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2175301
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Re: Boeing’s new CEO confronts its challenges

Sun Mar 08, 2020 6:49 pm

Sokes wrote:

Deleted for readability

I am wondering if I should believe that. Therefore a few questions:
a) Do board members get a fixed compensation, or does their compensation also depend on stock price?
b) What is talked within a board meeting is none of the shareholder's business?
c) The last years were a seller's market. Boeing had to decide if they wanted to spend profits to design a new plane or to buy back shares. I assume the board had to agree to the policy of share buybacks? If yes, would the board vote for somebody who didn't want that?
d) Boeing wanted to avoid separate simulator training for the Max. Would you expect the board to be involved in this question?

I ask the last question because I wonder how deep the board is involved in catastrophic wrong decisions. The deeper they are involved, the less I expect them to vote for a rebel who had always opposed them. Unless of course all of them had a board meeting in which they decided that they should change from Saul to Paul.


Answers:

a) Depends on the company
b) Internal discussions within the Board are privileged information. Only decisions are shareholders business.
c) The Board would normally have to approve a share buyback; unless there was a Board pre-approved policy that allowed share buybacks to occur at certain "free cash" ratios or values. Even then - that's been approved by the Board in the past.
d) An issue like simulator training would not normally rise to the level of the Board. It might not rise to the level of the CEO either. Most likely made by an upper manager or vice president.

Have a great day,
 
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spinotter
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Re: Boeing’s new CEO confronts its challenges

Sun Mar 08, 2020 7:04 pm

keesje wrote:
par13del wrote:
keesje wrote:
Trump & FAA in the pocket, because jobs & exports. https://www.fool.com/amp/investing/2019 ... -2019.aspx

So no Obama, I thought the 787 mess and other problems started long before Trump, probably better to say Congress and the Office of POTUS.


You are correct, FAA influence curtailling / streamlining really kicked off with the 2012 FAA re-authorization https://gama.aero/wp-content/uploads/FA ... 012-08.pdf .

And everybody, specially congress, strongly drove this and until very recently GAO proudly reported on its progress.
:redflag: Warning: reading this with todays knowledge hurts the eyes. :redflag: . . https://www.gao.gov/assets/690/683649.pdf

All said and done, looking forward I guess / think there will be some kind of deal launching a new, "10% better than NEO+" for first flight in 2026.
Included in the deal: US government (no laissez fair no more), Boeing, Spirit, Raytheon Collins, GE, NASA, FAA.

Free market ideology will be parked, government support in many ways will flow, WTO be ignored.
For the higher strategic interest of offering a home build competitive product in the biggest market segment.

Airbus will cry foul, but in the end it's probably the best for the industry longer term..
Free market capitalism nearly killed Boeing, so the rule set changed.


That would be a pretty radical shift. Say MAX flies again in September 2020 (is that conceivable?) Boeing fixes the existing MAX fleet and resumes new aircraft production. The 787 is a success and is outselling Airbus, right? 777X to come. Is the outlook as grim as you seem to be saying?
 
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keesje
Posts: 13841
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Re: Boeing’s new CEO confronts its challenges

Sun Mar 08, 2020 8:11 pm

spinotter wrote:
keesje wrote:
par13del wrote:
So no Obama, I thought the 787 mess and other problems started long before Trump, probably better to say Congress and the Office of POTUS.


You are correct, FAA influence curtailling / streamlining really kicked off with the 2012 FAA re-authorization https://gama.aero/wp-content/uploads/FA ... 012-08.pdf .

And everybody, specially congress, strongly drove this and until very recently GAO proudly reported on its progress.
:redflag: Warning: reading this with todays knowledge hurts the eyes. :redflag: . . https://www.gao.gov/assets/690/683649.pdf

All said and done, looking forward I guess / think there will be some kind of deal launching a new, "10% better than NEO+" for first flight in 2026.
Included in the deal: US government (no laissez fair no more), Boeing, Spirit, Raytheon Collins, GE, NASA, FAA.

Free market ideology will be parked, government support in many ways will flow, WTO be ignored.
For the higher strategic interest of offering a home build competitive product in the biggest market segment.

