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kurtverbose
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 7:16 am

planewasted wrote:
majano wrote:
gatibosgru wrote:
$5.6b actually doesn't sound that bad.

The article refers to USD5.6 plus a further USD 1.7 to be spread over future accounting periods. I am not challenging that it doesn't sound too bad, but just clarifying the actual cost announced.


That's 7.2 billion in total. The A350 development cost was 12.38 billions according to Wikipedia. I would say that more than half of the A350 development cost is quite much.


Yes, just think, if they'd stumped up a bit more they could've had a new NSA instead of this mess.
 
senatorflyer
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 7:39 am

SEU wrote:
SheikhDjibouti wrote:
SEU wrote:
Does this include the 4.9 billion order from Garuda Indonesia that was cancelled? or is this just costs in general, so its 4.9billion on top of the 5.6billion?
Er, no.
The $4.9billion Garuda order would have yielded a theoretical profit at some future date as each individual aircraft was delivered, but only a fraction of that headline amount would be actual profit (e.g. maybe $490million)
Also Boeing haven't necessarily "lost" this $490million potential future profit, because another customer might will step in at some point and take these frames.
Or more likely, a customer who was originally waiting until 2023 for delivery now finds themselves offered an earlier slot in 2020, meaning that they will have to come up with the $$$ in 2020.
Boeing will get that $4.9billion from somebody at some point, just not from Garuda.
A decade down the road when the 737 program finally ends, a.netters might argue that the final figures for 737 production could be 50 higher if Garuda hadn't got cold feet.
But it's all rather vague unless you find yourself one day with a real physical aircraft sitting at Renton all ready to be painted up in Garuda colors, but with nowhere to go. Except that will never happen.

The $5.6billion is different because it is a real assessment of real (& expected) losses up to this point in time.
Another way of looking at it is to view it as the profit Boeing would make if tomorrow they sold 560 737 MAXs to a new customer.(assuming a nominal $100 million price tag on each a/c, and 10% profit margin.)


Well I understand the technicalities, you are just talking about cash flow. They were going to get 4.9billion, now they are not. Its a loss of 4.9billion.


It would have been revenue only, the profit of this order would have been maybe a few hundert million. But since this is not happening nothing is lost in accounting terms.
 
devron
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 7:41 am

At first I thought that is a lot of money.

Second thought it is actually okay as I just googled Boeing made >10b profit last year. So this write off is easly covered. I assume divided will not even be affected maybe some buyback. Just wondering if this is everything or only a write-off thus far so meaning everything going in q3 still needs to be accounted for? Isn`t there a rule you can only do a write-off if the costs are extremly likely and as Boeing doesn`t know when the plane will fly they need to write of only the costs they can see?
 
mxaxai
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 7:58 am

SEU wrote:
Well I understand the technicalities, you are just talking about cash flow. They were going to get 4.9billion, now they are not. Its a loss of 4.9billion.

No. Garuda's 4.9 billion would have fully contributed to Boeings revenue but only part of it - say 10 % or 490 million - would have been profits. Those 490 million are the actual loss.
Even then, there's a high chance that those slots will be taken up by someone else. So the direct impact on Boeings finances is almost nil. But the extra development and certification work, the storage costs for the currently built 737, the damage compensation to airlines and relatives, that's all real money going straight out the door. Not everything will need to be paid today but Boeing will pay sooner or later.
 
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BoeingVista
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 8:06 am

planewasted wrote:
majano wrote:
gatibosgru wrote:
$5.6b actually doesn't sound that bad.

The article refers to USD5.6 plus a further USD 1.7 to be spread over future accounting periods. I am not challenging that it doesn't sound too bad, but just clarifying the actual cost announced.


That's 7.2 billion in total. The A350 development cost was 12.38 billions according to Wikipedia. I would say that more than half of the A350 development cost is quite much.


Yup this 5.6bn + 1bn from last quarter basically triples the MAX program cost, Boeing could easily have build a new narrow body aircraft for that money but the beancounting geniuses calculated they could nickel and dime the 737 back to life one last time.
BV
 
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Finn350
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 8:23 am

SEU wrote:
SheikhDjibouti wrote:
SEU wrote:
Does this include the 4.9 billion order from Garuda Indonesia that was cancelled? or is this just costs in general, so its 4.9billion on top of the 5.6billion?
Er, no.
The $4.9billion Garuda order would have yielded a theoretical profit at some future date as each individual aircraft was delivered, but only a fraction of that headline amount would be actual profit (e.g. maybe $490million)
Also Boeing haven't necessarily "lost" this $490million potential future profit, because another customer might will step in at some point and take these frames.
Or more likely, a customer who was originally waiting until 2023 for delivery now finds themselves offered an earlier slot in 2020, meaning that they will have to come up with the $$$ in 2020.
Boeing will get that $4.9billion from somebody at some point, just not from Garuda.
A decade down the road when the 737 program finally ends, a.netters might argue that the final figures for 737 production could be 50 higher if Garuda hadn't got cold feet.
But it's all rather vague unless you find yourself one day with a real physical aircraft sitting at Renton all ready to be painted up in Garuda colors, but with nowhere to go. Except that will never happen.

The $5.6billion is different because it is a real assessment of real (& expected) losses up to this point in time.
Another way of looking at it is to view it as the profit Boeing would make if tomorrow they sold 560 737 MAXs to a new customer.(assuming a nominal $100 million price tag on each a/c, and 10% profit margin.)


Well I understand the technicalities, you are just talking about cash flow. They were going to get 4.9billion, now they are not. Its a loss of 4.9billion.


So you are of the opinion that producing those planes at 4.9 billion revenue doesn’t incur any cost to Boeing?
 
