Boeing's CEO says a major US airline could collapse this year because of the COVID-19 pandemic (BA)

Boeing CEO David Calhoun said that a major US airline could fail this year, as the coronavirus pandemic continues to devastate the airline and aerospace industries.
Calhoun's comments came during a pre-taped interview on NBC's "Today."
Calhoun did not specify a carrier. Wall Street analysts have said that airline bankruptcies are a big possibility , though have avoided discussing an outright collapse.
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A major US airline could fail by the end of the year, Boeing CEO David Calhoun warned on Monday, as demand for air traffic remains near bottom due to the coronavirus pandemic.

In response to a question on whether a major airline could fail, Calhoun said "yes, most likely."

The comment came during a pre-taped interview with Savannah Guthrie, host of NBC's "Today," which aired Tuesday morning .

Calhoun warned that demand would likely be slow to recover, testing the airlines this fall.

"You know, something will happen when September comes around." he told NBC. "Traffic levels will not be back to 100%. They won't even be back to 25%. Maybe by the end of the year we approach 50%."

"So there will definitely be adjustments that have to be made on the part of the airlines," he added.

Payroll assistance for airlines, provided under the federal CARES Act, expires at the end of September. Airlines receiving aid, including the four biggest US airlines American, Delta, Southwest, and United are prohibited from laying off or furloughing staff until after September 30.

Airlines worldwide are facing a collapse in travel demand both internationally and domestically as travel bans, shelter-in-place advisories, and corporate travel suspensions remain in effect.

"The threat to the airline industry is grave. There's no question about it. And apocalyptic does actually accurately describe the moment," Calhoun said.

A spokesperson for Boeing said that Calhoun was "was speaking to the general uncertainty in the sector, not about any one particular airline."

While acknowledging the severity of the situation, Calhoun was also optimistic about the industry's long-term recovery.

"I don't think [apocalyptic] describes the recovery, and I don't think it describes the medium or long-term for the airline industry or aviation in general," he said. "As people begin to relive their lives, we expect they will also get back to traveling."

"As long as we can demonstrate the safety of our industry, the safety of our airplane experience, we believe we will return to a growth rate similar to the past. But it might take us 3-5 years to get there."

While Wall Street analysts have raised the specter of airline bankruptcies, a total collapse or liquidation of a major US carrier would be an extreme consequence and a blow for the industry at large.

Bankruptcy filings or reorganizations could be an end result of large amounts of debt assumed by airlines to get through the crisis, as well as necessary downsizing to emerge smaller on the other side of it. Analysts at JPMorgan Chase have written that American Airlines is a possible candidate , although other analysts have said that they do not expect any major US carriers to file for bankruptcy before the end of the year .

Although airlines receiving aid through the government bailout are prohibited from cutting staff through September 30, carriers are preparing for layoffs starting October 1. United has repeatedly warned employees of impending cuts , as well as reductions of hours in the coming weeks.

Boeing, meanwhile, has said that it will cut about 10% of its payroll, including 15% within its commercial airplane division . The company is also significantly reducing its production through 2021.

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