Somehow the decision – supposedly still not made but everyone seems to know it is, to fully transfer 787 assembly to Charleston, the other side of the country from Renton, has finally hit home.
With production slated to drop to just 6 aircraft per month there is no viable way to keep both plants open right now – and probably not for several years to come. Charleston can build the 787-10 as well as the -8 and -9. Renton doesn’t have the space for the -10.
Boeing has been the recipient of billions of dollars of state government tax credits over the years, almost as a matter of course, to keep production in Washington State. The feeling is that Boeing isn’t sticking to the deal, but it’s not exactly known for doing so. It gets what it wants by threatening to move elsewhere and dangles production in front of states to see who will cough up the most money. Almost always, Washington State gives in.
Suddenly legislators and unions realising the scale of the problem are worried about will happen and yet more job losses. Boeing seems not to really care, its problems are so deep and so profound it seems lost in a miasma of its own issues. Many are doubting its commercial aviation future, although I suspect in the longer term that will be proven unfounded.
Airlines are being accused of spending too much time trying to work out how to get back to 2019 levels of business, and refusing to face the facts that those days are gone, and they may never come back. Some airlines are seeing that more clearly than others. The US airlines, with one or two exceptions seem to be looking back, and the longer they do so the harder it becomes for them to face reality and plan their future.
Instead they, and many other airlines around the world seem to be piling up debts in the billions – a long term disaster waiting to weigh them down in the years to come. Stubborn refusals to send hundreds of aircraft to long term storage or even scrap, while paying for short term storage and maintenance at huge expense, hoping for a sudden restoration of flying to past levels, is simply wishful thinking.
Some of the airlines have been shocked at offering rock bottom prices and that nobody is taking the offers up. The trans-Atlantic route is dead and is staying that way until the US agrees to lift ESTA restricted travel. At the same time Europe is still requiring 14 day quarantines on arrivals. Who can travel under those circumstances?
Remember Flybe? It died back in February – many think of its as the first airline to go under because of the impending Covid crisis as bookings collapsed.
Flybe provided the UK and the immediate near-Europe region with crucial domestic and regional routes, most of which had little or no competition. As of this week only 13% of Flybe routes have been applied for and are being served – and they’re all the most obvious and the most likely to make any money.
The other 87% have attracted no interest from anyone, because they don’t have the right aircraft, the right infrastructure or are so risk averse they wouldn’t take the risk even in a normal business environment.
The aircraft manufacturing business has also started to deeply impact the supply chain, and the biggest element in that is the engine manufacturers. Rolls Royce is in deep fiscal trouble. It makes its money from leasing engines and charging by the hour flown. That isn’t happening on anything like the scale RR needs to maintain its business cash flow.
As a result the company is looking at trying to raise a massive $6.5 billion US to keep it going. Loans, share issues, bonds, will probably provide the money, but it’s another massive debt burden for the company to carry into the coming years.