Boeing To Slow 777X Production Rate

Boeing’s earnings call, published today, was as weak as expected. Struggling under the weight of the coronavirus travel…

Boeing To Slow 777X Production Rate

Boeing’s earnings call, published today, was as weak as expected. Struggling under the weight of the coronavirus travel downturn, the planemaker posted a first-quarter loss of $641m. As a consequence of this, the manufacturer is looking to cut thousands of jobs, and the production rate of some of its flagship aircraft, including the 777X.

The production rate of the 777X will be cut by more than one third. Photo: Boeing

Boeing’s earnings call bombshell

The first-quarter results from Boeing were as dismal as expected. Already struggling with the burden of the 737 MAX, the company has been further hamstrung by the outbreak of COVID-19, leading it to shut a number of factories for a time.

As part of the earnings call, Boeing reported some slowdown in its production rates. As expected, its Dreamliner production will be cut to 10 per month in 2020, further reducing to seven a month by 2022. What was unexpected, however, was a similar slowdown in the production rates of the 777 and 777X. Boeing’s report said,

The 777/777X combined production rate will be reduced to 3 per month in 2021

According to Boeing’s website, the current production rate of the 777 and 777X combined is five per month. A cut of two per month would take the plane maker’s annual output from 60 to just 36, a drop of more than a third.

Boeing’s backlog suggests 68 777s are still to be delivered, most of which are likely 777F cargo aircraft. The 777X, however, has a backlog of 309 airplanes, with customers including Emirates, Qatar, Lufthansa and British Airways. At a rate of just three per month, these airlines will be waiting more than a decade for their ordered airplanes to be delivered.

Boeing 777X airline orders
British Airways has committed to 18 firm 777-9 orders. Photo: Boeing

Boeing President and CEO David Calhoun commented in a press release,

“The COVID-19 pandemic is affecting every aspect of our business, including airline customer demand, production continuity and supply chain stability. Our primary focus is the health and safety of our people and communities while we take tough but necessary action to navigate this unprecedented health crisis and adapt for a changed marketplace.”

Is the 777X just too big for a post-corona market?

With air travel suffering its most significant downturn in history, questions are being raised regarding what sort of industry we’ll see emerging when demand starts to return. All predictions point to a slow and gradual pickup in demand, with analysts suggesting a period of three to five years for it to return to previous levels. Some say things may never be the same again.

Cathay Pacific 777x
Cathay Pacific could swap its 777X order for the smaller, cheaper 787-10. Photo: Cathay Pacific

With demand anticipated to be sluggish, aircraft like the 777X may just be too big for the emerging market. Just last week, Hong Kong-based Cathay Pacific was mulling a switch to the largest Dreamliner in lieu of its 777X order. The Boeing 787-10 is considered easier to fill, with just 336 seats compared to the 426 of the 777-9. It’s also a solid 25% less to buy.

The announced cut in production rates suggests that Boeing is anticipating cancellations or deferrals of its pending orders. It did say that production rates were under constant review, so these could change again if demand picks up faster than anticipated.

Lufthansa is due to be the launch customer of the Boeing 777X. Photo: Lufthansa

Despite the bleak outlook for Boeing, its leadership remains positive, as Calhoun concluded,

“While COVID-19 is adding unprecedented pressure to our business, we remain confident in our long term future … Air travel has always been resilient, our portfolio of products and technology is well positioned, and we are confident we will emerge from the crisis and thrive again as a leader of our industry.”

What do you make of the production slowdown on the 777/777X line? Let us know your thoughts in the comments.

Source : Simple Flying More   

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Goodbye SAA: South Africa To Get A New National Carrier

South African Airways seems to have reached the end of the line. Despite clinging on to life for…

Goodbye SAA: South Africa To Get A New National Carrier

South African Airways seems to have reached the end of the line. Despite clinging on to life for the past few months, the airline is now just days away from either being wound down slowly or liquidated quickly, depending on the actions of its 4,700 employees. This would make way for a new national carrier, one which it is hoped will provide jobs for the many who are set to lose out with the closure of SAA.

South African Airways is days away from liquidation. Photo: Getty Images

End of the runway for SAA

South African Airways, almost a century old, seems to have reached the end of the runway. Discussions that took place yesterday between the Public Enterprises Department, SAA’s rescue practitioners, and workers unions suggest that the airline is on the verge of being liquidated.

Business Rescue Practitioners (BRPs) Les Matuson and Siviwe Dongwana had previously planned to liquidate the airline and had issued a deadline of the 24th April for workers to choose between terminating their contracts or liquidating the airline. However, they .

Now, it seems that a deal has been reached which will see SAA closed down and liquidated, and a new airline formed in its place.

The National Transport Movement (NTM) has alleged that the decision has been made to form a new airline during a meeting between unions and the Public Enterprises Minister Pravin Gordhan. In a statement to EWN, NTM president Mashudu Raphetha said,

“It is with great regard that after having had the meeting with the minister, the new airline will be born out of SAA. We have tried our level best to ensure that the airline still flies [and] we need to participate in the formation of the airline in order to keep most jobs.”

According to Raphetha, discussions about a new airline are already at an advanced stage and further details will be released soon.

Confusion at the unions

Although the message from NTM is abundantly clear, the same message doesn’t seem to have filtered through to the unions. The National Union of Metalworkers of South Africa (Numsa) and the South African Cabin Crews Associations (Sacca), who jointly represent the bulk of the airline’s 4,700 employees, seem convinced that the government will swoop in with an eleventh-hour rescue package.

The two unions last night released a joint statement urging members not to sign the retrenchment agreements proposed by the BRPs. They accuse Matuson and Dongwana of spreading “misinformation and emotional propaganda,” saying that workers are facing “undue pressure” to sign the agreements. In the statement, the unions complain about,

“…the undue pressure these persons are placing on employees during this period of uncertainty and anxiety to sign hollow and conditional retrenchment agreements, tantamount to workers being forced to essentially relinquish their rights.”

Unions say workers are being pressured to sign. Photo: Getty Images

The unions say that the next 48 hours are critical in their mission to save SAA. Indeed, workers have been given until Friday, May 1st to sign the agreements. All of the 4,700 employees need to sign the agreement to terminate their contracts; if they do not, the BRPs will be forced to undertake immediate liquidation procedures.

With the termination contracts unsigned, SAA workers will forgo any severance pay. To claim their wages and any other pay they are owed, these people will be forced to join the queue behind other creditors of the airline. NTM has strongly recommended workers sign the agreement by Friday.

What do you think about the situation at SAA? Is it time for the workers to back down and sign the retrenchment plan? Let us know in the comments.

Source : Simple Flying More   

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