Boeing’s CEO is predicting that a major US airline will go under by the end of the year and says it will take between three to five years for the industry to bounce back as a result of the coronavirus pandemic.
In an interview with NBC’s Today on Tuesday, CEO Dave Calhoun said the threat of COVID-19 on the airline industry was ‘grave’.
When asked if he thought a major US airline would fold as a result of COVID-19, Calhoun said: ‘Yes, most likely.’
Calhoun, who did not name any specific airlines, predicted that something would happen by September, which is the month when the US government’s payroll aid to the airline industry is set to expire.
When that aid expires, it could result in widespread layoffs among various airlines.
Calhoun said he doesn’t expect passenger traffic to reach even a quarter of its pre-pandemic levels by September, creating the need for airlines to make ‘adjustments’ as they weather the impact of the coronavirus pandemic.
Boeing CEO Dave Calhoun said the threat of COVID-19 on the airline industry was ‘grave’ and said it was likely a US airline would fold as a result of the pandemic
‘Traffic levels will not be back to 100 percent. They won’t even be back to 25 percent. Maybe by the end of the year we approach 50 percent,’ he said.
‘So there will definitely be adjustments that have to be made on the part of the airlines.’
Calhoun said the situation was ‘grave’ but the airline and aviation would bounce back.
‘Apocalyptic does actually accurately describe the moment but I don’t think it describes the recovery and I don’t think it describes the medium or long term for the airline or aviation industry,’ Calhoun said.
‘We believe we will return to a growth rate similar to the past but it might take us three to five years to get there.’
Calhoun said his view of the future of the industry differed from that of billionaire Warren Buffet who sold off his entire $4billion stake in major US airlines earlier this month.
Buffet, at the time, said the ‘world has changed’ for the airline industry.
‘I don’t happen to share the view,’ Calhoun said. ‘I share the near-term turmoil. Near-term for me doesn’t mean a few months.
Airlines have been devastated by the pandemic with a near 95% drop in domestic passengers to travel restrictions and government lockdowns. Pictured above is an empty George Bush Intercontinental Airport in Houston, Texas on Monday
A passenger looks at his phone while waiting aboard an empty United Airlines plane before taking off from George Bush Intercontinental Airport on Monday. Airline executives have already warned of a slow recovery even after the virus is contained and have said demand may not recover to 2019 levels for years
‘I believe it’s three full years before we return to the traffic levels that we had just in 2019, and then probably another two before we begin to return to the growth rates that we used to have.
‘I’m hopeful that somewhere between here and there, there’s a vaccine, and that the moment of high anxiety begins to really subside. But I still believe in the future of the industry.’
Calhoun acknowledged that the air travel experience would be very different, saying that face masks would likely be required as well as temperature checks in airports.
He said the interior of a plane with its air circulation was designed to ‘prevent transmission of exactly this kind of airborne carrier’.
‘The cabin itself replaces its air every two to three minutes,’ he said.
‘By the time you layer those protections and you consider the responsible actions of the public themselves, I believe you do gradually get back to the same level of confidence that we’ve had before.’
Airline executives have already warned of a slow recovery even after the virus is contained and have said demand may not recover to 2019 levels for years.
US airlines have seen a near 95 percent drop in domestic passengers as travel restrictions and government-mandated lockdowns across the world have brought demand to a virtual standstill.
American Airlines, United, Delta and Southwest all reported large quarterly losses and are on track for a dismal second quarter.
US airlines have canceled hundreds of thousands of flights, including 80 percent or more of scheduled flights into June as US passenger traffic has fallen by 95 percent since March.
They are conducting additional cleaning measures and requiring all passengers to wear facial coverings.
The federal government awarded nearly $25 billion in cash grants to airlines to help them meet payroll costs in exchange for them agreeing not to lay off workers through September 30.
Major airlines have warned they will likely need to make additional cuts later this year to respond to a long-term decline in travel demand.
United Airlines Co has said it planned to cut at least 3,450 management and administrative workers on October 1, or 30 percent of those workers, and has also said it will reduce hours for thousands of other workers.
Meanwhile, Boeing Co has said it would cut 16,000 jobs by the end of the year, while GE Aviation plans to cut up to 13,000 jobs and airplane supplier Spirit AeroSystems Holdings Inc is cutting 1,450 jobs.