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keesje
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US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 10:31 am

Leeham today publsihed a status analyses of Boeing’s commercial airplane product strategy.

Despite Boeing’s long-standing PR that everything is fine, it’s not.

Boeing has, since 2011 with the launch of the MAX, been the follower, not the leader or innovator that its storied history demonstrated.

Airbus took over the leadership role with development of the A320neo, the A350-1000, The A350-900ULR, The A321LR and A321XLR. Boeing responded in defensive moves with the 737 MAX and the 777X.

Boeing dithered launching the New Midmarket Airplane (NMA) or, alternatively a single-aisle Future Small Airplane, both concepts discussed since 2012. Once the MAX crisis erupted, any new airplane program launch is on hold until the MAX returns to service.


https://leehamnews.com/2020/01/20/ponti ... -strategy/

Scott sees challenges in different areas and fears "Boeing might become McDonnell Douglas" and wither away..

Image

His conclusion (and probably not only his) is "The 737 MAX must return to service and Boeing Co. should return
to be an innovator and a leader." That would seem a break from the current conservative, "no moon shots" strategy.
https://www.seattletimes.com/business/m ... -new-jets/

I think the big question is if they have the muscle to achieve that within the next decade.
Or that unconventional intervention, re structuring of US Civil Aerospace is required.

More of the same, don't worry, everything will be ok, seems to be reaching it's expiry date.
It might be worse than it looks, instead of better than it looks.

Waiting creates addition damage itself. Specially for the huge, domestic supply chain.
Collins UTC, GE, Spirit and hundreds of smaller ones, are starting to push their representatives.
https://www.barrons.com/articles/boeing ... 1578408447

Time to move ahead & build that new cashcow. Maybe accept a little government is
required, communications will take care of the marketperceptions.

Image
https://aviationweek.com/aerospace/boei ... er-concept
"Never mistake motion for action." Ernest Hemingway
 
TObound
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 11:59 am

That duopoly means competitive pressure is massively reduced. Boeing knows that delivery times and relative pricing ensures that their lineup gets 40% marketshare. At least.

Their board doesn't care about innovation. Their goal has been to do the bare minimum to keep BCA printing cash through low cost derivative programs rather than an all new type.

Short of Airbus making major moves to steal marketshare, they aren't going to bother actually upping development budgets and reducing share buybacks. They know growing share would cost Airbus money. And they are hoping that Airbus' board comes around to where they are.
 
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keesje
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 12:23 pm

TObound wrote:
That duopoly means competitive pressure is massively reduced. Boeing knows that delivery times and relative pricing ensures that their lineup gets 40% marketshare. At least.

Their board doesn't care about innovation. Their goal has been to do the bare minimum to keep BCA printing cash through low cost derivative programs rather than an all new type.

Short of Airbus making major moves to steal marketshare, they aren't going to bother actually upping development budgets and reducing share buybacks. They know growing share would cost Airbus money. And they are hoping that Airbus' board comes around to where they are.


Looking at realistic backlog, deliveries and the health of the complete portfolio, radical decisions might be considered. The complete US Aerospace industry (GE, Collins UTC, Spirit, Honeywell, MSE's, LM, GD, NG), Embraer, White House, the big 4 US airlines are scratching their heads & rethinking a future state for US Aerospace. Boeing is the US #1 exporter & Aerospace is a strategic industry. Politics are increasingly involved because of it.

- https://www.reuters.com/article/us-boei ... SKBN1ZE2FM
- https://www.ccn.com/why-boeing-desperat ... -election/
"Never mistake motion for action." Ernest Hemingway
 
JayBCN
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 1:06 pm

I could see Europe taking the lead again ... and indeed Boeing become another McDonell ... and the next duopoly becoming Airbus versus a Chinese player some 20 to 30 years down the line.

I think it will be a monumental task to get Boeing back on track and even if it can be done it will cost so much money that it may just slowly suffocate the company financially and gradually frustrate its best resources.

But it raises a question if an industry is viable where one mistake can wipe you out.
 
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par13del
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 1:19 pm

[quote="keesje"
Looking at realistic backlog, deliveries and the health of the complete portfolio, radical decisions might be considered. The complete US Aerospace industry (GE, Collins UTC, Spirit, Honeywell, MSE's, LM, GD, NG), Embraer, White House, the big 4 US airlines are scratching their heads & rethinking a future state for US Aerospace. Boeing is the US #1 exporter & Aerospace is a strategic industry. Politics are increasingly involved because of it.
[/quote]
Well a couple things here, the US is pushing to make its oil exports the largest exporter so Boeing is being marginalized.
Two, with the Europeans telling the American people how much USA content is included in their products, the importance of Boeing is going down in the minds of the average Joe on the streets, which is the expected result since the main aim is to ensure that they think globally and buy more foreign content.

So is it really unexpected?
 
T4thH
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 1:22 pm

Issue also is now, Boeing is a little bit doomed.

It is now the wrong time, to start a new clean sheet design; it is either 10 to 15 years too late or minimum 5 years to early.