Airbus will cry foul, but in the end it's probably the best for the industry longer term..
Free market capitalism nearly killed Boeing, so the rule set changed.


That would be a pretty radical shift. Say MAX flies again in September 2020 (is that conceivable?) Boeing fixes the existing MAX fleet and resumes new aircraft production. The 787 is a success and is outselling Airbus, right? 777X to come. Is the outlook as grim as you seem to be saying?




A new "10% better than NEO+" would be available from 2026 earliest. Assume half the 4000 MAX aircraft will get cancelled or converted into the new aircraft, that means average deliveries of ~30MAX/month until production of the new one really picks up..

Airlines can overhaul their NG's for another 8 years, not as planned, but Boeing will pay (part of) the bill..
"Never mistake motion for action." Ernest Hemingway
 
trex8
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Re: Boeing’s new CEO confronts its challenges

Mon Mar 09, 2020 12:19 am

Revelation wrote:
[

At least he realizes he threw Dennis under the bus, and is admitting he made a rookie mistake, but what he said was IMO pretty much unforgivable.


Looking at his CV this is not a rookie
https://en.wikipedia.org/wiki/Dave_Calhoun
 
VS11
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Re: Boeing’s new CEO confronts its challenges

Mon Mar 09, 2020 2:27 am

Revelation wrote:
Apparently Calhoun is now "embarrassed and regretful" about the interview, according to tweets by the NYT reporter:
At least he realizes he threw Dennis under the bus, and is admitting he made a rookie mistake, but what he said was IMO pretty much unforgivable.


Bloomberg has an article now on the topic:
Boeing’s New CEO Regrets Blasting Predecessor as Backlash Grows
https://www.bloomberg.com/news/articles ... lash-grows

"...The about-face suggests an attempt at damage control just two months after Calhoun took over as CEO following a decade of service on Boeing’s board. The new boss’s first extensive print interview as CEO left many inside Boeing dumbfounded and angry, said current and former employees. The article spread like wildfire both inside the company and among the wide network of Boeing alumni, and a stunned “wow” was a common response, one of the people said...."

".. “Because of his long tenure on the board, Calhoun surely must have had a good idea of what was going on inside the company. If he didn’t, he would have been negligent.”
 
Sokes
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Re: Boeing’s new CEO confronts its challenges

Mon Mar 09, 2020 3:54 am

@2175301:
Thanks for that balanced answer.
I was thinking some more about it. One of my favorite books is "Why Nations Fail". It's basically about the importance of pluralism.

If one sees on how many boards some people sit, one wonders if they can have any clue at all about the specific business. Obviously detailed knowledge is not assumed. Rather the CEO or some other manager has to present a policy and board members having a general knowledge of how economy works discuss it. E.g. should we build a new factory and where? Should we outsource more? It's a bit like a consulting firm. Would you agree so far, for I'm just assuming here?
Do any board members have a similar knowledge of the industry as somebody whom a consulting firm would send?

Coming back to pluralism: The chance that things get terrible wrong are reduced if power of decision making is spread. That this is not always so can be seen on Boeing and on successful family owned businesses.
Anybody knows how family owned businesses do their decision making?
Why can't the world be a little bit more autistic?
 
speedbird52
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Re: Boeing’s new CEO confronts its challenges

Mon Mar 09, 2020 4:09 am

Asked whether he believed American pilots would have been able to handle a malfunction of the software, Calhoun asked to speak off the record. The Times declined to do so.

“Forget it,” Calhoun then said. “You can guess the answer.”

Illuminating.
 
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keesje
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Re: Boeing’s new CEO confronts its challenges

Mon Mar 09, 2020 12:37 pm

Sokes wrote:
Anybody knows how family owned businesses do their decision making?


AFAIN: the old guy listens to his first line reports, checks with greyheads on the floor, discusses with the family and takes a decision.
Employee loyalties, intuition, history, long term continuity & strategy in the end can overrule impressive spreadsheets.

speedbird52 wrote:
Asked whether he believed American pilots would have been able to handle a malfunction of the software, Calhoun asked to speak off the record. The Times declined to do so.

“Forget it,” Calhoun then said. “You can guess the answer.”

Illuminating.


Covertly playing the Nationalist Card..
"Never mistake motion for action." Ernest Hemingway
 
trex8
Posts: 5559
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Re: Boeing’s new CEO confronts its challenges

Mon Mar 09, 2020 1:02 pm

speedbird52 wrote:
Asked whether he believed American pilots would have been able to handle a malfunction of the software, Calhoun asked to speak off the record. The Times declined to do so.

“Forget it,” Calhoun then said. “You can guess the answer.”

Illuminating.

Presumably he knew about the "American " pilots who "failed" to follow the correct procedure.


Boeing’s change in direction was spurred by the results of four days of testing in Seattle last month, when Boeing ran pilots from American Airlines, Southwest, United and Aeromexico through a series of emergency flight scenarios in MAX flight simulators, a person familiar with the matter said. The purpose was to test the “human factors” elements of the updated flight control system, including the crew workload.

All of the pilots managed to eventually maintain control when confronted with various emergencies, including the type of system failure that occurred in the two fatal MAX crashes in Indonesia and Ethiopia. However, about half of the pilots in the testing failed to follow the correct emergency procedures.

https://www.seattletimes.com/business/b ... -training/
 
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Revelation
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Re: Boeing’s new CEO confronts its challenges

Mon Mar 09, 2020 4:08 pm

VS11 wrote:
Bloomberg has an article now on the topic:

I found the following paragraph quite interesting:

For a decade, Calhoun had been among the most outspoken and influential directors on Boeing’s board, one of the people said. Calhoun was lead independent director before replacing Muilenburg as chairman last year, and his opposition was enough to kill company initiatives. Years ago, Calhoun had been in the running to replace Jim McNerney as Boeing CEO. Instead, Muilenburg got the nod.

So, as above, maybe Calhoun was saying similar things in objection to DM's strategies all along, we have no way of knowing.

On the other hand, maybe he always wanted DM's job and was ready to strike when DM was at his weakest, we have no way of knowing.

It's interesting that this letter has gotten the hackles up of current and former Boeing leadership.

Maybe he's right and it's a good time for them to look in the mirror.

But maybe he's now created an atmosphere of ill will that will make it hard for him to lead.
Wake up to find out that you are the eyes of the world
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Wake now, discover that you are the song that the morning brings
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texl1649
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Re: Boeing’s new CEO confronts its challenges

Mon Mar 09, 2020 5:45 pm

Boeing is right now merely a $134B market capitalization company. Calhoun as a long time insider now-CEO is not going to be the permanent seat-holder. They are close to hitting the 50% loss in market value from it's Feb 28th, 2019 peak, and had over a billion a month in free cash flow just last year.

Truly massive changes are ahead.
 
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spinotter
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Re: Boeing’s new CEO confronts its challenges

Mon Mar 09, 2020 6:14 pm

trex8 wrote:
speedbird52 wrote:
Asked whether he believed American pilots would have been able to handle a malfunction of the software, Calhoun asked to speak off the record. The Times declined to do so.

“Forget it,” Calhoun then said. “You can guess the answer.”

Illuminating.

Presumably he knew about the "American " pilots who "failed" to follow the correct procedure.


Boeing’s change in direction was spurred by the results of four days of testing in Seattle last month, when Boeing ran pilots from American Airlines, Southwest, United and Aeromexico through a series of emergency flight scenarios in MAX flight simulators, a person familiar with the matter said. The purpose was to test the “human factors” elements of the updated flight control system, including the crew workload.

All of the pilots managed to eventually maintain control when confronted with various emergencies, including the type of system failure that occurred in the two fatal MAX crashes in Indonesia and Ethiopia. However, about half of the pilots in the testing failed to follow the correct emergency procedures.

https://www.seattletimes.com/business/b ... -training/


I hope there was ONE ONLY and the one INVALID AoA sensor in some of these emergencies.
 
m007j
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Re: Boeing’s new CEO confronts its challenges

Mon Mar 09, 2020 6:14 pm

keesje wrote:
speedbird52 wrote:
Asked whether he believed American pilots would have been able to handle a malfunction of the software, Calhoun asked to speak off the record. The Times declined to do so.

“Forget it,” Calhoun then said. “You can guess the answer.”

Illuminating.


Covertly playing the Nationalist Card..


He might not have been playing that card, assuming he knew the recent test results, he may not have wanted to admit that no one would have been able to save it, which then reflects poorly on his airplane's design choices.
 
Sokes
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Re: Boeing’s new CEO confronts its challenges

Tue Mar 10, 2020 3:55 am

keesje wrote:
Sokes wrote:
Anybody knows how family owned businesses do their decision making?


AFAIN: the old guy listens to his first line reports, checks with greyheads on the floor, discusses with the family and takes a decision.
Employee loyalties, intuition, history, long term continuity & strategy in the end can overrule impressive spreadsheets.



I believe that for companies who are mainly domestic active.

Suppose a company chooses to expand business to India. The trouble of running a business in India not only varies from state to state, but from town to town.
One could assume that there are professional consultants who help make the decision. But then I know a lot of German companies start in Pune. It's hard to imagine that this is the best place for most industries. Do they do it because managers want to meet people from home in the free time?
Or does management say "It may not be the best location, but it's less likely that politicians take us for a ride."?

And how does a company decide if they should start business in India? There is always risk and company decisions always have an element of bet. I believe consultancy services are specialized on knowledge which bets are reasonable and which are too high risk. In other words: consultancy services should be having smart people who are familiar with different potential locations in India. Do boards have people who spent time in India? Or does a company who thinks of expanding to India take two people familiar with the question into the board?

Mostly if companies go into trouble it's easy to identify the wrong decisions. Of course that's easy to say in hindsight. Nevertheless when it comes to strategic decisions I don't think there is genius involved. E.g. for the question "Should we re-engine the B737 or should we build a cleansheet?" a look into airliners.net would have led to a better decision. What about A380? What about Bombardier?
And for in depth analysis of tricky decisions I wonder if boards can be more competent than consultancy services. However I have no experience how genius (or not) the later are.
Why can't the world be a little bit more autistic?
 
Sokes
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Re: Boeing’s new CEO confronts its challenges

Tue Mar 10, 2020 4:20 am

texl1649 wrote:
Boeing is right now merely a $134B market capitalization company. Calhoun as a long time insider now-CEO is not going to be the permanent seat-holder. They are close to hitting the 50% loss in market value from it's Feb 28th, 2019 peak, and had over a billion a month in free cash flow just last year.

Truly massive changes are ahead.


If 134 billion $ is around 50% I assume Boeing's market capitalization lost 130 billion $ or so?
How ridiculous is this? I'm not saying the Max debacle is cheap, but it isn't 130 billion $ either.
Or should we take 30 billion $ for the Max and 100 billion $ for change in market sentiment?
Financial markets are just gone crazy. Stupid low interest policy, stupid government regulations.

And here we are at the main problem. The management doesn't own the company. They are just employees who try to extract as much as possible by manipulating share price through share buybacks or betting with derivatives. The only one who can confront the challenge is the government by changing regulations.

Suppose I buy a share in times in which regulation doesn't allow for bonuses/ gambling. Does the government have the right to change the regulation? It very much changes the nature of the company I invested in.
The government should just stay out. Companies with IPOs would have to clearly state their policies which have to be unchangeable, unless there is a 66% majority. I refer to questions like compensation of management and if management is allowed to gamble with financial derivatives.
That's the idea of constitutions of states: There are rules which everybody has to abide and which require a higher majority than day to day business.

I like the idea of publicly traded companies. But at the moment one may as well invest in a country with anarchy.
Why can't the world be a little bit more autistic?
 
snasteve
Posts: 109
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Re: Boeing’s new CEO confronts its challenges

Tue Mar 10, 2020 8:28 am

https://arstechnica.com/science/2020/02 ... bug-found/

Boeing does seem to have an issue with throughly testing their software. In the case of the Starliner, they never ran the entire software from beginning to end to see how it would perform, they just tested it in segments. Which didn’t reveal the problem. Hopefully they will quit doing this.

