Wall St. Recoils After Trump Signals End of Relief Talks: Live Updates
Boeing said on Tuesday that demand for commercial airplanes would be about 11 percent smaller over the next decade than it had predicted last year. But the company expects aerospace and defense sales to hold up much better.
In its annual market outlook report, Boeing predicted that airlines and others would buy 18,350 airplanes over the next decade, spending about $2.9 trillion. The market for all aerospace products and services over the next decade would be worth about $8.5 trillion, it said, down from last year’s estimate of $8.7 trillion and buoyed by demand for the defense, space and services businesses.
“While this year has been unprecedented in terms of its disruption to our industry, we believe that aerospace and defense will overcome these near-term challenges, return to stability and emerge with strength,” Marc Allen, Boeing’s chief strategy officer, said in a statement.
Airplane sales are expected to be driven by demand for single-aisle planes like the 737 Max, which is close to flying again after it was grounded in March 2019 following two fatal crashes. Such planes are projected to be in greater demand because people who are traveling are taking primarily short trips.
Across the world, airlines are experiencing very different recoveries, with China leading the way. In the United States, air travel is down about two-thirds from last year, according to Transportation Security Administration data, and airlines are cutting flights ahead of an expected decline in travel this winter.
American Airlines said on Tuesday that its flight schedule for November would be 50 percent smaller than it was for the same time last year. The airline said it was seeking to “match low demand resulting from coronavirus,” noting that it would operate more than 104,000 flights next month.
Southwest Airlines last week cut its November schedule by 36 percent, according to Airline Data, a firm that tracks the industry. Delta Air Lines and United Airlines are expected to make similar cuts soon, said Jeff Pelletier, the firm’s managing director. Because it has become harder to predict demand, airlines are adjusting schedules far closer to the day of travel.
“It’s becoming the new normal for a passenger to go out and say I want to fly from Dallas to Cancun and even if they want to fly in November, they still might book a flight that may not exist next week,” he said.
U.S. airlines are reeling from an impasse between lawmakers in Washington over further economic stimulus. American Airlines and United Airlines said last week that they would furlough more than 32,000 workers — cuts that they have promised to reverse if Congress and the Trump administration reach a deal that included aid for the industry.
Some airlines have been able to avoid such cuts, but not without concessions from employees. At Delta Air Lines, more than 40,000 people volunteered for unpaid leave to prevent sweeping cuts. On Monday, Southwest said it would cut executive compensation and hopes to put in place a broader pay cut to avoid furloughs next year.
Gillian Freidman contributed reporting.
Article source: https://www.nytimes.com/live/2020/10/06/business/us-economy-coronavirus