It is time to start with a clean sheet design, when a new breakthrough invention has been done.
These have been all done earlier (as "plastic" wing (carbon), new materials for the fuselage (new alloys like carbon, Aluminium Lithium alloys), new engines (Leap, geared fans, Trent 1000 family e.g.).
These have been already used in new products as the A350 Xwb, A220, B787 MC21 e.g.
or have been used, to upgrade existing, like A320 Neo family, B737 Max, A330 Neo.

The B777x is a little bit between with the new folded wingtips, but this is a nice feature but not a big breakthrough.
Other new implemented technologies, like the 3D printing, can be also used to upgrade existing jets.

So, what can be expected as next breakthrough inventions, which can not be easily implemented in existing products?

In my opinion, these will be three mayor and breakthrough inventions:
1. New jet engine developments, like outer fans or Ultra fans; with this, also existing products can be upgraded to Neo/Max versions.
2. New materials for the fuselage, in this case the Aluminium Magnesium Scandium alloys (3rd generation), which will be much lighter and better, to be used primary for narrowbody jets. Aluminium Mg Scandium alloys of the 2nd generation are now in early use by Airbus for 3D printing with a big benefit (Scalmalloy, around 0.72% Scandium content). Main issue: Scandium is not rare, only nicely distributed on earth; the mining has to be increased from 20 t/year to....a global demand of around 3.000t/year is in discussion (aviation + automotive ++++). In 3rd generation Al-Mg-Scandium alloys, Scandium content will be around 0.05 to 0.1% (in 2nd it is around 0.5 to 1%; Scandium price /kg is around 4.000$/kg), other Al-Scandium alloys will have a little bit higher content from 0.1 up to 0.3%.
3. the full laminar wing (we are not talking about laminar foils) and these will demand a clean sheet design. And here is Airbus/Europe with the BLADE program and the Clean Sky programs I to III now far in front in development. Benefit in fuel consumption can be expected around 15%. But a full laminar wing seems also to demand a different sweep/angle of the wings: -> clean sheet design.

Too early for hybrid (this would be the following generation), I do not believe in the one man cockpit e.g.

All together, I say, Airbus will be able to start with a new clean sheet design (for a narrowbody/A320 FU) around 2023 to 2025, design cut around earliest 2027, EIS...303X.
Boeing will be able to start a narrowbody clean sheet around 2025 to 2027, design cut at 2029, EIS...?
The same for a NMA (if it is not already gone).
 
Amiga500
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 1:29 pm

Boeing have the talent and they have the cash.

Do they have the boardroom will to stop handing the cash to the stockholders and give some to the engineers instead?
 
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keesje
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 2:28 pm

T4thH wrote:
Issue also is now, Boeing is a little bit doomed.

It is now the wrong time, to start a new clean sheet design; it is either 10 to 15 years too late or minimum 5 years to early.

It is time to start with a clean sheet design, when a new breakthrough invention has been done....


Building the 737max, 777s was the easiest, cheapest way forward 10 years ago.
Good cases / reasons were build around those decisions.

In corporate communication, you can see a consistant message over the years:
- new technology just isn't available, no risky "moonsshots"
- the 737 will be just fine until 2030
- free cash flow is really the most important KPI for Boeing and any other company
- the global market looks fantastic for the next 20 years, so don't worry
- the 777X will do great because the 777 did great.
- the 100 yr old, strong Boeing brand assure at 50% market share
- program accounting really makes the most sense to account for investments, losses
- watch quaterly results, stock value mirroring company health

And it sticked, reflected what we wanted to hear.

:arrow: Now park these assumption / believes for a second & see how the company is doing.
Simply assets, depts, income, products, competition, brandvalue. Old school.

Maybe the messsengers got their huge bonusses, over the last 15 years, despite all challenges
but many others suffer & the company is fundamently weakened.
"Never mistake motion for action." Ernest Hemingway
 
TObound
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 3:17 pm

The short sighted view on cash payouts to shareholders is starting to look like the tunnel vision that saw them letting go of the A220. I am thinking, they really didn't believe that Airbus or the Chinese would rescue the program. That kind of myopia is sort of unbelievable. Imagine where Boeing would be today if they had 50% of the CSeries for $1. Not Airbus.

Inheriting MDD's management team was the worst thing to ever happen to Boeing. I have never understood why they let the same management team that drove MDD into the ground, have so much influence at the merged Boeing. They are now making all the same mistakes as MDD. Stonecipher drove up MDDs stock 4X, before being compelled to merge.
 
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ElroyJetson
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 3:35 pm

I guess Boeing should close up shop and go out of business now. They're doomed.
707 717 727 72S 737 733 737-700 747 757 753 767-300 764 A319 A320 DC-9-10 DC-9-30 DC-9-50, MD-82 MD-88 MD-90 DC-10-10 DC-10-40 F-100
 
T4thH
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 3:40 pm

TObound wrote:
The short sighted view on cash payouts to shareholders is starting to look like the tunnel vision that saw them letting go of the A220. I am thinking, they really didn't believe that Airbus or the Chinese would rescue the program. That kind of myopia is sort of unbelievable. Imagine where Boeing would be today if they had 50% of the CSeries for $1. Not Airbus.

Inheriting MDD's management team was the worst thing to ever happen to Boeing. I have never understood why they let the same management team that drove MDD into the ground, have so much influence at the merged Boeing. They are now making all the same mistakes as MDD. Stonecipher drove up MDDs stock 4X, before being compelled to merge.


Sorry, you are really asking, why the MDD managers have taken over Boeing?

If you put a team of 100% perfectly trained and highly experienced assassins (the MD managers, combat cry "shareholder value") together in a room with 100% nicely and lovely well experienced boy scouts (the Boeing team of engineers, combat...lol, forget it: "can I help you over the street, grandma")...

After end of the short massacre, who will have survived and who has ended up in the mass grave?
 
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 3:44 pm

Boeing is far from doomed. Troubled - yes, but not doomed.
MAX trouble will go away, but this will spell long overdue end to the 737 line. Not going ahead with NSA back in 2010/11 has rightfully backfired on the company.

Boeing needs all-new narrowbody ASAP.
The queen of the skies is dead.
 
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STT757
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 3:46 pm

This nonsense reminds me of all the anti-American threads that used to populate the non aviation board here about 10-15 years ago. Certain posters were claiming the US was failing and the EU would dominate.

The Boeing stock price looks remarkably strong, which would help it if it needs to tap into capital.
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JayinKitsap
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 4:01 pm

ElroyJetson wrote:
I guess Boeing should close up shop and go out of business now. They're doomed.


Yes, Boeing is just incapable of issuing any new models, cannot think for themselves, and deserve to just go away.

Boeing missed the golden opportunity by passing on the C Series, and selected that loser Embraer which too can't seem to develop anything new.

The A229 is just going to destroy the Max, no need to return it to service.
 
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par13del
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 4:02 pm

TObound wrote:
The short sighted view on cash payouts to shareholders is starting to look like the tunnel vision that saw them letting go of the A220.

How is it short sighted if Boeing is presently funding their billion dollars losses on the MAX presently?
If they were borrowing money to pay penalties, keep staff employed, pay vendors then I can agree it was shortsighted, but so far they have set aside billions just for the MAX and have not borrowed any money.

If we do not like shareholders recouping on their investments that is fine, but financially, that has not affected them financially.
 
TObound
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 4:03 pm

BlueSky1976 wrote:
Boeing is far from doomed. Troubled - yes, but not doomed.
MAX trouble will go away, but this will spell long overdue end to the 737 line. Not going ahead with NSA back in 2010/11 has rightfully backfired on the company.

Boeing needs all-new narrowbody ASAP.


STT757 wrote:
This nonsense reminds me of all the anti-American threads that used to populate the non aviation board here about 10-15 years ago. Certain posters were claiming the US was failing and the EU would dominate.

The Boeing stock price looks remarkably strong, which would help it if it needs to tap into capital.


Boeing isn't doomed. But they most certainly are in a world of hurt. And that could go either way. What happens if the C-Suite decides that return on investment looks better without the Commercial Aviation business?

As for raising capital through a new issue, that would run counter to their current effort to buy back stock.... You have to ask yourself. Do Boeing's shareholders care that much about keeping the company in Commercial Aviation or the short to medium term impacts to stock price from dilution? How many billions would they need to fund the 737 replacement, finish 777X and possibly NEO the 787 over the next decade? How much do you think that much new capital would dilute the stock? Are Boeing's shareholders okay with that? I wouldn't argue this is easy to know until they announce the first capital raise....
 
Amiga500
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 4:04 pm

STT757 wrote:
The Boeing stock price looks remarkably strong, which would help it if it needs to tap into capital.


:rotfl:

How much do you think that stock price is being supported by the belief that Boeing do not need to invest $40 billion in properly renewing 2 product lines?

Then how much do you think executive bonuses are tied to that stock price?


When do you envisage any boardroom biting the bullet and making the internal investment Boeing need to make?
 
TObound
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 4:13 pm

par13del wrote:
TObound wrote:
The short sighted view on cash payouts to shareholders is starting to look like the tunnel vision that saw them letting go of the A220.

How is it short sighted if Boeing is presently funding their billion dollars losses on the MAX presently?
If they were borrowing money to pay penalties, keep staff employed, pay vendors then I can agree it was shortsighted, but so far they have set aside billions just for the MAX and have not borrowed any money.

If we do not like shareholders recouping on their investments that is fine, but financially, that has not affected them financially.


They are most certainly looking at taking on new debt and have taken on additional lines of credit:

https://www.wsj.com/articles/boeing-mov ... 1556649215

https://www.wsj.com/articles/boeing-con ... 1578308401

It's not the MAX funding its own billion dollar losses. It's Boeing's credit card. And they'll have to pay that back. When they start delivering MAX, that will pay down the debt. But then they won't have cash for investing in future developments. Which inevitably means they either slowly exit commercial aviation or taken on a large capital raise, hurting the stock substantially.
 
morrisond
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 4:33 pm

TObound wrote:
par13del wrote:
TObound wrote:
The short sighted view on cash payouts to shareholders is starting to look like the tunnel vision that saw them letting go of the A220.

How is it short sighted if Boeing is presently funding their billion dollars losses on the MAX presently?
If they were borrowing money to pay penalties, keep staff employed, pay vendors then I can agree it was shortsighted, but so far they have set aside billions just for the MAX and have not borrowed any money.

If we do not like shareholders recouping on their investments that is fine, but financially, that has not affected them financially.


They are most certainly looking at taking on new debt and have taken on additional lines of credit:

https://www.wsj.com/articles/boeing-mov ... 1556649215

https://www.wsj.com/articles/boeing-con ... 1578308401

It's not the MAX funding its own billion dollar losses. It's Boeing's credit card. And they'll have to pay that back. When they start delivering MAX, that will pay down the debt. But then they won't have cash for investing in future developments. Which inevitably means they either slowly exit commercial aviation or taken on a large capital raise, hurting the stock substantially.


They can easily fund that debt indefinitely with the cash flow they have even without the MAX (it looks like EBIT is more than Airbus even without MAX). However assuming MAX does return to the skies - they don't have to pay back that debt right away - it's paid over time and assuming that they suspend Stock buybacks they will have about $10B in cash per year with no home.

This is on top of the aprroximate $3B per year spend they are currently doing on R&D(for all Business segments). A lot of that can go towards the next project without touching the extra $10B as 777x/MAX 10 spending winds down.

There is a reason the market cap of Boeing is still $180B.

However we will know a lot more on the 29th when the updated Financials come out. Right now it is just a lot of speculation.
 
ILNFlyer
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 4:38 pm

Should focus on clean sheet 737 replacement, then MOM.
 
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seahawk
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 4:47 pm

A topic that is hard to answer in a neutral way, but the main part is that the future is in Boeing´s hands. They have all options on the table and only they decide the direction they are taking, there is no overwhelming finiancial pressure that pushes them into one direction.
 
planecane
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 5:10 pm

ILNFlyer wrote:
Should focus on clean sheet 737 replacement, then MOM.


No they shouldn't. The costs of the MAX debacle won't be undone by a 737 replacement. True, it probably would have cost the same had they opted for NSA in 2011 instead of MAX. However, that is in hindsight. They need to operate from where they are right now. In order for it to make sense to focus on a clean sheet 737 replacement first (as in starting very soon), they need to be able to charge a premium for it above what Airbus charges for the A320NEO series. Otherwise the business case doesn't make sense.

In order for a NSA to make sense and be able to charge the necessary premium, it has to deliver 15%+ better fuel efficiency than the MAX/NEO. Producing something slightly better than the NEO but not being able to charge a premium makes no sense. Even if it could flip the market share for the next few years. If you are looking between now and 2030, the NSA couldn't possibly be in service before 2025. Now what happens when the engine technology for 15%+ improvement comes along in 2027? Airbus starts their A320 replacement and blows the brand new Boeing clean sheet out of the water. Then what? Boeing scraps the brand new program and does a NNSA (new NSA) that launches in 2028?

Now the MOM, if they get the design right can charge a premium over competitors, none of which are perfect for the market it will enter. It can be used as a platform to test production methods that can be applied to the NSA at higher volume thus cutting the development costs of the NSA program.

Assuming that the MAX can RTS in the next 6 months, the strategy that makes the most sense is to continue to sell the MAX until the engine technology exists for a leap in efficiency. Even if that means 40% narrowbody market share for the next 10 years.
 
Amiga500
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 5:13 pm

seahawk wrote:
A topic that is hard to answer in a neutral way, but the main part is that the future is in Boeing´s hands. They have all options on the table and only they decide the direction they are taking, there is no overwhelming finiancial pressure that pushes them into one direction.


Absolutely.

But its gonna take a boardroom that has the collective balls to say "I'm foregoing my share-price related bonuses to do what is best in the company's long term interest".

(and a board that can resist the Wall Street scum who would want them removed for trying to do the right thing)
 
Amiga500
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 5:15 pm

planecane wrote:
Now the MOM, if they get the design right can charge a premium over competitors, none of which are perfect for the market it will enter. It can be used as a platform to test production methods that can be applied to the NSA at higher volume thus cutting the development costs of the NSA program.


If that is single-aisle, I can agree with you. [A 757-300 kinda size]

If its twin-aisle, then I must strongly disagree.
 
TObound
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 6:06 pm

morrisond wrote:
TObound wrote:
par13del wrote:
How is it short sighted if Boeing is presently funding their billion dollars losses on the MAX presently?
If they were borrowing money to pay penalties, keep staff employed, pay vendors then I can agree it was shortsighted, but so far they have set aside billions just for the MAX and have not borrowed any money.

If we do not like shareholders recouping on their investments that is fine, but financially, that has not affected them financially.


They are most certainly looking at taking on new debt and have taken on additional lines of credit:

https://www.wsj.com/articles/boeing-mov ... 1556649215

https://www.wsj.com/articles/boeing-con ... 1578308401

It's not the MAX funding its own billion dollar losses. It's Boeing's credit card. And they'll have to pay that back. When they start delivering MAX, that will pay down the debt. But then they won't have cash for investing in future developments. Which inevitably means they either slowly exit commercial aviation or taken on a large capital raise, hurting the stock substantially.


They can easily fund that debt indefinitely with the cash flow they have even without the MAX (it looks like EBIT is more than Airbus even without MAX). However assuming MAX does return to the skies - they don't have to pay back that debt right away - it's paid over time and assuming that they suspend Stock buybacks they will have about $10B in cash per year with no home.

This is on top of the aprroximate $3B per year spend they are currently doing on R&D(for all Business segments). A lot of that can go towards the next project without touching the extra $10B as 777x/MAX 10 spending winds down.

There is a reason the market cap of Boeing is still $180B.

However we will know a lot more on the 29th when the updated Financials come out. Right now it is just a lot of speculation.


A lot of that cash flow is conditional on record high defense spending continuing for a long time. I'm not sure I would want to bet my company on that presumption.....But I do agree that suspending buybacks does give them a lot more room.

Note this story out today though:

https://www.thestreet.com/investing/boe ... max-crisis

That gives some idea of the capital shortfall the MAX is causing.
 
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keesje
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 7:43 pm

40% Market share has been discussed as a kind of lowest sustainable marketshare. I kind it's a valid question to ask what to do if marketshare goes significantly below 40%. In 2019 it was reality, however you look at it.
"Never mistake motion for action." Ernest Hemingway
 
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par13del
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 7:53 pm

Amiga500 wrote:
But its gonna take a boardroom that has the collective balls to say "I'm foregoing my share-price related bonuses to do what is best in the company's long term interest".

(and a board that can resist the Wall Street scum who would want them removed for trying to do the right thing)

The flip side of that is that the shareholders who also need money will dump their shares when the price is high or before it starts going down, as you know, that will drive the price down even further ultimately resulting in a Chpt.11 filing which is the only way to get rid of those shareholders who were getting returns on their investments with the share buy back.

Unfortunately, our mantra is that anyone who got funds via share buyback is evil and must go and never be heard from again.
 
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par13del
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 7:57 pm

TObound wrote:
A lot of that cash flow is conditional on record high defense spending continuing for a long time. I'm not sure I would want to bet my company on that presumption.....But I do agree that suspending buybacks does give them a lot more room.

When Lockheed and others start complaining about defense spending, Boeing will need to worry, they are not the largest recipient of the US govt. spending, the tanker and trainer are the two recent victories, they have lost most others that they were primary. A number of their existing programs came from Douglas.
 
morrisond
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 8:08 pm

TObound wrote:
morrisond wrote:
TObound wrote:

They are most certainly looking at taking on new debt and have taken on additional lines of credit:

https://www.wsj.com/articles/boeing-mov ... 1556649215

https://www.wsj.com/articles/boeing-con ... 1578308401

It's not the MAX funding its own billion dollar losses. It's Boeing's credit card. And they'll have to pay that back. When they start delivering MAX, that will pay down the debt. But then they won't have cash for investing in future developments. Which inevitably means they either slowly exit commercial aviation or taken on a large capital raise, hurting the stock substantially.


They can easily fund that debt indefinitely with the cash flow they have even without the MAX (it looks like EBIT is more than Airbus even without MAX). However assuming MAX does return to the skies - they don't have to pay back that debt right away - it's paid over time and assuming that they suspend Stock buybacks they will have about $10B in cash per year with no home.

This is on top of the aprroximate $3B per year spend they are currently doing on R&D(for all Business segments). A lot of that can go towards the next project without touching the extra $10B as 777x/MAX 10 spending winds down.

There is a reason the market cap of Boeing is still $180B.

However we will know a lot more on the 29th when the updated Financials come out. Right now it is just a lot of speculation.


A lot of that cash flow is conditional on record high defense spending continuing for a long time. I'm not sure I would want to bet my company on that presumption.....But I do agree that suspending buybacks does give them a lot more room.

Note this story out today though:

https://www.thestreet.com/investing/boe ... max-crisis

That gives some idea of the capital shortfall the MAX is causing.


They have a lot of time to downsize the company if necessary before those contracts run out. However 35% of Boeings earnings are servicing Defense Programs. They don't make as much on new Build Defense and if Defense Budget cuts come into play - that means they usually keep older stuff a lot longer which is more profitable for Defense contractors.

That it looks like they will be able to get that Capital from the banks is actually a pretty strong sign of the financial strength of Boeing. It's way harder to get approved for that type of lending than issuing bonds in the open markets.
 
morrisond
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 8:17 pm

keesje wrote:
40% Market share has been discussed as a kind of lowest sustainable marketshare. I kind it's a valid question to ask what to do if marketshare goes significantly below 40%. In 2019 it was reality, however you look at it.


Lowest sustainable market share? I've never heard of that one in this context. Even at 40% Boeing would probably earn as much as Airbus at 60% as they have higher margin. Even at 30% I'm sure they would still make a pile of money (of course to offset MAX grounding losses).

I suspect at the end of the day the MAX program will still be profitable or at the very least just break even. That is the benefit of having 4,000+ in backlog. That plus the 400 still undelivered is $240B in revenue then plus all services and parts related to those frames - call it another $60B lifetime at a 12% margin is $36B in Profit, assuming they don't sell anymore.

Assuming they do achieve RTS they will most likely sell another few thousand before MAX replacement - it's hard to not see them make money on the program - it just won't be nearly what they expected and it would have been a lot smarter to do NSA in hindsight.
 
Elementalism
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 8:24 pm

IMO after getting through this MAX debacle work on the FSA. Ready for delivery in early 2030s
 
User avatar
kitplane01
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 8:33 pm

T4thH wrote:
TObound wrote:
The short sighted view on cash payouts to shareholders is starting to look like the tunnel vision that saw them letting go of the A220. I am thinking, they really didn't believe that Airbus or the Chinese would rescue the program. That kind of myopia is sort of unbelievable. Imagine where Boeing would be today if they had 50% of the CSeries for $1. Not Airbus.

Inheriting MDD's management team was the worst thing to ever happen to Boeing. I have never understood why they let the same management team that drove MDD into the ground, have so much influence at the merged Boeing. They are now making all the same mistakes as MDD. Stonecipher drove up MDDs stock 4X, before being compelled to merge.


Sorry, you are really asking, why the MDD managers have taken over Boeing?

If you put a team of 100% perfectly trained and highly experienced assassins (the MD managers, combat cry "shareholder value") together in a room with 100% nicely and lovely well experienced boy scouts (the Boeing team of engineers, combat...lol, forget it: "can I help you over the street, grandma")...

After end of the short massacre, who will have survived and who has ended up in the mass grave?


The merger was 23 years ago. The top executives at MDD have long since retired.
 
airzona11
Posts: 1656
Joined: Wed Dec 17, 2014 5:44 am

Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 8:38 pm

How many decades have the Chinese been right around the corner from dominating the market?

STT757 wrote:
This nonsense reminds me of all the anti-American threads that used to populate the non aviation board here about 10-15 years ago. Certain posters were claiming the US was failing and the EU would dominate.

The Boeing stock price looks remarkably strong, which would help it if it needs to tap into capital.


+1. And how many of the same threads does Anet need?
 
snasteve
Posts: 102
Joined: Sun Dec 01, 2013 1:58 am

Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 8:57 pm

Amiga500 wrote:
Boeing have the talent and they have the cash.

Do they have the boardroom will to stop handing the cash to the stockholders and give some to the engineers instead?


I doubt it because when they say shareholders, that really means the executives. They often are the largest single shareholders. When they say shareholder value they mean that as a way give themselves a raise. I doubt much will happen as this is a disease which affects much of corporate America these days. Where compensation and rewards are divorced from reality.
 
T4thH
Posts: 721
Joined: Thu Jun 06, 2019 11:17 pm

Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 9:04 pm

kitplane01 wrote:
T4thH wrote:
TObound wrote:
The short sighted view on cash payouts to shareholders is starting to look like the tunnel vision that saw them letting go of the A220. I am thinking, they really didn't believe that Airbus or the Chinese would rescue the program. That kind of myopia is sort of unbelievable. Imagine where Boeing would be today if they had 50% of the CSeries for $1. Not Airbus.

Inheriting MDD's management team was the worst thing to ever happen to Boeing. I have never understood why they let the same management team that drove MDD into the ground, have so much influence at the merged Boeing. They are now making all the same mistakes as MDD. Stonecipher drove up MDDs stock 4X, before being compelled to merge.


Sorry, you are really asking, why the MDD managers have taken over Boeing?

If you put a team of 100% perfectly trained and highly experienced assassins (the MD managers, combat cry "shareholder value") together in a room with 100% nicely and lovely well experienced boy scouts (the Boeing team of engineers, combat...lol, forget it: "can I help you over the street, grandma")...

After end of the short massacre, who will have survived and who has ended up in the mass grave?


The merger was 23 years ago. The top executives at MDD have long since retired.


Yes and no. You are right, this was 23 years ago. But with this change, the Boeing corporate culture changed from a engineering and safety based culture to another, a shareholder based culture. And this change got without return, when the corporate headquarter moved from Seattle to Chicago in 2001 (EDIT: without return means, till now without return. After this pile of disasters, including the MAX disaster, the issues with the B787, the KC e.g., perhaps we will see a change).

You are right, the MDD executives/managers are gone, but their shareholder value culture is still there.

Do not understand me wrong, shareholder value as even the well hated bean counters are important, they are needed in a healthy corporate company. But this have to be only part of the corporate culture, the mix with the engineering culture will make a successful company. A company needs a healthy balancing of both; if it is 100% of one of both, it is bad.

This healthy balancing is not there at Boeing.
Last edited by T4thH on Mon Jan 20, 2020 9:21 pm, edited 1 time in total.
 
User avatar
Dutchy
Posts: 10884
Joined: Sat Nov 03, 2007 1:25 am

Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 9:17 pm

TObound wrote:
That duopoly means competitive pressure is massively reduced


Boeing is lucky that they are in a duopoly, if it wasn't the case, they probably would have gone belly-up or their civilian line reduced or even gone like Lockheed. The military contracts kept comming, so they get massive support from the US government anyway.
Many happy landings, greetings from The Netherlands!
 
TObound
Posts: 737
Joined: Mon May 27, 2019 12:54 am

Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 9:30 pm

kitplane01 wrote:
T4thH wrote:
TObound wrote:
The short sighted view on cash payouts to shareholders is starting to look like the tunnel vision that saw them letting go of the A220. I am thinking, they really didn't believe that Airbus or the Chinese would rescue the program. That kind of myopia is sort of unbelievable. Imagine where Boeing would be today if they had 50% of the CSeries for $1. Not Airbus.

