Airlines Unhappy With Boeing CEO’s Carrier Failure Prediction

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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.

Boeing 777-200LR
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).

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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.

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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.

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