Boeing is falling so behind on plane deliveries that United is asking pilots to volunteer for unpaid leave, potentially for months

United Airlines asked pilots to take unpaid time off next month due to excess staffing, which the airline said is due to Boeing aircraft delays. 

Delivery delays have reduced the number of flying hours United anticipated for its pilots, pushing the airline to offer unpaid leave, a United spokesperson told Bloomberg. The Air Line Pilots Association (ALPA), a union that represents United pilots, said United will offer more time off through the summer and potentially into the fall. United reported in a Feb. 29 SEC filing that it is contracted to receive 165 Boeing aircrafts in 2024—but it expects to receive only 63 this year. 

​​“Due to recent changes to our Boeing deliveries, the remaining 2024 forecast block hours for United have been significantly reduced,” the United chapter of the ALPA wrote in a Friday memo to its members, CNBC reported. “While the delivery issues surround our 787 and 737 fleets, the impact will affect other fleets as well.”

The ALPA did not respond to Fortune’s requests for comment.

What’s happening to all of United’s pilots?

Asking pilots to take unpaid time off is one step further than United’s decision in March to slow its hiring of pilots and pause new-hire classes through June as a result of Boeing delivery delays. As of March 7, United hired 450 pilots and had plans to hire 800 by the end of April. For context, the airline hired 2,350 pilots in all of 2023.

United’s operating plans were further stymied by the Federal Aviation Administration’s increased scrutiny of the airline after a series of 10 safety mishaps over just two weeks in early and mid March. The probe may limit new routes during the busy summer months and has already prevented United from promoting and approving pilots to fly different aircraft models.

United CEO Scott Kirby said the repeated safety incidents were unrelated and welcomed increased FAA attention. He has spoken repeatedly about his frustrations with Boeing’s delivery problems, which are set to continue as the 737 Max 10 model is yet to be certified. United asked Boeing to instead focus on slightly smaller Max 9 production for the airline.

“Boeing is not going to be able to meet their contractual deliveries on at least many of those airplanes,” Kirby said in a January call with investors. “And let’s leave it at that.”

Last month, United was closing in on a deal to acquire three dozen Airbus A321neo jets. Of the 26 Airbus A321neo aircrafts United is contractually obligated to receive in 2024, it expects to receive 25 this year, according to the Feb. 29 SEC filing.

Years of mounting delays

Airbus has kept its promise to deliver its contracted aircrafts, but it has been in spite of continued supply-chain delays that have plagued the entire airplane manufacturing industry.

Engines and other jet components are in tight supply, but delays lasting months or years are the modern norm in the industry, Air Lease executive chairman Steven Udvar-Hazy said in February. 

Airline manufacturers across the board are still navigating pandemic-era supply-chain delays—sometimes two to five times as long as before 2020 because of prolonged labor shortages and supplier bottlenecks caused by ongoing war in the Ukraine.

Airbus has felt the brunt of these supply-chain issues because of increased demand for its jets, but Boeing has had the opposite fate. After a door plug blew off a Boeing 737 Max 9 on a January Alaska Airlines flight—along with a series of safety mishaps on Boeing planes—the FAA barred the manufacturer from expanding production of its 737 Max beyond 38 planes per month. Boeing had said in previous earnings reports that it hoped to produce up to 50 jets of the model monthly by 2025. 

Boeing CFO Brian West said customers have been supportive of the manufacturer’s increased safety checks following the incidents, though they have exacerbated delivery delays.

“We are in regular, very transparent communications [with customers] and they know precisely where we stand and the progress that we’re making,” West said at a Bank of America conference on March 20. “We, at the same time, have to understand what their needs are as they think about their flight schedules and their passengers.”

The impact of Boeing’s mishaps and resulting FAA crackdown have reverberated across the industry. Southwest and Alaska Air both said their flying plans may be at risk because of Boeing’s delays. Ryanair CEO Michael O’Leary piled on to Boeing’s misery, telling Reuters in February that the discount airline expects to have seven to 10 fewer Boeing plane deliveries by the summer. The delays could force Ryanair to hike ticket fares by up to 10%.

“The [Boeing] management team in Seattle don’t appear to have a grip on the situation at the moment,” O’Leary said.

Subscribe to the CFO Daily newsletter to keep up with the trends, issues, and executives shaping corporate finance. Sign up for free.

Source link

About The Author

Scroll to Top