Lingering Strike Forces Boeing to Delay Deliveries
A 36-day strike by Boeing Co. engineers is causing delays in aircraft deliveries that have started to force some airlines to juggle schedules and fleet plans, Boeing and air carriers said Wednesday.
Boeing is telling airlines to expect the slowdown to continue for at least a few more months because of the strike by the company’s largest engineers union. The walkout has left the world’s No. 1 aircraft maker without many of the employees who set up tooling on its assembly lines, design parts and inspect finished aircraft.
AMR Corp.’s American Airlines, one of Boeing’s largest customers, expects to cancel a “handful” of flights in its spring schedule starting in late March, American spokesman John Hotard said. The No. 2 U.S. carrier is facing slower-than-expected deliveries of 737 and 777 jetliners.
“We don’t like to cancel flights, because you’re canceling revenue,” Hotard said. “But it certainly hasn’t approached epidemic proportions yet.”
Delivery delays “may affect some new routes later in the summer” at Delta Air Lines Inc., said John Kennedy, a spokesman for the No. 3 U.S. carrier.
Delta is scheduled to receive 55 aircraft from Boeing over the rest of this year. The airline has seen some “slight delays” so far and it’s too early to be more precise about what effect the strike might have, Kennedy said.
British Airways received one 777 jetliner several days late after the strike began and is trying to establish when its next 777, due this month, is going to be ready for delivery, a spokeswoman said.
No talks are scheduled in Boeing’s contract dispute with the least 15,000 striking engineers. Boeing Chairman Phil Condit has said he could go a “long, long time” without the strikers, many of whom declined to return to work when the company imposed the wage provisions of its offer this month.
The engineers are pushing for a bonus, higher guaranteed wage increases and no cuts in their medical benefits. They also object to what they consider their declining role in the company as it cuts costs in its jetliner business and invests in new markets such as space and communications.
Engineers at Boeing’s Long Beach plant are not striking.
Boeing missed 15 of 42 planned deliveries last month and has delivered just three aircraft so far in March. It had expected to deliver jetliners at a rate of more than one a day to meet a goal of 490 deliveries for the year.
Shares of Boeing rose $1.81 to close at $34.88 on the New York Stock Exchange. The Seattle-based company’s stock has dropped 14% since the walkout began on Feb. 9.
While Boeing has weathered strikes in the past without losing any orders, analysts said the company faces more risks this time. A series of production bottlenecks in 1997 and 1998 prompted complaints from many customers and helped rival Airbus Industrie gain market share.
“Boeing can’t afford too many chinks in the armor,” said Peter Jacobs, an analyst with Ragen MacKenzie Group Inc. in Seattle. “If these types of situations continue to arise, at some point when there is a close decision between Boeing and Airbus, an airline that had been a loyal customer might decide to try Airbus instead.”
Several airlines said the current backlog isn’t severe.
“It’s always unpleasant when the delivery date is not met but there are various solutions being studied,” said Peter Wellhuner, a spokesman for KLM Royal Dutch Airlines, which flies an almost all-Boeing fleet.
KLM is talking with Boeing about potential delays in the nine 737-800s and one 747-400 it expected to be delivered starting in May, Wellhuner said. KLM is discussing “different scenarios” with Boeing, he said, declining to say whether the Dutch carrier is seeking monetary compensation.
In previous work stoppages Boeing has sought to appease some customers by offering discounts on future purchases, analysts said.