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PW100
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 8:31 am

TVNWZ wrote:
nikeherc wrote:
That’s not as bad as it may sound. I’m not denying that it is an eye watering amount of money, but BellSouth took multiple hits of over a billion just for restructuring about 20 years ago. What they do is take a loss on the books upfront and then reduce the accrual as they pay out the penalties in whatever form. When everything has settled out, they will show any balance as a profit or any additional costs as an additional charge. As of now, they haven’t reduced their cash for this, but they have greatly reduced their tax liability.


Finally, someone who has a working knowledge of accounting.


Or in other words, the tax payer is footing an important part of the bill. Great.
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PW100
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 8:34 am

9Patch wrote:
ScottB wrote:
Kindanew wrote:

Its ok. They will lobby even harder for tax breaks.


Maybe they should ask for "repayable loans."

That don't have to be repaid.


But they are being repaid.
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mxaxai
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 8:48 am

PW100 wrote:
TVNWZ wrote:
nikeherc wrote:
That’s not as bad as it may sound. I’m not denying that it is an eye watering amount of money, but BellSouth took multiple hits of over a billion just for restructuring about 20 years ago. What they do is take a loss on the books upfront and then reduce the accrual as they pay out the penalties in whatever form. When everything has settled out, they will show any balance as a profit or any additional costs as an additional charge. As of now, they haven’t reduced their cash for this, but they have greatly reduced their tax liability.


Finally, someone who has a working knowledge of accounting.


Or in other words, the tax payer is footing an important part of the bill. Great.

It's difficult to tax losses. The tax payer isn't directly footing the bill but the reduced profits obviously lead to reduced tax payments.
 
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 9:26 am

If I read between the lines, the 4,7BN is for the 2nd quarter (first quarter of grounding) only, and only represent what Boeing "think" they might stand to lose. Extend the grounding for another 2 (highly likely), 3 (probable) or 4 (unlikely but possible) quarters, and the picture may very well be different.

Keep in mind this is Boeing we're talking about, a company with a long and sordid history of only drip-feeding bad news on a quarterly basis (ref: B787 delays), and we may very well see them wave goodbye to another handful of billions, as they fail to have the grounding lifted.

Furthermore, this write-off does seemingly not take into account the possibility of further reducing, or even halting, the production line. Rather, in typical sucking up to Wall Street style, it talks about raising production from 42 to 57 a month. Well, yes, if all goes swimmingly that's a possibility. But for anyone reading the tealeaves, the current trajectory trend toward a need to further reduce production rather than the opposite. And that's really, really, really going to sting.

I'd be amazed if they can wiggle their way out of this with anything less than 10-15BN in losses, probably closer to the latter. Why? Because there's no actual signs they've cracked the core issue yet (MCAS), nor that they have any solid plans afoot to address the additional issues which seem to pop up on a very regular basis. And then there is, of course, the spectre of the trim wheel, which they have seemingly not taken into any sort of account. If the regulators decide it's really no good having to employ a pair of bodybuilders to manipulate the trim wheel, they might need to come up with a fix for umpteen thousand additional (NG) aircraft, the cost of which may well be astronomical.

So, all in all, this is a 'best case' scenario designed to do nothing but stabilise stock prices for a while, keeping in the mind the inability of Boeing (Chicago) to look any further than the next quarter, and I'm sure it'll also stabilise the bonuses of senior management, which I expect is the main motivating factor for releasing these numbers.

Boeing presently command the same level of trust as a 2 year old with a set of crayons and a newly painted wall.
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Absynth
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 9:32 am

BoeingGuy wrote:
This is very typical of Boeing over the past 25 years. Gotta cut costs to the bone up front. Then it costs 1000x more later - 787, KC-46, 737 Max.

Never enough money to do it right, but always lots more money later to fix the mess. Unfortunately the 737 Max cost more than late deliveries.

They never learn as long as the leaders who foster this culture walk away with their pockets lined with money.


25 yrs seems a bit much but the merger with MDD in 1997 and the subsequent move to Chicago four years later seem to be the landmark events that enabled this cultural shift from engineering to stockholder value.
 
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 9:43 am

mxaxai wrote:
SEU wrote:
Well I understand the technicalities, you are just talking about cash flow. They were going to get 4.9billion, now they are not. Its a loss of 4.9billion.

No. Garuda's 4.9 billion would have fully contributed to Boeings revenue but only part of it - say 10 % or 490 million - would have been profits. Those 490 million are the actual loss.
Even then, there's a high chance that those slots will be taken up by someone else. So the direct impact on Boeings finances is almost nil. But the extra development and certification work, the storage costs for the currently built 737, the damage compensation to airlines and relatives, that's all real money going straight out the door. Not everything will need to be paid today but Boeing will pay sooner or later.


Look I get your point, and somewhat correct. However lets say you get paid $1000 per month, after all your bills come out its $100 disposable income (aka profit)

Now if you made a mistake at work, and you were not paid $1000 this month, would you say:

A) ive only lost $100 profit
or
B) ive lost my entire $1000 pay

Just because only a % of it is profit, doesnt mean boeing only lost out on the profit, the 4.9 billion would have paid towards staff, overheads, productions, debts, which now they have to find the money elsewhere.

Respectfully, you whilst your point is partly true, its not factoring in everything and is wrong.
 
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Faro
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 10:25 am

SEU wrote:
SheikhDjibouti wrote:
SEU wrote:
Does this include the 4.9 billion order from Garuda Indonesia that was cancelled? or is this just costs in general, so its 4.9billion on top of the 5.6billion?
Er, no.
The $4.9billion Garuda order would have yielded a theoretical profit at some future date as each individual aircraft was delivered, but only a fraction of that headline amount would be actual profit (e.g. maybe $490million)
Also Boeing haven't necessarily "lost" this $490million potential future profit, because another customer might will step in at some point and take these frames.
Or more likely, a customer who was originally waiting until 2023 for delivery now finds themselves offered an earlier slot in 2020, meaning that they will have to come up with the $$$ in 2020.
Boeing will get that $4.9billion from somebody at some point, just not from Garuda.
A decade down the road when the 737 program finally ends, a.netters might argue that the final figures for 737 production could be 50 higher if Garuda hadn't got cold feet.
But it's all rather vague unless you find yourself one day with a real physical aircraft sitting at Renton all ready to be painted up in Garuda colors, but with nowhere to go. Except that will never happen.

