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max999
Posts: 1230
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Re: Boeing in Crisis

Thu Mar 12, 2020 8:22 am

This article blames Boeing's current cash crunch crisis on its $43 billion stock buybacks over the last six years. https://wolfstreet.com/2020/01/20/after ... ax-fiasco/

If Boeing had focused on its business – such as designing a new plane instead of doctoring an ancient design to save money and time – and if it hadn’t blown $43 billion on share-buybacks but had invested this money in a new design, those two crashes wouldn’t have occurred, and it wouldn’t have to beg for cash now.


This is just more evidence of Boeing's toxic culture led by shareholder value as priority 1, 2, and 3.
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keesje
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Re: Boeing in Crisis

Thu Mar 12, 2020 9:02 am

Away with all the triumphant non-sense and stir the pot icons.
Peoples jobs are on the line at Boeing and their huge supply chain.
Families are watching with growing fear.

MAX, 777X, accounting, KC767, Corona it is all coming together
for a company that was brainwashed, organized with stock value /
free cash flow as guidance for every major decision.

Looking at long term strategic interest and the current POTUS,
there will increasingly likely be an intervention.

Trump will drag Boeing, Raytheon Collins, NASA, Spirit, DoT,
LM, FAA and GE into a meeting room & say things not good
for childrens / WTO / Wallstreet ears.

He'll start asking anyone not interested in saving US civil aerospace
to raise their hand and face the consequences.
"Never mistake motion for action." Ernest Hemingway
 
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cv990Coronado
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Re: Boeing in Crisis

Thu Mar 12, 2020 9:22 am

With the significant drop in oil prices, this will reduce the urgency for airlines to replace some of their current equipment. It should help Boeing with compensation for the MAX where airlines are flying less fuel-efficient aircraft. It won't help the sales of the 777X or the 787 though.
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JonesNL
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Re: Boeing in Crisis

Thu Mar 12, 2020 9:50 am

The biggest problem with this crisis is that the low oil price effectively kills many reasons to buy a new efficient aircraft from A or B. I see a slow down in production for the A330 and A350 for A and the 787 for Boeing if the low oil price is more structural. Which leaves the A32x as the only source of profit bringing line at A and none for B. Quite a dire situation for the whole industry...
 
kimimm19
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Re: Boeing in Crisis

Thu Mar 12, 2020 9:56 am

Maybe if they come out of this, they will learn from what put them there in the first place.
 
VFRonTop
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Re: Boeing in Crisis

Thu Mar 12, 2020 9:57 am

Burning that $43bn cash pile on a share buy-back spending spree may not have been the best of ideas.

FT Article on Boeing and the siren call of share buybacks
 
mjoelnir
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Re: Boeing in Crisis

Thu Mar 12, 2020 10:18 am

max999 wrote:
This article blames Boeing's current cash crunch crisis on its $43 billion stock buybacks over the last six years. https://wolfstreet.com/2020/01/20/after ... ax-fiasco/

If Boeing had focused on its business – such as designing a new plane instead of doctoring an ancient design to save money and time – and if it hadn’t blown $43 billion on share-buybacks but had invested this money in a new design, those two crashes wouldn’t have occurred, and it wouldn’t have to beg for cash now.


This is just more evidence of Boeing's toxic culture led by shareholder value as priority 1, 2, and 3.


Of course Boeing burning cash on stock buy backs is a big part of Boeing crisis. To artificially elevate the stock price, Boeing used every available cash for the buy backs, instead of developing new frames, or building reserves for bad times.
There is no equity left, it went to negative. No reserves left, Boeing only depends on lending cash from outside the company, a strategy that works well as long as somebody is prepared to lend you. There I include also suppliers and customers. Liabilities are outstripping assets. Assets are kept artificially high, because with program for cost accounting deferred cost are booked to assets. The hole in the accounts is big.

But Boeing will not go under. If the problems will get that big it will be saved or run through chapter 11. Capitalism will be instantly suspended by the USA government, when certain companies (to big to fail) are in trouble
 
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keesje
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Re: Boeing in Crisis

Thu Mar 12, 2020 10:40 am

Stock buy backs, program accounting, executive pay packages, free cash flow.

Most stood cheering on the side line, blinded but loving the results & PR.

Ignoring every serious question as Boeing bashing & pointing at stock value as the holy grail of performance.

Image

https://wolfstreet.com/2020/01/20/after ... ax-fiasco/

Hopefully sanity comes back and real strategy is on the table.

No more to good to believe out looks & incomplete product comparisons and groupthink.

https://uploads.kinibiz.com/2014/05/Boeing-737-Max-specs.png

Let's start with with facing that Airbus won, do damage control and innitiate solid plans.

No way Brasil is gonna sell Embraer to this Boeing.
"Never mistake motion for action." Ernest Hemingway
 
DartHerald
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Re: Boeing in Crisis

Thu Mar 12, 2020 11:16 am

strfyr51 wrote:
For all the BS? Boeing and the 737 will eventually be ok. The FAA is in Sour Grapes now trying to do anything to get their "Pound of Flesh" .
So Who was it that decided to LET Boeing inspect themselves? Who was it that wasn't hiring or training inspectors nor Engineers to look over the Boeing Findings?
It Sure as hell wasn't Boeing!! Boeing went along with it for sure and then cheated and Lied through the Teeth! Hell! For that alone every engineering Document relating to the 737 up to the 747 should be reviewed! But? Since none of them have been crashing? It won't happen. But Now all of a sudden? The FAA wants to look at electrical wiring and all kinds of madness. They want to inspect what they've been up to now "Pencil whipping" Looking for trash in the tanks and BS like that! So tell me?
How Many FAA inspectors are there at Airbus Commercial? Are we just taking EASA's Word for it that Airbus is above reproach? OR is this which hunt Just for Boeing?
Either we do it for EVERYBODY? or we don't do it at all!! Maybe the FAA should have been Doing the Job we pay TAXES for in the first Place!!


