With hundreds of 737 Maxes sitting idle and indefinitely grounded by regulators, Boeing’s new CEO David Calhoun might have inherited the biggest crisis in the history of the aviation industry. A lot of work cut out for him, the new CEO has to undo the work of his predecessor and navigate this storm. In an exclusive interview, Calhoun talks about the roadmap ahead for the company. Excerpts:
Aviation sector recovery
In the post-Covid world, domestic markets will return the fastest. The US market feels a little bit like the old days. Long-haul recovery will be in full swing by the end of the next calendar year and into 2023. Owing to the state of supply chains and the aviation industry, ramping up operations is going to be another herculean task.
Shift towards single-aisle, 757-class replacement
The big differentiator will be the technology airframers use to engineer the airplane, the simplicity with which they do it and the manufacturing techniques they use to get efficiency out of the cost. Going forward, the change cannot be anything but fundamental. So we need to prove that our modeling capability can do the next airplane and the manufacturing techniques can be used at scale and are repeatable.
Rollout of new 777X
The new 777X is being held up as a model of efficiency and design, and the company has also donated 250,000 medical masks to Wuhan following the coronavirus outbreak. This new aircraft could be the ultimate replacement for the seemingly doomed 737 Max.
We have a gigantic inventory of finished airplanes. When you add it to our production rate for this year and next year, it will end up with a delivery rate that’s pretty robust. The company is not looking at winning back production losses that it faced earlier to even up the market share. Suppliers need to trust us so when we ask them to increase capacity, they will do it willingly and hence, we need to be transparent.
Next year, we will end the production run of the 747. The 777X will play on its own for 50 years. It’s that efficient, that good, and its only two competitors are going by the wayside. The freighter version of it is very powerful.
Boeing’s future in missile defense
Incumbency might have worked to our disadvantage in this case. There are other opportunities where our incumbencies might give us opportunities to take a few things from our competitors. We were disappointed, I don’t want to suggest otherwise, but there’s a lesson in it. Every now and then, you need a clean sheet of paper and a slightly different way of thinking about it than the incumbent position.