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MarketScreener Homepage  >  Equities  >  Nyse  >  Boeing Company (The)    BA

BOEING COMPANY (THE)

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Boeing : made mistakes on 737 MAX says Southwest CEO, hopeful planes return in U.S. summer

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05/15/2019 | 05:33pm EDT
FILE PHOTO: A number of grounded Southwest Airlines Boeing 737 MAX 8 aircraft are shown parked at Victorville Airport in Victorville, California

DENVER (Reuters) - Boeing Co made mistakes with its 737 MAX planes that need to be addressed, Southwest Airlines Co Chief Executive Officer Gary Kelly told shareholders on Wednesday, but he said he is still hopeful that the jets grounded after two crashes will return to service in the U.S. summer.

Southwest, which only flies 737s and is the world's largest MAX operator, has bet its growth strategy on the fuel-efficient, longer-range MAX, which was grounded worldwide in March following two deadly crashes, one in Indonesia and one in Ethiopia.

As a result, Southwest has canceled 160 daily flights through Aug. 5, hitting revenue and costs, and putting its growth plans on hold. The low-cost carrier launched service to Hawaii earlier this year but has had to defer flying there from San Diego and Sacramento because of the MAX groundings.

"Boeing made some mistakes ... they need to address those mistakes," Kelly said at the company's annual shareholders meeting in Denver, where Southwest has expanded faster than any other city.

Asked by a shareholder whether he was seeking compensation from Boeing, Kelly said: "No one is happy with the situation. All of our growth is with the MAX."

A handful among about 40 shareholders questioned Kelly about the airline's heavy MAX exposure. The MAX jets represent less than 5 percent of Southwest's fleet of about 750, but the airline has at least 249 more on order.

Southwest is scheduling flights on the MAX as of Aug. 6, but it is still unclear whether regulators will clear it to fly by then. They were grounded following an Ethiopian Airlines accident just five months after a similar Lion Air crash, killing a combined 346 people.

During a call with investors last month, Boeing CEO Dennis Muilenburg said he knows "we have some work to do to earn and re-earn the trust of our customers and the flying public in particular."

The Federal Aviation Administration's acting chief, Dan Elwell, told lawmakers on Wednesday he expects Boeing to submit a software fix soon, a key step to flying the planes again.

Asked by a reporter if he would fly on the first MAX flight, Kelly said: "I'd love to." But he said Southwest would not fly the jets until he and regulators were fully confident in their safety.

A Reuters/Ipsos poll released on Wednesday showed that U.S. fliers still consider ticket price the most important factor when choosing a flight. Southwest remained the most popular airline, with 21% of respondents picking it as their preferred carrier, up from 19% in a similar Reuters/Ipsos poll that ran in June 2017.

Shareholders of Southwest, whose stock is flat over the past year, rejected a motion to split Kelly's dual role as CEO and chairman of the board at the annual meeting.

(Reporting by Tracy Rucinski in Denver; Editing by Matthew Lewis, Leslie Adler and Grant McCool)

By Tracy Rucinski

Stocks mentioned in the article
ChangeLast1st jan.
BOEING COMPANY (THE) 1.24% 354.9 Delayed Quote.8.70%
SOUTHWEST AIRLINES 0.37% 51.15 Delayed Quote.10.05%
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Financials ($)
Sales 2019 101 B
EBIT 2019 11 272 M
Net income 2019 9 858 M
Debt 2019 5 898 M
Yield 2019 2,24%
P/E ratio 2019 20,94
P/E ratio 2020 14,58
EV / Sales 2019 2,03x
EV / Sales 2020 1,69x
Capitalization 200 B
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Mean consensus OUTPERFORM
Number of Analysts 25
Average target price 421 $
Spread / Average Target 19%
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Managers
NameTitle
Dennis A. Muilenburg Chairman, President & Chief Executive Officer
Jenette E. Ramos Senior Vice President-Supply Chain & Operations
Gregory D. Smith CFO, EVP-Corporate Development & Strategy
Theodore Colbert Chief Information Officer & SVP-Data Analytics
Gregory L. Hyslop CTO, Senior VP-Engineering, Test & Technology
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