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What Did He Just Say?': Boeing CEO's Prediction Irks Airlines

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05/14/2020 | 01:24pm EDT

By Andrew Tangel and Alison Sider

Boeing Co. Chief Executive David Calhoun's prediction of a major U.S. airline's demise has prompted complaints from some of the plane maker's biggest customers as they grapple with fallout from the coronavirus pandemic, people familiar with the matter said.

American Airlines Group Inc. CEO Doug Parker called the Boeing chief this week to express surprise and disappointment after Mr. Calhoun told a television interviewer that a major U.S. airline would most likely go out of business by this fall, one of these people said.

Mr. Calhoun's comments weren't well-received at United Airlines Holdings Inc. either, people familiar with the matter said. United also conveyed displeasure to Boeing over Mr. Calhoun's remarks, these people said.

In an interview that aired Tuesday on NBC's "Today" show, Mr. Calhoun said he expected demand for air travel to bounce back to 2019 levels in three to five years. Asked if he thought a major U.S. carrier might go out of business, Mr. Calhoun said: "Well, I don't want to get too predictive on that subject, but yes, most likely. Something will happen when September comes around."

"What did he just say?" is how one person described the initial reaction among some executives at American, which is based in Fort Worth, Tex.

Some industry leaders said Mr. Calhoun's comments left them wondering why the plane maker's CEO would speculate about a customer's potential failure while carriers are negotiating financing deals, including with the U.S. Treasury for taxpayer stimulus.

Boeing spokesmen said Mr. Calhoun was speaking generally about the challenges faced by the industry and not any particular airline. They said the full context of his comments included his assessment of the industry's outlook, expressions of optimism for an eventual recovery and support for airlines.

A senior Boeing executive said Mr. Calhoun had received a "range of feedback" from aviation industry CEOs. "Some weren't keen on his sobering assessment of industry challenges ahead, but others appreciated him telling it like it is," this executive said. "It's in his nature to be frank."

Boeing's board appointed Mr. Calhoun CEO in December 2019, ousting Dennis Muilenburg from the top job, in part to repair relationships with customers and regulators after two 737 MAX crashes that took 346 lives. But Mr. Calhoun has at times made Boeing's problems worse. He previously irked senior Federal Aviation Administration officials and antagonized his own leadership team by claiming Boeing's problems were worse than he'd imagined.

Airlines are facing what executives have described as their greatest challenge in decades. Even with $25 billion in government aid aimed at paying employees through the summer and another $25 billion in federal loans, carriers say the situation remains dire. Major U.S. airlines, including American, United, Delta Air Lines Inc. and Southwest Airlines Co. have sought government assistance. U.S. passenger air traffic is about 90% lower than a year ago as public officials ordered people to stay home to slow the spread of the virus.

An American Airlines spokesman said the carrier and the plane maker have had a long, successful partnership. "They are friends who we are rooting for and, likewise, we know they are in our corner," the spokesman said.

Write to Andrew Tangel at Andrew.Tangel@wsj.com and Alison Sider at alison.sider@wsj.com


Stocks mentioned in the article
ChangeLast1st jan.
AMERICAN AIRLINES GROUP INC. -4.18% 12.6 Delayed Quote.-56.07%
AT HOME GROUP INC. 3.09% 22.72 Delayed Quote.313.09%
BYD COMPANY LIMITED -6.66% 135.9 End-of-day quote.249.81%
JUST GROUP PLC -0.68% 46.64 Delayed Quote.-40.96%
LETS HOLDINGS GROUP CO., LTD. 0.11% 9.04 End-of-day quote.49.67%
LOOK HOLDINGS INCORPORATED 0.83% 970 End-of-day quote.-22.52%
MAX CO., LTD. 1.13% 1517 End-of-day quote.-30.86%
SOUTHWEST AIRLINES 2.05% 42.79 Delayed Quote.-20.73%
TEAM, INC. 2.93% 5.97 Delayed Quote.-62.62%
THE BOEING COMPANY -1.01% 167.36 Delayed Quote.-48.10%
WILL GROUP, INC. 1.55% 852 End-of-day quote.-31.95%
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Financials (USD)
Sales 2020 60 448 M - -
Net income 2020 -4 459 M - -
Net Debt 2020 37 596 M - -
P/E ratio 2020 -21,4x
Yield 2020 0,64%
Capitalization 94 466 M 94 466 M -
EV / Sales 2020 2,18x
EV / Sales 2021 1,58x
Nbr of Employees 161 100
Free-Float 55,7%
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David L. Calhoun President, Chief Executive Officer & Director
Lawrence W. Kellner Non-Executive Chairman
Jenette E. Ramos Senior Vice President-Supply Chain & Operations
Gregory D. Smith CFO & Executive VP-Enterprise Operations
Theodore Colbert Executive Vice President
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