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Boeing strike is hurting travel

The walkout is mainly at Seattle factories, but Southern California is seeing a domino effect.

October 03, 2008|Peter Pae | Times Staff Writer

A strike by Boeing Co. factory workers in the Seattle area has begun to hit Southern California travelers and local aerospace companies as the walkout has left at least one airline without the new planes it needs and aircraft parts makers facing layoffs.

V Australia, a new airline started by British billionaire Richard Branson, said Thursday that it was postponing by more than two months the launch of its first flights between Los Angeles and Sydney, Australia.

The service was scheduled to start Dec. 15 but has been pushed back to Feb. 28, leaving thousands of passengers who had already bought tickets in the lurch.

In an e-mail to passengers, the airline's top executive said V Australia was "very sorry to have to tell you" but that it didn't expect to get the first three new jets it ordered from Boeing in time to launch the service as scheduled. The first plane, a 365-passenger 777-300ER, was nearly complete when the strike began Sept. 6.

"Boeing has advised us that it cannot predict the duration of the strike," the airline's general manager, Scott Swift, said in the e-mail. "It is in these circumstances that we feel we have no choice but to delay our V Australia launch."

As airline passengers were left scrambling to make alternative plans, hundreds of Boeing suppliers in the region were facing prospects of laying off workers as the strike neared its one-month mark and didn't appear to be anywhere near its end.

More than 27,000 members of the International Assn. of Machinists and Aerospace Workers, most of whom work in factories in the Seattle area, walked off their jobs after the union and Boeing could not come to terms for a new labor contract. The strike does not involve Boeing workers or operations in Southern California, most of which are military-related.

"It is at an impasse," said Scott Hamilton, an aviation consultant who has been closely following the labor dispute. "They are still very far apart on the core issues," which include how much work could be outsourced to foreign companies.

The strike has stopped final assembly of all Boeing commercial jets, including the company's most popular 737 single-aisle jet and the new fuel-efficient 787 Dreamliner, leaving suppliers with no new orders for aircraft parts.

"We're going day by day, but we will have to start laying off some people if this continues," said Joseph C. Berenato, chief executive of Ducommun Inc., which makes wing parts for Boeing's 737 jet at its Monrovia plant. So far the company has reduced the production rate and has been retraining some of its 400 employees to work on other programs to avoid job cuts.

Ducommun is one of more than 5,700 California companies that supply parts and services to Boeing, and most are based in Southern California.

"The longer the strike goes, the deeper the cuts will be," Berenato said, echoing several Los Angeles-based suppliers.

As for travelers, V Australia said Thursday that it had begun notifying passengers of the delay in the launch of the LAX-to-Sydney flight. The start of flights from LAX to Brisbane, Australia, next March is not affected, the airline said.

Airline spokeswoman Heather Jeffery, citing competitive reasons, declined to say exactly how many passengers were affected by the delay but that they numbered in the "several" thousands.

Passengers can either get a refund, rebook the trip with another airline at the carrier's expense -- or reschedule the trip on V Australia on or after March 1. Passengers who reschedule the trip with the airline will receive a $200 voucher for air travel within Australia on its sister carrier, Virgin Blue.

The airline's launch was announced with much fanfare this year and was viewed as welcome competition for travel to Australia, a popular destination long dominated by flights operated by that country's flag carrier, Qantas Airways.

V Australia offered a promotional rate of $777 for an economy-class round-trip ticket, or about half of what Qantas had been charging. Qantas quickly responded by dropping fares below $1,000 as well as offering limited $380 round-trip fares on its new Airbus A380 super jumbo jet that is expected to begin service from LAX to Melbourne this month.

The airline, which could lose millions of dollars in revenue, is likely to seek some compensation from Boeing for the aircraft delay.

"We will certainly be examining our position at a later date, as current focus is on guest re-accommodation," Jeffery said.

V Australia isn't alone. "We are one of a number of airlines impacted by the strike," Swift said in the e-mail to passengers.

Earlier this week, Boeing officials said that because of the strike the first delivery of the 787 jetliner could be delayed again, further frustrating the plane's first customer, Japan's All Nippon Airways. The plane, which the airline had hoped to begin flying a few months ago, may not even be ready for the revised delivery date of August 2009.

"Frankly, we do not know when the strike will end," Boeing's vice president for marketing, Randy Tinseth, said during a news conference in Tokyo this week. "Only when it's over can we develop a production schedule."

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peter.pae@latimes.com

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