The $5.6billion is different because it is a real assessment of real (& expected) losses up to this point in time.
Another way of looking at it is to view it as the profit Boeing would make if tomorrow they sold 560 737 MAXs to a new customer.(assuming a nominal $100 million price tag on each a/c, and 10% profit margin.)


Well I understand the technicalities, you are just talking about cash flow. They were going to get 4.9billion, now they are not. Its a loss of 4.9billion.



Yes and no.

They were going to get USD 4.9 billion in revenues, yes. But attached to those USD 4.9 billion are, say, USD 4.4 billion of total costs, some being cash-out like supplier purchases and other not like the allocation of a share of the MAX development cost amortisation. So what they get in net profit terms is what is important from an accounting point of view, say, a token 10% of revenues or USD 500 million.

This is the net-net difference, what matters to shareholders only. This is what shareholders can metaphorically take home and eat. The Garuda cancellation has deprived them of their pizza.

The USD 4.9 billion loss of revenues also matters of course, to shareholders (because it includes their USD 500 million net profit), to employees (because it includes their wages, salaries and pensions) and to suppliers and the government which will lose taxes on the relevant profit before tax.

But in accounting parlance, a "loss" is the opposite of net profit; it affects the bottom-line, not the top-line. A "loss" of a sales contract is understood better in sales/marketing --or general lay-- terms.

A wee bit pendantic perhaps...but in the end just semantics I think...


Faro
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PW100
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 10:56 am

SEU wrote:
mxaxai wrote:
SEU wrote:
Well I understand the technicalities, you are just talking about cash flow. They were going to get 4.9billion, now they are not. Its a loss of 4.9billion.

No. Garuda's 4.9 billion would have fully contributed to Boeings revenue but only part of it - say 10 % or 490 million - would have been profits. Those 490 million are the actual loss.
Even then, there's a high chance that those slots will be taken up by someone else. So the direct impact on Boeings finances is almost nil. But the extra development and certification work, the storage costs for the currently built 737, the damage compensation to airlines and relatives, that's all real money going straight out the door. Not everything will need to be paid today but Boeing will pay sooner or later.

Look I get your point, and somewhat correct. However lets say you get paid $1000 per month, after all your bills come out its $100 disposable income (aka profit)
Now if you made a mistake at work, and you were not paid $1000 this month, would you say:
A) ive only lost $100 profit
or
B) ive lost my entire $1000 pay
Just because only a % of it is profit, doesnt mean boeing only lost out on the profit, the 4.9 billion would have paid towards staff, overheads, productions, debts, which now they have to find the money elsewhere.
Respectfully, you whilst your point is partly true, its not factoring in everything and is wrong.


Your comparison is not really valid.

Say we agreed that you would do some work for me valued at around $1000, next year in April. Now, I'm backing off. You still have the better part of a year to find someone else to take your work. And your work is in high demand. In fact, your competition is sold out for the full next year. What would be your loss because I cancelled our deal (ignoring that we may re-engage on a new deal on a different product).
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Faro
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 12:08 pm

PW100 wrote:
SEU wrote:
mxaxai wrote:
No. Garuda's 4.9 billion would have fully contributed to Boeings revenue but only part of it - say 10 % or 490 million - would have been profits. Those 490 million are the actual loss.
Even then, there's a high chance that those slots will be taken up by someone else. So the direct impact on Boeings finances is almost nil. But the extra development and certification work, the storage costs for the currently built 737, the damage compensation to airlines and relatives, that's all real money going straight out the door. Not everything will need to be paid today but Boeing will pay sooner or later.

Look I get your point, and somewhat correct. However lets say you get paid $1000 per month, after all your bills come out its $100 disposable income (aka profit)
Now if you made a mistake at work, and you were not paid $1000 this month, would you say:
A) ive only lost $100 profit
or
B) ive lost my entire $1000 pay
Just because only a % of it is profit, doesnt mean boeing only lost out on the profit, the 4.9 billion would have paid towards staff, overheads, productions, debts, which now they have to find the money elsewhere.
Respectfully, you whilst your point is partly true, its not factoring in everything and is wrong.


Your comparison is not really valid.

Say we agreed that you would do some work for me valued at around $1000, next year in April. Now, I'm backing off. You still have the better part of a year to find someone else to take your work. And your work is in high demand. In fact, your competition is sold out for the full next year. What would be your loss because I cancelled our deal (ignoring that we may re-engage on a new deal on a different product).



Your loss would be the cost of the working capital finance you need to build those frames and keep them in your inventory (assuming supplier commitments cannot be instantly cancelled) + the deep discount that you have to offer because your product is not perceived to be as attractive as was before the grounding...cue the IAG deal and its supposed sweet discount.

Mind you the demand is still there and growing...but carriers now have a justifiable reason to getter better bargains...

Over time however, you are right...in 2 or 3 years' time, the grounding will be largely forgotten...and it will be back to business as usual...


Faro
Last edited by Faro on Fri Jul 19, 2019 12:11 pm, edited 1 time in total.
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SheikhDjibouti
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 12:09 pm

mxaxai wrote:
No. Garuda's 4.9 billion would have fully contributed to Boeings revenue but only part of it - say 10 % or 490 million - would have been profits. Those 490 million are the actual loss.
Even then, there's a high chance that those slots will be taken up by someone else. So the direct impact on Boeings finances is almost nil. But the extra development and certification work, the storage costs for the currently built 737, the damage compensation to airlines and relatives, that's all real money going straight out the door. Not everything will need to be paid today but Boeing will pay sooner or later.
:checkmark:
SEU wrote:
Look I get your point, and somewhat correct. However lets say you get paid $1000 per month, after all your bills come out its $100 disposable income (aka profit)

Now if you made a mistake at work, and you were not paid $1000 this month, would you say:

A) ive only lost $100 profit
or
B) ive lost my entire $1000 pay

Just because only a % of it is profit, doesnt mean boeing only lost out on the profit, the 4.9 billion would have paid towards staff, overheads, productions, debts, which now they have to find the money elsewhere.

