The company has said deliveries to airline customers might start again in August.
Photograph by Jim Watson/AFP via Getty ImagesBoeing CEO Dave Calhoun said Friday the commercial aerospace giant would resume building the company’s grounded 737 MAX jets this month.
The MAX, is on the verge of returning, according to the company, and will re-enter service amid the disruption in air travel caused by the coronavirus pandemic.
“The airplane is in great shape…I’m confident we will start our [assembly] line again this month,” Calhoun said in a Fox Business interview. That is the most recent data point regarding the MAX return. On the company’s recent earnings conference call, management said deliveries to airline customers might start again in August.
The 737 MAX—Boeing’s newest-model single-aisle jet—has been grounded worldwide since mid-March following two deadly crashes inside of five months. Boeing (ticker: BA) has been working with global aviation officials to implement fixes and bring the plane back to the skies.
Right now, though, air travel in the U.S. is down more than 90% year over year and things will take a long time to recover. “About half the schedule they had before,” said Calhoun, answering a question about what demand will look like later in 2020. He based that off his conversations with Boeing’s airline customers.
The outlook is lower for longer. “For three years we will slowly crawl back to the traffic levels we had in 2019,” Calhoun said. Three years is optimistic. Other analysts and industry insiders see the downturn lasting until at least 2024.
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Regardless of precise timing, things aren’t great. And in the current reality, Calhoun acknowledged that the company probably built too many MAX jets. There are about 450 sitting parked, waiting for regulatory approval to fly. Still, he sees no long-term market share ceded to rival Airbus (AIR.France). Calhoun believes MAX planes will be delivered and that market share in the narrow-body jet market will normalize over time.
The shape of a demand recovery for airlines is a hot topic with analysts and investors, who have never had to consider anything even close to Covid-19. The consensus is that things will take years to recover. The one wild card Calhoun cited regarding aerospace demand is the availability of an effective Covid vaccine.
Boeing shares were down 3.2% to $129.20 near midday Monday. Year to date, Boeing shares are down about 60%, trailing far behind comparable drops of the S&P 500 and Dow Jones Industrial Average over the same span.
The aerospace value chain is down as well. Aerospace supplier stocks Barron’s tracks are down about 45% year to date. U.S. airline stocks are down more than 60%.
The MAX assembly line shutdown wasn’t related to Covid-19. But it did force the closing of several Boeing facilities and many are, or are about to be, reopened.
Write to Al Root at allen.root@dowjones.com
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