Boeing's (BA) issues affect much more than the company's choppy stock movements as delivery delays for its 787 Dreamliner plane is now forcing at least one airline client to change their plans heading into the busy summer travel season.
American Airlines (AAL) is trimming its international flight schedule, delaying the launch of certain routes and reducing service for one international route.
All of this is due to Boeing failing to deliver on what it had promised the airline.
The company is reducing its schedule "due to Boeing's continued inability to deliver our 787-8 aircraft. We are taking a proactive approach to reduce the negative impact Boeing's delays could have on our business and customers," according to an internal staff memo viewed by TheStreet.
American will delay the launch of its Dallas-Fort Worth to Tel Aviv route and reduce its Miami to Sao Paolo, Brazil route to single daily service.
The company is also temporarily suspending Seattle to London Heathrow, Dallas Fort Worth to Pudahuel, Chile, and Los Angeles to Sydney flight routes.
Boeing's Failing to Deliver
American was expecting Boeing to Deliver all 13 of the 787 Dreamliners it is owed this year, but instead it expects to receive only 10 of them this year with the remaining three being delivered in 2023.
Despite the issue, American still says that the aircraft is an essential part of its fleet and that it has "tremendous confidence in the aircraft and will continue to work with Boing on their delivery."
American said that Boeing will compensate the airline for its failure to deliver, and that its relationship with the plane maker is still intact.
But while the two are still on good terms, delivery issues for Boeing appear not to be going anywhere anytime soon.
What's Going on With the Dreamliner?
Boeing suspended delivers of the 787 in late May 2021 after the Federal Aviation Administration (FAA) raised concerns about the company's inspection method.
Deliveries have remained suspended since then as the FAA and other regulators have reviewed repairs and inspections. All indications are that this suspension will go on for months.
Earlier this week, the FAA said that to address its issues, Boeing needs a "systemic fix to fix their production process," Reuters reported. Prior to this, the FAA also said that it would not allow Boeing to self-certify individual new 787 planes.
Boeing has said that the 787 program remains at a low production rate with an expected gradual return to five per month over time.
Boeing took a $3.5 billion charge in its most recent quarter due to delivery delays and concessions to customers like the one American Airline is getting.
The company also had another $1 billion in abnormal production costs related to production flaws and related repairs and inspections.
