compared with a 2% decline in the S&P 500 index.
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