Respectfully, you whilst your point is partly true, its not factoring in everything and is wrong.

Respectfully, you have turned the world on it's head.
The $1000 /month pay analogy is so wrong, explaining it would take forever. Let's just say that it would only work for a lumberjack who spends $300 / month on travelling to site, $300 maintaining their chainsaw, and $300 having his lunchbox delivered by helicopter every day. Furthermore, he is told ahead of next month that he can stay at home. Travel costs are now nil. Wear & tear on chainsaw now nil. He still needs to eat to stay alive, but he can do that on a much reduced budget of say $150/month.
Yeah, he is down $1000 in terms of earnings, but his costs are only a fraction of what they would have been. Obviously he is also "losing" the $100/month profit he was putting aside for a holiday... in Canada. :lol:

Unfortunately this crazy analogy still needs several thousand more words to cover all the real world equivalents, and even then we won't see the wood for the trees.

You are correct that Boeing still have obligations to pay staff (excepting where they reduce overtime, and make other temporary cuts)
They can also divert a limited number of staff to other production lines.
You are correct that Boeing still have overheads, such as paying ground rent (?) and maintaining all those beautiful huge buildings.
But with the MAX production rate reduced, there will also be savings, such as lower electricity usage, and a paintshop using far less paint.
Not to mention the parts suppliers, who are sharing the pain because they are currently supplying components at a slower rate.
And yes, if Boeing are borrowing money, they still have debts to service.

But the only way Boeing would lose $4.9billion is if they continued to build 50 Max's for Garuda, painted them up in full livery, and then flew them into the ocean.
Even then, they would only lose $4.4billion in actual costs, (and $490million in potential profit)

Unless the MAX is permanently grounded, what is going to happen is that they will build 50 Max's for Garuda, paint them up in somebody else's livery, and sell them to somebody else... for $4.9billion, albeit after a delay of some months, possibly a year, due to the current grounding.
What part of that do you not understand?

Perhaps you are under the misunderstanding that Garuda paid the entire $4.9billion up front, like you or I would if we were ordering a burger at McDonalds?
If that had been the case, then yeah, Garuda demanding their money back would have deprived Boeing of $4.9b overnight.
Except it doesn't work like that.
As it stands, Garuda would only have placed a small deposit against the original order, and for all we know Boeing kept that (non-refundable) deposit scoring a "profit" for building absolutely nothing.
Nothing to see here; move along please.
 
ethernal
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 12:43 pm

par13del wrote:
ethernal wrote:
par13del wrote:
So is 5.6 bil enough if they creatively add the deferred 787 cost for Boeing to go chpt.11, wipe out investors who are already sitting pretty with all the buy backs, get new investors - no shortage of willing participants, reduce other expenses so that when they emerge the company will be re-capitalized allowing them to be competitive with Airbus?


Yeah.. no. Are you insane?

You wanna explain GE and the others, etc?


GE? You mean the completely operationally and entity isolated sub-prime subsidiary that went through bankruptcy? GE never went through bankruptcy (although it did have a massive writedown associated with its ownership stake in WMC - as you would expect as an equity holder for a company going through bankruptcy...).

A company never chooses to go through bankruptcy for "convenience reasons" - which is what you are proposing. Pretty much by definition, bankruptcy wipes out equity (i.e. stock) value completely (if it doesn't, then it probably means that the company didn't need to go through bankruptcy as it could satisfy all non-equity capital/debt obligations). No shareholder would ever accept this, nor would the board, nor would the senior leadership team that is primarily compensated via equity. This is assuming that a court would even allow the company to go through bankruptcy - creditors would file objections (bankruptcy takes away creditor rights, so they have an obligation to avoid what is in essence fraudulent bankruptcy).

Boeing has a perfectly healthy balance sheet and cash position. Deferred expenses related to the 787 program have no cash impact which mean they have no relevance on the firm's solvency. If the 787 was going to drive Boeing to bankruptcy, it would be when they were incurring those expenses, not when they're recouping them.

The only way the MAX issue results in a Boeing bankruptcy is in the highly unlikely event that this permanently ends the MAX program - and even that is no guarantee given the relatively strong balance sheet position (it would be painful for sure of course - lots of layoffs, etc). It would depend on how airlines react to the breach of contracts and how much Boeing could settle for.
 
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Revelation
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 1:17 pm

B777LRF wrote:
If I read between the lines, the 4,7BN is for the 2nd quarter (first quarter of grounding) only, and only represent what Boeing "think" they might stand to lose. Extend the grounding for another 2 (highly likely), 3 (probable) or 4 (unlikely but possible) quarters, and the picture may very well be different.

Professional market analysts see things pretty differently.

They are treating this announcement as a clear signal from Boeing that it thinks the worst is over, the planes will return to service in Q4, and they will be running the production line at rate 57 in 2020.

Leeham quotes Cowan Research:

Key takeaway from yesterday’s Q2 preannounce was that BA assumes “return to service early in Q4in line with our estimates and plans to reach 57/month in 2020 vs. our assumption of a 52/month peak. While timing of return to service obviously is in the hands of the regulators, we assume that BA’s timing comments are based on its extensive interactions with regulators. Furthermore, its willingness to publicly target reaching 57/month next year presumably reflects discussions with customers indicating sufficient demand to warrant taking the rate up to that level.

