Airlines Unhappy With Boeing CEO’s Carrier Failure Prediction

Boeing CEO David Calhoun is stirring things up and upsetting some airlines after remarking on May 12th that…

Airlines Unhappy With Boeing CEO’s Carrier Failure Prediction

Boeing CEO David Calhoun is stirring things up and upsetting some airlines after remarking on May 12th that it was likely a major American carrier could be out of business in the near future. High-ranking executives at United Airlines and American Airlines have already expressed their dissatisfaction with Calhoun’s opinion.

The remarks were made on May 12th. Stock prices of major airlines dropped two consecutive days after. Photo: Getty Images

The May 12th interview

 

The comments were made on May 12th during an interview on NBC’s “TODAY” show after the reporter raised the subject and initiated the topic:

For those unable to watch the video, NBC’s Savannah Guthrie asks Calhoun, “Do you think there might be a major US carrier that just has to go out of business?” Calhoun responds by saying: “Well, I don’t want to get too predictive on that subject but, yes, most likely. Something will happen when September comes around…”

Interview fallout

According to NBC News, the comments “sent shockwaves through Wall Street and airline offices.” In fact, a high-ranking airline executive at United Airlines has reportedly complained to Calhoun about the comment. At the same time, American Airlines CEO Doug Parker was also reported to be upset over the remarks.

While the greater public can probably appreciate Mr. Calhoun’s straightforward and honest answer, the opinion of Boeing’s CEO carries an immense amount of weight, which undoubtedly has real-world ramifications.

The most tangible and observable effect would be the value of airline shares on the stock market. Both United and American trade on the Nasdaq while Delta Air Lines and Southwest Airlines trade on the New York Stock Exchange (NYSE).

United airlines aircraft parked
A United Airlines executive has reportedly complained to Calhoun about his remarks. Photo: Getty Images

Through NBC News, a Boeing spokesperson said the following:

“We’ve had long-standing personal relationships with the airlines and they’re highly valued customers…We will all get through this current pandemic and be stronger in the end.”

Simple Flying reached out to Boeing to see if there was more to say on the matter. A spokesperson for the company notes that Mr. Calhoun was “speaking to the general uncertainty in the sector not about any one particular airline.”  It should also be noted that further on in the actual interview, Calhoun mentions the positive long-term outlook for the industry.

Should airlines be upset?

On the one hand, Calhoun’s remarks are honest and in touch with the serious situation that faces the air travel sector. This global phenomenon has shown us that anything can happen, and we are, in fact, still seeing this unfold in increasingly unfortunate ways.

It’s still well within the realm of possibility that subsequent waves of the virus will take place before a vaccine can be developed and widely distributed. Before that day arrives, it is fair to say that the government can only extend financial support so far for so long.

 

AA’s planes parked at Tulsa. Photo: American Airlines

However, the upsetting part for airline executives would mostly come from the drop in share value as the stock market reacts to the Boeing CEO’s comments. All four of the largest airlines in the United States saw their stock prices drop the day after the remarks were made. Prices dropped even further the day after.

Do you think Calhoun was right for answering and giving his opinion so honestly? Or does he need to be more restrained given his potential influence over the stock market? Let us know your thoughts in the comments.

Source : Simple Flying More   

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Cancun Handled Just 245 International Passengers Per Day In April

During April, Cancun International Airport saw a sharp 99.5% decline in the number of international passengers due to the current…

Cancun Handled Just 245 International Passengers Per Day In April

During April,  saw a sharp 99.5% decline in the number of international passengers due to the current coronavirus pandemic. It went from handling more than 50,000 international passengers a day to just 245. And things might not have hit bottom yet. Let’s investigate further. 

Cancun International Airport recorded a 99.5% drop of international passengers in April. Photo: Getty Images

The second most important airport in Mexico is in peril

The International Airport in Cancún is the second most important in Mexico. In 2019, the airport received more than 25 and a half million passengers. More than half of those passengers came from abroad. 

In comparison, Mexico City International Airport remained last year as the top hub in the country. It had over 50 million passengers. 

But there is a statistic where both airports go toe to toe: the international demand. In 2019, Cancun had 16 million 500 thousand international passengers, and Mexico had 17 million 500 thousand international passengers. 

Now, with the air travel demand falling, both hubs have had their worst year-to-year performances in their histories. What may be more shocking is that May and June could have even darker passenger numbers as the pandemic continues to grow in Mexico. Currently, Mexico has 40,186 cases and 4,220 deaths. 

Cancun
Domestic travel is expected to be back sooner in Cancun. Photo: Vmzp85 via Wikimedia Commons.

Can it get worse?

Given the current uncertainty in the air travel industry, Cancun International Airport numbers could be worse. In April, the hub received almost 58,000 domestic passengers, representing a 92.2% decrease on a year-to-year basis. It means that the airport authorities received approximately 1,932 domestic passengers per day. This was due mainly because airlines in Mexico know that the route between Mexico City and Cancun is vital to the country. The top four airlines are maintaining their operations in the city, even Interjet with its Sukhoi fleet.

The airport received 7,349 international passengers last month. This adds to 245 a day. Nevertheless, more people have flown out of Cancun in recent days. According to the airport operator, ASUR, up to 332,000 international tourists were stuck in Cancun at the time of the outbreak. Their respective governments

But how can it get any worse?

On 12 May, ASUR reported that Cancun had only 22 scheduled operations during the whole day. This amount is just 7% of the regular number of operations and the worst performance since the outbreak began. Currently, the airport is only operating from one of its four terminals, due to the lack of demand. 

Cancun Terminal 3
Currently, three out of four terminals in Cancun are closed. Photo: Presidencia de la República via Flickr.

Which airlines will continue to operate in Cancun?

Not every airline is as brave as TAP Air Portugal. The Portuguese carrier announced last month a , while the rest of the world was struggling with current events. 

It is very likely that, after all the pandemic ends, a lot of airlines will reduce its weekly flights to Cancun. For instance, according to La Jornada, UK travelers who usually flood the Mexican beaches are currently not very interested in traveling into Mexico. If this tendency keeps up, we could see some European airlines reducing their frequencies. We also have to remember what IATA said recently: long-haul travel will be the last to come back to its 2019 levels. It may happen as late as 2025.

Additionally, other countries, such as Japan, have issued warnings against traveling into Mexico due to the number of coronavirus cases. 

Domestically, Cancun International Airport should bounce back quicker. The route Mexico City-Cancun is still the second most important in Latin America after Sao Paulo-Rio de Janeiro. 

How can Cancun come back as a strong international hub? Let us know in the comments. 

Source : Simple Flying More   

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