That is laughable and juvenile to take such shortcuts. The auto industry tests more thoroughly. If you read the comments section it’s pretty shocking for most working in the tech industry to see software get that far along without being given a full test run.
 
snasteve
Posts: 109
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Re: Boeing’s new CEO confronts its challenges

Tue Mar 10, 2020 8:49 am

Sokes wrote:
texl1649 wrote:
Boeing is right now merely a $134B market capitalization company. Calhoun as a long time insider now-CEO is not going to be the permanent seat-holder. They are close to hitting the 50% loss in market value from it's Feb 28th, 2019 peak, and had over a billion a month in free cash flow just last year.

Truly massive changes are ahead.


If 134 billion $ is around 50% I assume Boeing's market capitalization lost 130 billion $ or so?
How ridiculous is this? I'm not saying the Max debacle is cheap, but it isn't 130 billion $ either.
Or should we take 30 billion $ for the Max and 100 billion $ for change in market sentiment?
Financial markets are just gone crazy. Stupid low interest policy, stupid government regulations.

And here we are at the main problem. The management doesn't own the company. They are just employees who try to extract as much as possible by manipulating share price through share buybacks or betting with derivatives. The only one who can confront the challenge is the government by changing regulations.

Suppose I buy a share in times in which regulation doesn't allow for bonuses/ gambling. Does the government have the right to change the regulation? It very much changes the nature of the company I invested in.
The government should just stay out. Companies with IPOs would have to clearly state their policies which have to be unchangeable, unless there is a 66% majority. I refer to questions like compensation of management and if management is allowed to gamble with financial derivatives.
That's the idea of constitutions of states: There are rules which everybody has to abide and which require a higher majority than day to day business.

I like the idea of publicly traded companies. But at the moment one may as well invest in a country with anarchy.


Management follows the direction of the executives, the executives are primarily paid in shares, generally the executives are the largest owners of the corporation on an individual basis. The temptation as they are in control of the company to vote for share repurchases is too great. Who wouldn’t vote themselves a pay raise?

It’s not the solution to the problem but I really think that the workers should be represented by at least one vote on the BOD.
 
Sokes
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Re: Boeing’s new CEO confronts its challenges

Wed Mar 11, 2020 8:29 am

snasteve wrote:
https://arstechnica.com/science/2020/02/starliner-faced-catastrophic-failure-before-software-bug-found/

Boeing does seem to have an issue with throughly testing their software. In the case of the Starliner, they never ran the entire software from beginning to end to see how it would perform, they just tested it in segments. Which didn’t reveal the problem. Hopefully they will quit doing this.
...


From your link:
"During its quarterly meeting on Thursday, NASA's Aerospace Safety Advisory Panel dropped some significant news about a critical commercial crew test flight. The panel revealed that Boeing's Starliner may have been lost during a December mission had a software error not been found and fixed while the vehicle was in orbit."

It's good that they make a safe spacecraft even safer.
Why can't the world be a little bit more autistic?
 
Redsand187
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Re: Boeing’s new CEO confronts its challenges

Wed Mar 11, 2020 9:13 am

Sokes wrote:

If 134 billion $ is around 50% I assume Boeing's market capitalization lost 130 billion $ or so?
How ridiculous is this? I'm not saying the Max debacle is cheap, but it isn't 130 billion $ either.
Or should we take 30 billion $ for the Max and 100 billion $ for change in market sentiment?

It's not just the Max problem. It's the 777 delays, the 787 missing sales, the KC46 problems, the Starliner failure. It's evidence of a company that is severely flawed. Investors are betting on more bad news coming before any good news.
 
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FiscAutTecGarte
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Re: Boeing’s new CEO confronts its challenges

Fri Mar 20, 2020 10:34 pm

Dennis has to be thinking... Wow... this being fired stuff is starting to feel pretty good...
learning never stops...

FischAutoTechGarten is the full handle and it reflects my interest. It's abbreviated to fit A.net short usernames.
 
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kjeld0d
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Re: Boeing’s new CEO confronts its challenges

Fri Mar 20, 2020 11:25 pm

What a confrontation that was...lol

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