Lots of similar analysis at https://leehamnews.com/2019/07/19/analy ... ouncement/

B777LRF wrote:
Boeing presently command the same level of trust as a 2 year old with a set of crayons and a newly painted wall.

Hopefully you better now that you got that rant out of your system so we can now have an adult conversation.
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 1:17 pm

william wrote:
https://www.nytimes.com/2019/07/18/business/boeing-737-charge.html

Boeing said on Thursday that it would take a $5.6 billion charge in the quarter as it reels from the prolonged grounding of its 737 Max.

That figure represents Boeing’s current estimate of how much it will have to pay airlines that fly the Max, which has been grounded for months after two deadly crashes, and may not fly again this year.

Boeing also said it was anticipating an additional $1.7 billion in costs associated with the production of the Max, which has had a factory slowdown. Those costs will be spread out over years, and will depress the overall profitability of the Max program.


Ouch! This is going to be a lesson in business schools for decades to come on what not to do.
 
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 1:49 pm

Finn350 wrote:
SteelChair wrote:
At what point are profits wiped out for the entire 737 program? Does anyone know how much that program has made? Although its been high volume for years, margins were probably a lot less than for widebodies.


Boeing Commercial Airplanes Unit yearly earnings (profits) of (about $8 billion in an average year) exceeds the proposed charge for the 737 MAX disruptions, so in a big picture the charge is insignificant.


Well, yes, thank you. But $5.6B gone is still a huge hit. I wouldn't characeize it as insignificant.

There has been so much written on this website about the 787 program accounting, I wonder how this grounding and lack of deliveries affects the 737 program accounting, wasnt so much commenting on Boeing as a whole.
 
mxaxai
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 1:54 pm

SheikhDjibouti wrote:
As it stands, Garuda would only have placed a small deposit against the original order, and for all we know Boeing kept that (non-refundable) deposit scoring a "profit" for building absolutely nothing.

Boeing probably did already incur some costs that cannot be directly recovered via other orders, though. Particularly the work of the marketing and legal departments that made the deal. Perhaps also deposits for some long-lead items (although I can't think of any particular customer-specific items with long lead times). So the deposit will have to cover some of that.
 
VC10er
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 1:54 pm

Yes, it seems like Boeing cut corners etc. The worst part are the deaths and their loved ones. Yeah, $5 to 7 Billion is a lot.
However I vividly recall the mortgage and banking crisis which was 1001 times worse and the greed wrecked the global economy...it doesn’t matter Dem or GOP, the government had to take control to avert a global depression. All of our lives were terribly impacted and the dirt bags who caused it walked away with the same bonus they always got: in fact one is my next door neighbor who just sold his double wide townhouse in the West Village for the highest price in downtown NYC history.
Something tells me this 737MAX debacle will be a blip in history!
To Most the Sky is The Limit, For me, the Sky is Home.
 
morrisond
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 2:02 pm

SteelChair wrote:
Finn350 wrote:
SteelChair wrote:
At what point are profits wiped out for the entire 737 program? Does anyone know how much that program has made? Although its been high volume for years, margins were probably a lot less than for widebodies.


Boeing Commercial Airplanes Unit yearly earnings (profits) of (about $8 billion in an average year) exceeds the proposed charge for the 737 MAX disruptions, so in a big picture the charge is insignificant.


Well, yes, thank you. But $5.6B gone is still a huge hit. I wouldn't characeize it as insignificant.

There has been so much written on this website about the 787 program accounting, I wonder how this grounding and lack of deliveries affects the 737 program accounting, wasnt so much commenting on Boeing as a whole.


It's actually pretty small if you assume that they maybe build 7-8,000 MAX's before they are done - only $1 Million per frame. But it sounds like they are not charging this against the program and instead are just writing it off in one shot. They are probably taking this reserve now - so when they discount future frames they can charge that discount against this reserve and then still report there normal margin. Oh the games you can play with numbers!

This is basically just one year of share repurchases. It hurts but it's not crippling.
 
planecane
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 2:10 pm

PW100 wrote:
TVNWZ wrote:
nikeherc wrote:
That’s not as bad as it may sound. I’m not denying that it is an eye watering amount of money, but BellSouth took multiple hits of over a billion just for restructuring about 20 years ago. What they do is take a loss on the books upfront and then reduce the accrual as they pay out the penalties in whatever form. When everything has settled out, they will show any balance as a profit or any additional costs as an additional charge. As of now, they haven’t reduced their cash for this, but they have greatly reduced their tax liability.


Finally, someone who has a working knowledge of accounting.


Or in other words, the tax payer is footing an important part of the bill. Great.


No, the tax payer isn't footing any of the bill. Boeing will only pay less taxes by making less profit. These costs are real. It isn't like they have made up a charge to reduce the tax liability on profits.

A company making less profit and therefore paying less taxes isn't a subsidy or a tax credit.

However, the portion of these costs that get paid to US based airlines will mitigate losses for the airlines. Therefore, the airlines will essentially pay the taxes on the profit that wouldn't have existed without the compensation.
 
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par13del
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 2:13 pm

morrisond wrote:
Oh the games you can play with numbers!

The key thing here is that the majority of the charge will not be cash paid out.
Small airlines will require cash compensation, larger one's can also but if they have additional a/c on order, their progress payment will go away and or be much smaller.
I suspect Boeing has a lot hidden in the value if it as of now is just a one time charge writing off cash.
 
majano
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 3:03 pm

B777LRF wrote:
If I read between the lines, the 4,7BN is for the 2nd quarter (first quarter of grounding) only, and only represent what Boeing "think" they might stand to lose. Extend the grounding for another 2 (highly likely), 3 (probable) or 4 (unlikely but possible) quarters, and the picture may very well be different.

ll.