Inheriting MDD's management team was the worst thing to ever happen to Boeing. I have never understood why they let the same management team that drove MDD into the ground, have so much influence at the merged Boeing. They are now making all the same mistakes as MDD. Stonecipher drove up MDDs stock 4X, before being compelled to merge.


Sorry, you are really asking, why the MDD managers have taken over Boeing?

If you put a team of 100% perfectly trained and highly experienced assassins (the MD managers, combat cry "shareholder value") together in a room with 100% nicely and lovely well experienced boy scouts (the Boeing team of engineers, combat...lol, forget it: "can I help you over the street, grandma")...

After end of the short massacre, who will have survived and who has ended up in the mass grave?


The merger was 23 years ago. The top executives at MDD have long since retired.


Retired....but only after imparting the MDD culture across BA's management. Heck, they brought in more fellow GE managers to reinforce that culture change.
 
chrisp390
Posts: 711
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Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Mon Jan 20, 2020 9:31 pm

Funny how all theses market pundits claim to be "experts" now on Boeing, yet they were silent on these apparent troubles the past 9 years, and instead were pushing Boeing stock as the next biggest thing!

If anything happens in the US aerospace industry involving the government it will need to be done behind the scenes/under the table as the U.S has just made a big scene about how it will not tolerate EU and Chinese intervention in their respective aerospace industries.
 
Sokes
Posts: 605
Joined: Sat Mar 09, 2019 4:48 pm

Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Tue Jan 21, 2020 7:00 pm

T4thH wrote:
TObound wrote:
The short sighted view on cash payouts to shareholders is starting to look like the tunnel vision that saw them letting go of the A220. I am thinking, they really didn't believe that Airbus or the Chinese would rescue the program. That kind of myopia is sort of unbelievable. Imagine where Boeing would be today if they had 50% of the CSeries for $1. Not Airbus.

Inheriting MDD's management team was the worst thing to ever happen to Boeing. I have never understood why they let the same management team that drove MDD into the ground, have so much influence at the merged Boeing. They are now making all the same mistakes as MDD. Stonecipher drove up MDDs stock 4X, before being compelled to merge.


Sorry, you are really asking, why the MDD managers have taken over Boeing?

If you put a team of 100% perfectly trained and highly experienced assassins (the MD managers, combat cry "shareholder value") together in a room with 100% nicely and lovely well experienced boy scouts (the Boeing team of engineers, combat...lol, forget it: "can I help you over the street, grandma")...

After end of the short massacre, who will have survived and who has ended up in the mass grave?


Here a 3:34 min video about a book I believe you would enjoy:
https://www.youtube.com/watch?v=4j_Wh5UcxIc

It's a popular scientific book. It's light and fast reading. And I believe it helps to understand politics as well.
Why can't the world be a little bit more autistic?
 
WIederling
Posts: 9307
Joined: Sun Sep 13, 2015 2:15 pm

Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Tue Jan 21, 2020 8:31 pm

airzona11 wrote:
How many decades have the Chinese been right around the corner from dominating the market?


Every couple of years they are one corner less around the corner.
Murphy is an optimist
 
airzona11
Posts: 1656
Joined: Wed Dec 17, 2014 5:44 am

Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Tue Jan 21, 2020 8:51 pm

Dutchy wrote:
TObound wrote:
That duopoly means competitive pressure is massively reduced


Boeing is lucky that they are in a duopoly, if it wasn't the case, they probably would have gone belly-up or their civilian line reduced or even gone like Lockheed. The military contracts kept comming, so they get massive support from the US government anyway.


Airbus and Boeing both benefit equally from the duopolly. There is not an alternate reality without it.
 
T4thH
Posts: 721
Joined: Thu Jun 06, 2019 11:17 pm

Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Tue Jan 21, 2020 9:01 pm

Sokes wrote:
T4thH wrote:
TObound wrote:
The short sighted view on cash payouts to shareholders is starting to look like the tunnel vision that saw them letting go of the A220. I am thinking, they really didn't believe that Airbus or the Chinese would rescue the program. That kind of myopia is sort of unbelievable. Imagine where Boeing would be today if they had 50% of the CSeries for $1. Not Airbus.

Inheriting MDD's management team was the worst thing to ever happen to Boeing. I have never understood why they let the same management team that drove MDD into the ground, have so much influence at the merged Boeing. They are now making all the same mistakes as MDD. Stonecipher drove up MDDs stock 4X, before being compelled to merge.


Sorry, you are really asking, why the MDD managers have taken over Boeing?

If you put a team of 100% perfectly trained and highly experienced assassins (the MD managers, combat cry "shareholder value") together in a room with 100% nicely and lovely well experienced boy scouts (the Boeing team of engineers, combat...lol, forget it: "can I help you over the street, grandma")...

After end of the short massacre, who will have survived and who has ended up in the mass grave?


Here a 3:34 min video about a book I believe you would enjoy:
https://www.youtube.com/watch?v=4j_Wh5UcxIc

It's a popular scientific book. It's light and fast reading. And I believe it helps to understand politics as well.


Thanks, but..sorry, this is something for others, to begin with it. It is popular...yes... Pretty sure, it will be nice to start...for others.. as said, sorry.
 
