Boeing woes likely leading to higher airfare

The odds that Boeing’s quality control issues will impact you directly — say, by a panel blowing off your plane mid-flight — are still low. The odds that they’ll impact you indirectly through pricier airfare, however, are quite high. 

Driving the news: Airlines are warning that they are facing delays for new planes from Boeing, which will reduce the number of routes they can fly and likely push up prices for flyers. 

  • An order of 50 new 737 Max 10s by WestJet has been delayed indefinitely, and Boeing said yesterday it could take a year to fix engine issues with the troubled aircraft.

  • United and Southwest Airlines are also slashing their estimates of how many new planes they’ll receive from Boeing this year.

  • In Europe, Ryanair’s CEO said an order of 57 planes from Boeing has been delayed, and prices could rise up to 10% this summer as a result. 

Why it’s happening: U.S. regulators have cracked down on Boeing after a string of recent safety incidents, limiting its production of 737s to 38 per month. 

  • Two variants of Boeing’s 737 — the Max 7 and Max 10 — have yet to be certified by the Federal Aviation Administration to fly passenger service.

Why it matters: Buying an aircraft isn’t like shopping for a pair of jeans — if Boeing can’t deliver, there’s really not much airlines can do about it (except raise prices on flyers, of course).

  • Airbus, Boeing’s only major competitor, has a full order book through 2030, and smaller manufacturers, like Brazil’s Embraer, don’t have the capacity to make up the shortfall.

What’s next: Boeing’s situation could get worse before it gets better. The company is negotiating a new contract with its manufacturing workers and could face a strike that would grind production to a halt if it doesn’t make a deal by a September deadline.—TS