I usually wait for Flightglobal to get an accurate picture of aviation news, and they explain the charges very well here: https://www.flightglobal.com/news/artic ... un-459769/

Although the 5.6bn charge will be recorded in Q2'19, it is the total estimated cost for the entire grounding. The main caveat here is that the type returns to service in early Q4'19. The deferred cost which will be released in future accounting periods is 2.7bn in total because there was a 1bn charge announced in April. This brings the total cost of the grounding to 8.3bn.
 
WayexTDI
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 3:13 pm

planecane wrote:
PW100 wrote:
TVNWZ wrote:

Finally, someone who has a working knowledge of accounting.


Or in other words, the tax payer is footing an important part of the bill. Great.


No, the tax payer isn't footing any of the bill. Boeing will only pay less taxes by making less profit. These costs are real. It isn't like they have made up a charge to reduce the tax liability on profits.

A company making less profit and therefore paying less taxes isn't a subsidy or a tax credit.

However, the portion of these costs that get paid to US based airlines will mitigate losses for the airlines. Therefore, the airlines will essentially pay the taxes on the profit that wouldn't have existed without the compensation.

Wait for Boeing asking for more tax break, with this "hit" as a justification. THEN the tax payer will foot the bill.
 
planecane
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 3:24 pm

WayexTDI wrote:
planecane wrote:
PW100 wrote:

Or in other words, the tax payer is footing an important part of the bill. Great.


No, the tax payer isn't footing any of the bill. Boeing will only pay less taxes by making less profit. These costs are real. It isn't like they have made up a charge to reduce the tax liability on profits.

A company making less profit and therefore paying less taxes isn't a subsidy or a tax credit.

However, the portion of these costs that get paid to US based airlines will mitigate losses for the airlines. Therefore, the airlines will essentially pay the taxes on the profit that wouldn't have existed without the compensation.

Wait for Boeing asking for more tax break, with this "hit" as a justification. THEN the tax payer will foot the bill.


When was the last time a company had a situation that led to a large charge and then asked for a tax break? There is nothing in the tax code that provides a way to do it. They'd need to pass a law specifically for this situation and I can guarantee you that will not happen.
 
planecane
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 3:26 pm

majano wrote:
B777LRF wrote:
If I read between the lines, the 4,7BN is for the 2nd quarter (first quarter of grounding) only, and only represent what Boeing "think" they might stand to lose. Extend the grounding for another 2 (highly likely), 3 (probable) or 4 (unlikely but possible) quarters, and the picture may very well be different.

ll.

I usually wait for Flightglobal to get an accurate picture of aviation news, and they explain the charges very well here: https://www.flightglobal.com/news/artic ... un-459769/

Although the 5.6bn charge will be recorded in Q2'19, it is the total estimated cost for the entire grounding. The main caveat here is that the type returns to service in early Q4'19. The deferred cost which will be released in future accounting periods is 2.7bn in total because there was a 1bn charge announced in April. This brings the total cost of the grounding to 8.3bn.


However, some of the cost will be offset when they are able to deliver the 160+ units produced that are currently liabilities.
 
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keesje
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 3:30 pm

WayexTDI wrote:
planecane wrote:
PW100 wrote:

Or in other words, the tax payer is footing an important part of the bill. Great.


No, the tax payer isn't footing any of the bill. Boeing will only pay less taxes by making less profit. These costs are real. It isn't like they have made up a charge to reduce the tax liability on profits.

A company making less profit and therefore paying less taxes isn't a subsidy or a tax credit.

However, the portion of these costs that get paid to US based airlines will mitigate losses for the airlines. Therefore, the airlines will essentially pay the taxes on the profit that wouldn't have existed without the compensation.

Wait for Boeing asking for more tax break, with this "hit" as a justification. THEN the tax payer will foot the bill.


Bit of flagwav'n & it would go down as ensuring a level playing field, or something similar in defense of tbd wrongdo'ers.
"Never mistake motion for action." Ernest Hemingway
 
majano
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 3:32 pm

planecane wrote:
majano wrote:
B777LRF wrote:
If I read between the lines, the 4,7BN is for the 2nd quarter (first quarter of grounding) only, and only represent what Boeing "think" they might stand to lose. Extend the grounding for another 2 (highly likely), 3 (probable) or 4 (unlikely but possible) quarters, and the picture may very well be different.

ll.

I usually wait for Flightglobal to get an accurate picture of aviation news, and they explain the charges very well here: https://www.flightglobal.com/news/artic ... un-459769/

Although the 5.6bn charge will be recorded in Q2'19, it is the total estimated cost for the entire grounding. The main caveat here is that the type returns to service in early Q4'19. The deferred cost which will be released in future accounting periods is 2.7bn in total because there was a 1bn charge announced in April. This brings the total cost of the grounding to 8.3bn.


However, some of the cost will be offset when they are able to deliver the 160+ units produced that are currently liabilities.

Not really sure how, but the Flightglobal report has nothing around that.
 
WayexTDI
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 3:40 pm

planecane wrote:
WayexTDI wrote:
planecane wrote:

No, the tax payer isn't footing any of the bill. Boeing will only pay less taxes by making less profit. These costs are real. It isn't like they have made up a charge to reduce the tax liability on profits.

A company making less profit and therefore paying less taxes isn't a subsidy or a tax credit.

However, the portion of these costs that get paid to US based airlines will mitigate losses for the airlines. Therefore, the airlines will essentially pay the taxes on the profit that wouldn't have existed without the compensation.

Wait for Boeing asking for more tax break, with this "hit" as a justification. THEN the tax payer will foot the bill.


When was the last time a company had a situation that led to a large charge and then asked for a tax break? There is nothing in the tax code that provides a way to do it. They'd need to pass a law specifically for this situation and I can guarantee you that will not happen.

There's no need to pass a law for that. Here's how it can play out:
Company: local authorities, we need more tax break or we'll move jobs out.
Local Authority, after many back and forth: here's several hundreds of millions of dollars of tax break. Please stay here.