Vladex
Posts: 401
Joined: Sat Oct 26, 2013 2:44 pm

Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Tue Jan 21, 2020 9:09 pm

Boeing can't compete with A220, A320 and A350 line so the only thing left is to build a double deck quad jet with a ultrafan like engines now that A has exited the market. That would go against B has said and done in the last 20 years but counter intuitive thinking is required when talking about long term strategies and going against shareholders short term thinking.
 
User avatar
caoimhin
Posts: 461
Joined: Thu Oct 23, 2014 12:30 am

Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Wed Jan 22, 2020 5:30 am

This thread performed as expected.

Not a hint of partisanship or anti-Americanism or Americanism by proxy.
 
Amiga500
Posts: 2629
Joined: Tue Mar 03, 2015 8:22 am

Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Wed Jan 22, 2020 11:18 am

It actually went a bit better than I expected Kevin.
 
LupineChemist
Posts: 806
Joined: Wed Oct 07, 2015 9:03 am

Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Wed Jan 22, 2020 11:38 am

Even if Boeing ends up not making it through, I can't imagine that Northrup or Lockheed wouldn't get in to gobble them up if the price were right. There are still big US aerospace companies that could take on the operation other than Boeing, even if we focus on the airliner market here.
 
Noshow
Posts: 1303
Joined: Wed Jun 15, 2016 3:20 pm

Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Wed Jan 22, 2020 11:47 am

I see the decision to halt the MAX production as critical. In some way Boeing is risking to burn the relations to their key suppliers, say Spirit. The supply chain cannot be left to sit idle for a year. The question is: Will it still be there in year? Isn't Boeing forcing a reconfiguration of the supply chain with the halt? Will they look to other places like China? Does Boeing want to do that or even actively intends a change like that?
 
WIederling
Posts: 9307
Joined: Sun Sep 13, 2015 2:15 pm

Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Wed Jan 22, 2020 2:36 pm

Noshow wrote:
I see the decision to halt the MAX production as critical. In some way Boeing is risking to burn the relations to their key suppliers, say Spirit. The supply chain cannot be left to sit idle for a year. The question is: Will it still be there in year? Isn't Boeing forcing a reconfiguration of the supply chain with the halt? Will they look to other places like China? Does Boeing want to do that or even actively intends a change like that?


What in your view is a viable alternative ( to stopping production )?

Boeing internal having the RTS pushed out to at the earliest mid year 2020 can't have been brand new "surprise" information.
They had to go public now to avoid SEC scrutiny from withholding relevant information to share holders.

Even with GAAP and its sidekick "Deferred Production Cost" there is a limit to how much inventory and cost bucket you can book as asset.
What to balance credits against? What if the shareholders don't get their sacrificial lamb?
Future may show Boeing as a shiny hull bare of content.

What was that corporation again whose house rather unexpectedly buckled from internal vacuum? ( ENRON? )
Murphy is an optimist
 
brindabella
Posts: 581
Joined: Fri Apr 30, 2010 10:38 am

Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Wed Jan 22, 2020 2:37 pm

seahawk wrote:
A topic that is hard to answer in a neutral way, but the main part is that the future is in Boeing´s hands. They have all options on the table and only they decide the direction they are taking, there is no overwhelming finiancial pressure that pushes them into one direction.


Well, yes.

But clearly, they also need to get their moves right.
No mistakes allowed.

However time is not on their side - and as even the (relatively few) non-Boeing-haters on this site agree.

Apocalyptic? Certainly, in the sense that leadership is definitely slipping away now - and indeed has certainly been at risk for some time.


(To me, the definitive McDD-style anti-decision was the 777X. Some nice upgrades, sure ... but recall that recall that the 777W with a nice new wing and engines was nevertheless taking-on a clean-sheet A350-1000.

And now contrast this present 777X to the 787 "Big Brother" that it surely should have been.

All that beautiful 787 technology, so hard-won, but finally all mature and all there to be harvested ....
And now have a wee thought about the ROI flowing from the half-baked 777X about to fly now, with no, that is ZERO super high-tech, super-cheap automatic fuse building technology, versus the ROI from the 787+++ which should instead be taking to the air right now .
Grrrrr!)

And all this pusillanimous penny-pinching despite the tsunamis of Free Cash sluicing through the Accounts over those last few years.

And I NOW read that the official policy was in fact to return ALL Free Cash to shareholders.

OMG!!!

I don't know where to start when choosing between arrogance, stupidity and cupidity.

:eek:

However the Analysts here and elsewhere are certainly right about the pernicious McDD virus - and so if the new leadership do not:

- cancel dividends (temporarily), and
- cancel share buybacks (for a long, loooong time).

Then we can certainly know that the McDD virus has struck again.
That in fact we are witnessing a replay of the time of the Emperor Nero - that is, watching Nero fiddling while Rome burns....

cheers
Billy
 
Noshow
Posts: 1303
Joined: Wed Jun 15, 2016 3:20 pm

Re: US, Boeing Commercial Aircraft Strategy Retaking Leadership 2020-2030 ?

Wed Jan 22, 2020 2:47 pm

What in your view is a viable alternative ( to stopping production )?


Some low rate production to keep the line going and both suppliers and staff ready for some hoped for ramp up after RTS.

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