Transcript: How airlines are handling the Boeing fiasco
This is an audio transcript of the FT News Briefing podcast episode: ‘How airlines are handling the Boeing fiasco’
Marc Filippino
Good morning from the Financial Times. Today is Friday, January 26th, and this is your FT News Briefing.
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US regulators want to peek under the hood of Big Tech’s investment into AI. And the head of Europe’s central bank says inflation is headed in the right direction. Plus, major US airlines are furious with Boeing.
Sylvia Pfeifer
American Airlines chief executive Robert Isom told analysts on Thursday that the airline is going to hold Boeing accountable. He said Boeing needs to get their act together.
Marc Filippino
I’m Marc Filippino and here’s the news you need to start your day.
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US federal regulators have a new target, and it’s Big Tech’s bromance with artificial intelligence. The Federal Trade Commission said yesterday that it’s launching an inquiry into partnerships between cloud providers and generative AI companies. The move targets five huge players — tech giants Amazon, Microsoft and Google, and start-ups Anthropic and OpenAI. These tech companies have dumped billions of dollars into the start-ups. And the FTC wants to investigate potentially anti-competitive behaviour. The companies will have 45 days to respond to the inquiry.
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US airlines are taking a big hit from the latest problems at Boeing, and yesterday, some major carriers predicted substantial profit losses because of issues with the American aircraft maker. It all stems, of course, from a mid-air accident earlier this month on an Alaska Airlines flight. That led to the grounding of Boeing’s Max 9 planes. Here to talk to me about what this means for Boeing is the FT’s Sylvia Pfeifer. Hey, Sylvia.
Sylvia Pfeifer
Hi, Marc.
Marc Filippino
OK, so do me a favour. Unpack some of the news that came out yesterday. Just how much have US airlines been hit by the most recent problems at Boeing?
Sylvia Pfeifer
Yeah. So as you say, the Federal Aviation Administration grounded a lot of the Boeing 737 Max 9 aircraft after the accident happened on January the 5th. So that grounding has impacted in particular two US airlines — United Airlines and Alaska Airlines. So Alaska said that the grounding of the Max 9s would cost the carrier about $150mn. The other thing that happened quite late on Wednesday is that the FAA also put limits on Boeing’s production of all 737 Max jets. Now, the US plane maker had hoped to increase production of the Max fleet this year, partly as a way of, you know, servicing customers who want the planes, but also it’s key to them meeting cash flow targets. But the FAA said, no, you can’t do this ramp-up until we are satisfied that the quality assurance processes and manufacturing process at your factories are top-notch and we verified them.
Marc Filippino
Obviously, this throws a huge wrench in the airline industry’s plans for this year. How are CEOs responding to Boeing’s problems?
Sylvia Pfeifer
So a lot of Boeing’s large customers are not very happy. They vented their anger in recent days over the plane maker’s quality lapses, in effect really warning that their patience is running thin now. American Airlines chief executive Robert Isom told analysts on Thursday that the airline is going to hold Boeing accountable. He said Boeing needs to get their act together. And those comments followed very similar comments from Scott Kirby, the chief executive of United Airlines. So big airline customers are not very happy. Nobody is yet publicly calling for a change in management at Boeing, but obviously they are under a lot of pressure to get this sorted.
Marc Filippino
OK, so a lot of people are angry with Boeing right now. What sort of larger repercussions does this all potentially have for the aircraft maker?
Sylvia Pfeifer
Yeah. So Boeing’s just coming out of some very difficult years. If you remember, back in 2018 and 2019, Boeing had two fatal crashes of its Max 8 aircraft where 346 people died. They’ve promised repeatedly in the past few years that they would increase transparency, that they would improve safety. And by all accounts, this recent accident seems to suggest that that hasn’t really happened. Now, I think the one thing to remember about Boeing is that it is a giant of US industry, and it still is despite these problems. I do think what it does do, it has weakened Boeing in relation to its arch-rival, Airbus, the European plane maker. It is really a duopoly between the two of them. And Airbus, certainly since the Max 8 crashes, has gained the upper hand in terms of market share in the lucrative single-aisle segment of the market. And that is starting to sort of generate questions among people. How can Boeing ever catch up against Airbus, especially if they have these persistent problems that are holding them back?
Marc Filippino
Sylvia, it seems like it would help a lot if there were a third manufacturer that airlines could go to to make up for these issues with Boeing. Why isn’t there? Why are we stuck with the duopoly?