We see this every day.
Of course Boeing isn't going to say they need that due to the f'ed up they did; but it'll be the underlying reason for it. And the Local Authority will oblige.
 
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par13del
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 3:45 pm

WayexTDI wrote:
There's no need to pass a law for that. Here's how it can play out:
Company: local authorities, we need more tax break or we'll move jobs out.
Local Authority, after many back and forth: here's several hundreds of millions of dollars of tax break. Please stay here.

What is missing from your narrative is the other side of the coin. As most of these are local tax breaks, the local voters have to be notified, so to notify them of the giveaway, the politicians have to state what they are getting for the money, and staying here by itself is usually not one of the conditions.
It will contain something like a pledge to increase employment, build new facilities, increase productions, always items that can be written down on the paper that the locals can see.
Verification is another story as reasons will be found why X or Y was not done, but the process has to have transparency, so something has to be promised for the tax break.
 
Planetalk
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 4:01 pm

Given Boeing's recent history with announcing bad news on programmes, I think it's safe to say the final figure will be far larger than this. So if you think that this doesn't sound too bad, don't count your chickens...as there is still not a sign Boeing have learned squat from anything in the last 10 years. Well except how an executive keeps their salary.
 
WayexTDI
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 4:01 pm

par13del wrote:
WayexTDI wrote:
There's no need to pass a law for that. Here's how it can play out:
Company: local authorities, we need more tax break or we'll move jobs out.
Local Authority, after many back and forth: here's several hundreds of millions of dollars of tax break. Please stay here.

What is missing from your narrative is the other side of the coin. As most of these are local tax breaks, the local voters have to be notified, so to notify them of the giveaway, the politicians have to state what they are getting for the money, and staying here by itself is usually not one of the conditions.
It will contain something like a pledge to increase employment, build new facilities, increase productions, always items that can be written down on the paper that the locals can see.
Verification is another story as reasons will be found why X or Y was not done, but the process has to have transparency, so something has to be promised for the tax break.

I beg to differ. Remember Carrier in IN? This is a good description
Basically:
- Carrier asked for tax break or threatened to cut 2,100 jobs from one factory in Indiana and transfer production to Mexico;
- Indiana offered around $1M in tax break;
- Carrier said no way;
- Indiana increased the offer to $7M right after Trump's election (remember, VP Mike Pence was Governor of Indiana at the time...);
- Carrier said they'd stay and keep only 800 jobs.

This is a very classical move for corporations. Tax breaks are usually granted for one of 2 reasons:
- trying to get companies/industries to establish themselves in a location (e.g. the Movie Industry in GA, or the fight for Amazon's HQ2);
- after being threatened by a major employer to move away or drastically reduce their task force.
 
planecane
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 4:02 pm

WayexTDI wrote:
planecane wrote:
WayexTDI wrote:
Wait for Boeing asking for more tax break, with this "hit" as a justification. THEN the tax payer will foot the bill.


When was the last time a company had a situation that led to a large charge and then asked for a tax break? There is nothing in the tax code that provides a way to do it. They'd need to pass a law specifically for this situation and I can guarantee you that will not happen.

There's no need to pass a law for that. Here's how it can play out:
Company: local authorities, we need more tax break or we'll move jobs out.
Local Authority, after many back and forth: here's several hundreds of millions of dollars of tax break. Please stay here.

We see this every day.
Of course Boeing isn't going to say they need that due to the f'ed up they did; but it'll be the underlying reason for it. And the Local Authority will oblige.


Not going to happen in this case. Any incentives to build the MAX in Renton are already in place and contractually agreed to. Same with 777X. I'm sure there will be incentives for the NMA but it will have nothing to do with mitigating MAX losses.
 
planecane
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 4:04 pm

Planetalk wrote:
Given Boeing's recent history with announcing bad news on programmes, I think it's safe to say the final figure will be far larger than this. So if you think that this doesn't sound too bad, don't count your chickens...as there is still not a sign Boeing have learned squat from anything in the last 10 years. Well except how an executive keeps their salary.

They have to be somewhat accurate when making these kind of announcements. Otherwise, they will violate SEC regulations and end up in more trouble.
 
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keesje
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 4:15 pm

The origins of this drama go back to 2011 when Boeing had underestimated the NEO & had to rush a 737 re-engining. That in itself was a result of all attention focussed on getting the years delayed, overpromised 787 into service. So this could be considered a double whammy from those decisions. The NMA might be the third victim..
"Never mistake motion for action." Ernest Hemingway
 
KlimaBXsst
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 4:23 pm

Is this getting serious yet?

Kind of getting the impression the disco ball has a number of bulbs not present in the current design.
Aesthetically the A 340 got it right!
 
Eyad89
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 4:28 pm

I guess Boeing is lucky to have such an excellent financial position to not get slaughtered by those losses.

I imagine Airbus would have had a harder time had the NEO faced a similar fate.
 
ScottB
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 4:29 pm

kurtverbose wrote:
Yes, just think, if they'd stumped up a bit more they could've had a new NSA instead of this mess.


The problem with NSA wasn't just development cost; it was also time to market for NSA versus another revision of the 737 and the relatively limited benefits the NSA could deliver over 737-MAX.
 
WayexTDI
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 4:38 pm

planecane wrote:
WayexTDI wrote:
planecane wrote:

When was the last time a company had a situation that led to a large charge and then asked for a tax break? There is nothing in the tax code that provides a way to do it. They'd need to pass a law specifically for this situation and I can guarantee you that will not happen.

There's no need to pass a law for that. Here's how it can play out:
Company: local authorities, we need more tax break or we'll move jobs out.
Local Authority, after many back and forth: here's several hundreds of millions of dollars of tax break. Please stay here.

We see this every day.
Of course Boeing isn't going to say they need that due to the f'ed up they did; but it'll be the underlying reason for it. And the Local Authority will oblige.


