Business major

Major aircraft lessor Avolon says Boeing has ‘lost its way’

A Boeing logo is seen at the company’s facilities in Everett after it was announced that their 777X model will make its first test flight later in the week in Everett, Washington, U.S. January 21, 2020. REUTERS/Lindsey Wasson

Join now for FREE unlimited access to Reuters.com

Register

DUBLIN, May 5 (Reuters) – The head of the world’s second-largest aircraft leasing company said on Thursday that Boeing had “lost its way” and may need new leadership to mend a faulty culture that has eclipsed his revival.

Avolon chief executive Domhnal Slattery’s comments represented a rare public rebuke of Boeing by a major customer, despite it canceling orders for more than 100 737 MAX jets during the COVID pandemic.

Boeing declined to comment.

Join now for FREE unlimited access to Reuters.com

Register

“I think it’s fair to say that Boeing has lost its way,” Slattery told the Airfinance Journal conference in Dublin, a gathering of the world’s aircraft lessors who together own most of the world’s passenger planes. world.

“Boeing needs to fundamentally rethink its strategic relevance in the market,” he said, adding that it would require “a new vision, maybe a new leadership.”

However, he said the issues could eventually be resolved.

“I’m confident they’ll find out,” Slattery said.

Boeing shares fell to a nearly 1.5-year low last week after the U.S. aircraft maker posted a quarterly loss, disclosed $2.7 billion in additional charges and costs and expressed doubts about achievement of 737 MAX delivery targets. Read more

Boeing also said it was halting production of the 777X through 2023 and did not say when it would resume deliveries of its key twin-aisle 787 Dreamliner model after a year-long shutdown.

“They’re burning cash at an unprecedented level. They’re probably going to be downgraded,” Slattery said.

“Boeing has a rich history… They build great planes. But they say culture eats strategy for breakfast and that’s what happened at Boeing,” Slattery said.

A succession of crises ranging from fatal accidents that grounded the 737 MAX for two years, to external regulatory pressures that halted 787 deliveries and delayed the 777X, have rocked the largest U.S. exporter, said said another major buyer.

Underscoring Boeing’s woes, its European rival Airbus (AIR.PA) moved forward on Wednesday with plans to increase production of rival single-aisle jets by 50% from current levels to 75 a month in 2025, just as Boeing has had to struggling to certify his 737 MAX 10 .

Slattery has expressed concern that the market could tilt too much in favor of Airbus if it sticks to its production plans, although some backers say it remains to be seen how soon Airbus can reach its target due to the fragility. supply chains.

Longtime board member Dave Calhoun became Boeing CEO in 2019, promising greater transparency after the group’s previous handling of the MAX crisis drew widespread criticism.

On Thursday, Boeing announced plans to move its headquarters from Chicago to the Washington, DC area, highlighting efforts to bring decision-making closer to customers and regulators. Read more

But Calhoun’s promise of a restart was overshadowed by fresh problems over several critical civil and defense projects, while another influential customer, Emirates Airline chairman Tim Clark, urged Boeing to recapture”.

Boeing says it is working on multiple challenges.

Calhoun told investors after the company’s board was reaffirmed by shareholders last week that Boeing would overcome further issues with the T-7 military trainer and Air Force One jets and also welcome progress. performed on the 787 and 737 MAX.

Join now for FREE unlimited access to Reuters.com

Register

Written by Conor Humphries; Editing by Jan Harvey, Bernadette Baum and Diane Craft

Our standards: The Thomson Reuters Trust Principles.