Sylvia Pfeifer
Because it’s really difficult to make aircraft. The technology involved is incredibly difficult. I mean, the Chinese last year flew their first ever homemade aircraft, the C919 made by Comac, the Chinese plane maker. But the C919 at the moment wouldn’t exist without western input. So people don’t realise how difficult it is. I mean, it’s not like building a car or anything. And the second thing, as we see with Boeing, safety is the key thing. You know, you can’t stick something up in the sky that is gonna fall out.
Marc Filippino
Sylvia Pfeifer is the FT’s industry correspondent. Thanks, Sylvia.
Sylvia Pfeifer
Thank you.
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Marc Filippino
The European Central Bank kept interest rates on hold yesterday, but the end might be in sight. The president of the ECB, Christine Lagarde, said rapid wage growth was already showing signs of slowing, which means, broadly speaking, that inflation is starting to ease. And it’s potentially a good sign for folks hoping the central bank will cut interest rates sooner rather than later. Lagarde said the uptick in the eurozone’s December inflation rate was, quote, weaker than expected and forecast that price pressures would continue to ease over the course of the year.
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The 2024 US presidential election is in full swing. The Republican primary is down to two candidates, but it’s looking like we’re gonna have a rematch between President Joe Biden and former President Donald Trump. To help you make sense of the nonstop news during the week, we’re launching a new weekend podcast called Swamp Notes. I’ll be hosting, and you can find it in the briefing feed every Saturday morning. Here to talk a little bit about the podcast is the FT’s deputy Washington bureau chief, Lauren Fedor. She will be a regular guest on the show. Hi, Lauren.
Lauren Fedor
Hi, Marc.
Marc Filippino
All right, so, you approached me a little while ago about doing a politics show for the briefing. Tell listeners a little bit about what they can expect from the Swamp Notes podcast.
Lauren Fedor
Well, I personally think this is gonna be a great opportunity for me and for my colleagues here in DC to share with your listeners a little bit more about what we’re seeing, thinking, hearing over the course of this very long and very complicated US election cycle.
Marc Filippino
Yeah. You were just in New Hampshire for the primaries, right?
Lauren Fedor
I was in New Hampshire. I was in Iowa for the caucuses before that. In New Hampshire, I was able to go to candidate events, but I was also able to just talk to ordinary voters. On polling day, on primary day, I went to a high school that was absolutely packed with people voting, either for Nikki Haley, who is the former South Carolina governor, the former UN ambassador, and the last woman, last person standing in the Republican field who’s taking on Donald Trump. But I also spoke to a lot of Trump supporters. One of them was Ted Maravelias. He was standing outside the high school with a Trump sign. He had a red baseball cap that said ultra-Maga on it.
Ted Maravelias
Nikki Haley just doesn’t represent my values. I mean, she’s a globalist. And honestly, maybe another thing that I love about President Trump is he’s not a globalist. And this insane funding of the Ukraine war is just crazy. We’re trying to get ourselves into world war three to defend a country that we have no business in.
Lauren Fedor
So I think that the Ukraine issue, foreign policy has actually been a big issue on the campaign trail in a way that foreign policy isn’t always. That’s the kind of thing that I’m hoping that in the podcast we can unpack and talk a little bit about.
Marc Filippino
Yeah, I’m sure we will. And the other thing I think we’re gonna spend a lot of time unpacking is just how weird this election is, because it’s really weird, Lauren.
Lauren Fedor
Absolutely. There are many unique factors about this hypothetical but increasingly likely match-up between Donald Trump and incumbent President Joe Biden. And one thing I feel very confident saying is it’s something that, really, the vast majority of Americans don’t want. And this is obviously really interesting for the US to be having an election. But the US is just one of, you know, dozens heading to the polls this year, right? And so I think this will be a great opportunity for us at the FT to be placing the US election in that global context, thinking about what the results here might mean for the rest of the world and how the rest of the world is perceiving what’s going on here.
Marc Filippino
Lauren Fedor is the FT’s deputy Washington bureau chief. Thanks so much, Lauren.
Lauren Fedor
Thanks, Marc.
Marc Filippino
You can listen to Swamp Notes starting tomorrow on the FT News Briefing feed wherever you get your podcasts.
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You can read more on all of these stories at FT.com for free when you click the links in our show notes. This has been your daily FT News Briefing. Make sure you check back next week for the latest business news.
The FT News Briefing is produced by Kasia Broussalian, Sonja Hutson, Fiona Symon and me, Marc Filippino. Our engineer is Monica Lopez. We had help this week from Josh Gabert-Doyon, Sam Giovinco, David da Silva, Michael Lello, Peter Barber, Gavin Kallmann and Zach St Louis. Our executive producer is Topher Forhecz. Cheryl Brumley is the FT’s global head of audio. And our theme song is by Metaphor Music.
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