Not going to happen in this case. Any incentives to build the MAX in Renton are already in place and contractually agreed to. Same with 777X. I'm sure there will be incentives for the NMA but it will have nothing to do with mitigating MAX losses.

Since Accounting is aggregated at The Boeing Company level, it doesn't matter where it's allocated to; they'll ask for more money and the tax payer will end up footing the bill, regardless the actual reason for it.
 
SteelChair
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 4:56 pm

Boeing will survive, has to survive, too big to fail.

The difficulty is total lack of accountability among the decision makers for the long run of bad decisions and poor performance. Their executive leadership should get canned imho. They're untouchable.
 
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kanban
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 5:03 pm

OK they take a hit now to cover costs to suppliers and to keep the program running. then when the issue is resolved and all those planes in storage are delivered, in comes the cash to nearly balance the books. the trouble is sometimes we don't look further out then the current news blip.

there are heads rolling and there will be more.. the problem is some of the heads are needed to design and implement the fix .. Boeing seldom sends the execution list to the press, and does it quietly. (except when CEO's get caught with their "pens in the company ink well"
 
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par13del
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 5:19 pm

WayexTDI wrote:
par13del wrote:
WayexTDI wrote:
I beg to differ. Remember Carrier in IN? This is a good description
Basically:
- Carrier asked for tax break or threatened to cut 2,100 jobs from one factory in Indiana and transfer production to Mexico;
- Indiana offered around $1M in tax break;
- Carrier said no way;
- Indiana increased the offer to $7M right after Trump's election (remember, VP Mike Pence was Governor of Indiana at the time...);
- Carrier said they'd stay and keep only 800 jobs.

This is a very classical move for corporations. Tax breaks are usually granted for one of 2 reasons:
- trying to get companies/industries to establish themselves in a location (e.g. the Movie Industry in GA, or the fight for Amazon's HQ2);
- after being threatened by a major employer to move away or drastically reduce their task force.

From the link posted

"The deal also calls for a $16 million investment in the Indianapolis facility. Most of that money will be invested in automation said Greg Hayes, CEO of United Technologies, Carrier's corporate parent. And that automation will replace some of the jobs that were saved.[31] In June 2017, union officials stated that Carrier planned to lay off about 600 employees in July and December 2017.[32] "
A tax break has to be tied to some tax required to be paid, whether existing or new, the details are right there for the local tax payers to see.
 
nycbjr
Posts: 215
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 5:57 pm

WayexTDI wrote:
[

From the link posted

"The deal also calls for a $16 million investment in the Indianapolis facility. Most of that money will be invested in automation said Greg Hayes, CEO of United Technologies, Carrier's corporate parent. And that automation will replace some of the jobs that were saved.[31] In June 2017, union officials stated that Carrier planned to lay off about 600 employees in July and December 2017.[32] "
A tax break has to be tied to some tax required to be paid, whether existing or new, the details are right there for the local tax payers to see.


I wonder why the bill authorizing the tax breaks doesn't specify how many jobs/time period?

Sorry to go off topic always wondered this!
 
goosebayguy
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 5:58 pm

Boeing really need to change management from do things as cheaply as possible to do things well. They messed up with the B787 and are still paying for it. It could have made Boeing billions for many years but the intial costs wiped out profit for years. Now they've done it to the B737 their main cash cow.
 
Absynth
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 6:44 pm

morrisond wrote:
SteelChair wrote:
Finn350 wrote:

Boeing Commercial Airplanes Unit yearly earnings (profits) of (about $8 billion in an average year) exceeds the proposed charge for the 737 MAX disruptions, so in a big picture the charge is insignificant.


Well, yes, thank you. But $5.6B gone is still a huge hit. I wouldn't characeize it as insignificant.

There has been so much written on this website about the 787 program accounting, I wonder how this grounding and lack of deliveries affects the 737 program accounting, wasnt so much commenting on Boeing as a whole.


It's actually pretty small if you assume that they maybe build 7-8,000 MAX's before they are done - only $1 Million per frame. But it sounds like they are not charging this against the program and instead are just writing it off in one shot. They are probably taking this reserve now - so when they discount future frames they can charge that discount against this reserve and then still report there normal margin. Oh the games you can play with numbers!

This is basically just one year of share repurchases. It hurts but it's not crippling.


If you think Boeing will sell 7-8000 MAX's I have a bridge to sell you. The Max won't last long past 2028, it's already on borrowed time today.

If they don't launch the NSA program soon Airbus will ramp up aggressively. So a maximum of 10 yrs life span against an average 50 p/m would be about 6000, best case. If they launch an NSA around 2030+, airlines will defect and it'll turn into a 757 even earlier.

Keeping sales up will only work in the short run and the only thing holding Airbus (and Comac) back from ramping up aggressively is the prospect of an NSA around the corner.

There are also many costs not taken into account yet: the likely extention of the grounding till early '20, compensation for the victims, lower sales long term and lower ASP long term (which could be about a million or more lower since it's reputation is completely in the gutter for the flying public AND operators - and will remain there when problems are solved - PR will always be PR to regain trust of the public in the planes they operate and gets them goodwill from Boeing).

2 million in lost profits per plane and 1 million in lower ASP seems the more realistic estimate to me.
 
planecane
Posts: 1555
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 7:14 pm

goosebayguy wrote:
Boeing really need to change management from do things as cheaply as possible to do things well. They messed up with the B787 and are still paying for it. It could have made Boeing billions for many years but the intial costs wiped out profit for years. Now they've done it to the B737 their main cash cow.


And yet the stock is up $15+ today for some inexplicable reason.
 
aaexecplat
Posts: 511
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Re: Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Fri Jul 19, 2019 7:15 pm

Lol. I find it comical that the same folks who have derided the A380 program as catastrophic to Airbus on this site for months/years are now twisting themselves into a pretzel to describe this initial set of charges as inconsequential to Boeing.

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Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos