Ryanair’s Chief Executive, Michael O’Leary, predicts that Boeing will take somewhere between a year to a year and a half to clear the backlogs in their aircraft deliveries. Speaking in London on Wednesday, he stressed the need for enhanced quality supervision. This comes in the wake of Boeing revealing their financial results, which demonstrated a consumption of roughly £3.01 billion in cash during the first quarter while attempting to address manufacturing quality issues.
Boeing reported an adjusted per-share loss of €1.05 and generated revenue of €15.02 billion in the initial three months. The company foresees a decelerated rise in its production rate and deliveries due to intense examination over the quality control since an in-flight panel explosion in a nearly new 737 MAX 9 in January.
O’Leary insisted that there’s much to be desired in terms of improving “quality control”, and Boeing’s management should prioritize stability in their operations. He has engaged in discussions with Stephanie Pope, the newly appointed head of commercial aircraft at Boeing, twice recently. He voiced optimism that Boeing would accelerate production and deliver approximately 40 jets to Ryanair before the height of the summer travel season.
O’Leary expressed hope saying, “The indicators are growing increasingly optimistic”. He pointed out a positive shift in delivery schedules, indicating progress rather than the usual regressions. Boeing has been subjected to heightened scrutiny from airlines, regulators, and lawmakers following an almost catastrophic fuselage panel explosion on a 737 Max 9 in early January.
The manufacturer has been barred by the Federal Aviation Administration from increasing the 737 Max’s output beyond a rate of 38 jets-per-month until they’re convinced of the implementation of quality measures.
Ryanair, which boasts a 600-strong aircraft fleet, predominantly Boeing 737 planes, is the largest operator of the type outside the US. Ryanair had previously faulted Boeing’s delivery delays for hampering their growth forecast for 2024, leading to a reduction in their yearly passenger projection and frequencies of flights across their network.
Despite this, O’Leary remains hopeful that the annual passenger number will hit the 200 million mark by the end of March 2025. However, it’s possible the airline may need to spark demand in crucial markets such as the UK by offering discounts.
Recommendations were put forth for the successor to the role of chief executive following the announcement from the aircraft manufacturer that current head, Dave Calhoun, will retire by the end of the year as part of a broad management overhaul. Mr O’Leary suggested that the most effective leaders and proprietors are the accountants, the individuals responsible for the monotonous, day-to-day operations. He emphasised the need to never appoint a pilot to manage an airline.
The period’s financial reports revealed that Boeing concluded with $7.5 billion in cash and short-term assets, a decrease from $16 billion at the beginning of the year. Mr Calhoun assured employees via a written statement that Boeing is doing a thorough examination of its processes as it alters its factories, motivates employees to identify flaws and slows its scheme to detect defects in its procedures.
Mr Calhoun admitted in the memo that the company is currently in a challenging situation. He said, “Reductions in deliveries can be hard for our clients and our economy. However, safety and quality are our top priorities.”
Boeing issued a warning a few weeks prior that it would encounter a cash shortfall of up to $4.5 billion in the quarter. Still, the recent financial results offered some relief during a period when the company has been struggling. Although its expenditure of money wasn’t as severe as the anticipated $4.4 billion projected by data from Bloomberg, both sales and revenue outperformed consensus forecasts. The financial outcomes were buoyed by an operational profit in Boeing’s defence division, which had recorded negative margins in the past quarters.
Boeing’s shares have depreciated by 35% since the opening of the year, making it the poorest performer on the Dow Jones Industrial Average. (Bloomberg, Reuters)