United Airlines rethinking large order for Max 10 jets from Boeing

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The chief executive of United Airlines, one of Boeing’s biggest customers, has increased the pressure on the beleaguered plane manufacturer, warning he is rethinking a big order for new aircraft. 

Scott Kirby on Tuesday said he was “disappointed” with the ongoing problems at Boeing, and called for it to take “real action”.

“I am disappointed that the manufacturing challenges do keep happening at Boeing, this isn’t new,” he said in an interview with CNBC. “They need to take action . . . it needs to be real action.”

United has been forced to ground 79 of its 737 Max 9 aircraft as a federal investigation looks into a damaging mid-flight fuselage breach of an Alaska Airlines aircraft earlier this month.

Kirby said the groundings meant United was rethinking a large order for the newer, larger Max 10 aircraft, production of which is running years behind and has yet to be certified by regulators.

“I think the Max 9 grounding is probably the straw that broke the camel’s back for us. We will at least build a plan that doesn’t have the Max 10 in it,” he said. United has agreed a multibillion-dollar order for 277 of the Max 10, with options for another 200.

Kirby’s frustration came as United said it expected to take a financial hit from the groundings in the first quarter, and that its longer-term growth plans would be hit by Boeing delivery delays.

“We are not going to grow quite as fast as we otherwise would have, because the reality is Boeing isn’t going to be able to deliver us all the aeroplanes in the [promised] timeframe,” he said. 

Kirby’s comments represented some of the most significant criticism of Boeing since the crisis began earlier this month.

He said the order was not cancelled. Kirby would not be drawn on where else United would find planes to meet its ambitious growth plans. He did not say whether he had engaged in discussions with Boeing rival Airbus over a replacement order. 

Speaking on United’s earnings call on Tuesday, chief financial officer Michael Leskinen said it was “unrealistic” to expect the full complement of 31 Max 9 deliveries from Boeing this year, and that delays from the plane maker more broadly could be expected into 2025.

As Boeing scrambled to limit the reputational damage from the Max 9 grounding, which has come amid wider delivery delays, one of its most senior executives issued an apology to the affected airlines.

“We have let down our airline customers and are deeply sorry for the significant disruption to them, their employees and their passengers,” Stan Deal, president and chief executive of Boeing Commercial Airplanes said.

“We are taking action on a comprehensive plan to bring these aeroplanes safely back to service and to improve our quality and delivery performance,” he said.

Despite the financial impact from the Boeing groundings, United’s shares rose nearly 7 per cent on Tuesday after it reported fourth-quarter results that beat forecasts, highlighting its “busiest travel period in history” in late December. It reported net income of $1.81 a share on $13.6bn in revenue in the three months ended December 31, topping consensus estimates on both measures.