, and when its CEO, Aengus Kelly, speaks, the industry pays attention. This week, he had some strong words for Boeing, stating that Boeing’s financial targets must “take a back seat” and focus on safety.
His frank comments included several thoughts on Boeing. First, Boeing cannot afford another slip-up with its 737 MAX aircraft family and must set aside its financial target to focus solely on quality and safety. “Given what has happened with the two fatal crashes and this incident, the financial targets have to take a back seat for Boeing and its supply chain,” said Kelly.
In an interview with the Financial Times earlier today, he said he backed Boeing and its management but added, “Boeing must now focus 100 percent on quality and safety metrics. Financial Metrics are completely secondary to the future of the company at this point.”
Despite the problems, Mr. Kelly stressed that he thinks Boeing was a “tremendous” company with “tremendous” people and that speculation on the Alaska MAX 9 decompression incident on January 5th was premature. He also stated that AerCap was continuing to purchase 737 MAX aircraft. But he offered this warning: “That product is the backbone of Boeing, so everything must be done in the near to medium term to ensure the quality of the product. They cannot afford another slip-up.” He said, “If there were another issue with the product line, it would be a very hard sell for customers to take incremental aircraft.”
AerCap owns 53 MAX aircraft, including MAX 9 models, and has ordered an additional 124 737 MAX aircraft. The company owns more than 1,400 passenger aircraft from Airbus and Boeing.
The Bottom Line: Aengus Kelly knows the aircraft market well and is as in tune with customer sentiment as anyone in the industry. His warning that an additional incident could make selling the MAX difficult underscores the seriousness of Boeing’s task. It also signals Wall Street that fixing the problem will likely result in missing short-to-medium-term financial goals as Boeing solves what appears to be an endemic problem of “never again” events continuing to occur despite assurances they would not.
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