"If we're doing it they must be too" is your argument in a nutshell regarding Airbus/EASA - two points come to mind: firstly, no-one else has suggested this afaik, so where is your evidence for this accusation, and secondly we haven't seen 2 x A32x plough into the ground as a result of design faults arising from poor EASA oversight and there have been no reported customer complaints of "trash in tanks and other BS like that". Perhaps the EASA have been doing what they are paid to do even if the FAA haven't?
 
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keesje
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Re: Boeing in Crisis

Thu Mar 12, 2020 12:02 pm

strfyr51 wrote:
So Who was it that decided to LET Boeing inspect themselves?
Who was it that wasn't hiring or training inspectors nor Engineers to look over the Boeing Findings?
It Sure as hell wasn't Boeing!!


Boeing / the aersoapce industry. Lobbying Congress to curtail, "streamline" FAA & cut cost and their influence on aircraft certification.

A leading aircraft manufacturer is calling on Congress to streamline the Federal Aviation Administration’s (FAA) certification process when lawmakers assemble an FAA reauthorization package this year.

The FAA’s certification process is meant to ensure that American-made aircraft and related products conform with U.S. safety regulations and meet the design standards of foreign civil aviation bodies.

But the aircraft manufacturing industry, which contributes billions to the economy and supports millions of jobs, has long lamented that delays in the process can lead to massive profit losses and undercut their ability to be globally competitive.

John Hamilton, vice president of engineering for Boeing's commercial airplanes, told lawmakers on Wednesday that getting FAA-certified airplanes validated with foreign aviation authorities should “be quick and efficient” but can sometimes take as long as 14 months.

Boeing continues to be the country’s largest exporter, exporting $56.8 billion worth of products and services in 2015.



https://thehill.com/policy/transportati ... on-process
"Never mistake motion for action." Ernest Hemingway
 
phxa340
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Re: Boeing in Crisis

Thu Mar 12, 2020 12:19 pm

Wow this thread went off the rails quickly. To those saying they are glad this is happening to Boeing, how about you show some compassion for the hundreds of thousands of workers there that had nothing to do with managements missteps but are now paying the price? And if y’all think Airbus is somehow immune to this global crisis .... we’ll then ... I want what your smoking.
 
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Dutchy
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Re: Boeing in Crisis

Thu Mar 12, 2020 12:33 pm

max999 wrote:
This article blames Boeing's current cash crunch crisis on its $43 billion stock buybacks over the last six years. https://wolfstreet.com/2020/01/20/after ... ax-fiasco/

If Boeing had focused on its business – such as designing a new plane instead of doctoring an ancient design to save money and time – and if it hadn’t blown $43 billion on share-buybacks but had invested this money in a new design, those two crashes wouldn’t have occurred, and it wouldn’t have to beg for cash now.


This is just more evidence of Boeing's toxic culture led by shareholder value as priority 1, 2, and 3.


Short term shareholders value as a priority. It can't be claimed that long term shareholders' value was first priority.
Many happy landings, greetings from The Netherlands!
 
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par13del
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Re: Boeing in Crisis

Thu Mar 12, 2020 12:33 pm

jwjsamster wrote:
YYZLGA wrote:
It does really make me shake my head at the unacceptability of any rescue of Bombardier, especially after it was directly targeted by the U.S. government. Of course, the U.S. would never be so foolish as to let its biggest high-tech exporter go under.


As a Canadian, it makes my blood boil and hope that boeing gets a taste of their own, through a small 200% tax on any boeing planes being sold outside of the USA.

So no anger at the Canadian government who could have properly bailed out the company years ago?
 
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par13del
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Re: Boeing in Crisis

Thu Mar 12, 2020 12:35 pm

[quote="mjoelnir"
But Boeing will not go under. If the problems will get that big it will be saved or run through chapter 11. Capitalism will be instantly suspended by the USA government, when certain companies (to big to fail) are in trouble[/quote]
Fortunately we can look at DL and UA and imagine how the industry in the USA would look if they were allowed to fail versus restructure thru chpt.11
Will ignore AA for now as they are still a basket case, but if DL and UA are now viewed as successful companies, does that bode well for Boeing if the go chpt.11?
 
slider
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Re: Boeing in Crisis

Thu Mar 12, 2020 12:48 pm

Yesterday afternoon, I saw a blurb on CNBC that Tesla has a bigger market cap than Boeing. I literally stopped in my tracks and had to pause for a moment.

I'm less worried about the imminent here and now crisis than I am concerned about Boeing's utter failure of vision for commercial aircraft. They aren't fixing that overnight.
 
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Revelation
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Re: Boeing in Crisis

Thu Mar 12, 2020 1:23 pm

keesje wrote:
Away with all the triumphant non-sense and stir the pot icons.
Peoples jobs are on the line at Boeing and their huge supply chain.
Families are watching with growing fear.

Unfortunately the same is true for Airbus:

Airbus has advised a number of workers at its Spanish Getafe plant to take quarantine precautions after a coronavirus diagnosis for one of the facility’s employees.

The airframer says it has advised a 14-day self-quarantine for those who have been in direct contact with the worker, who is receiving medical treatment.

Airbus says it is “following medical protocols” and implemented personnel guidelines relating to social interaction, travel, and visits to its operations.

Ref: https://www.flightglobal.com/air-transp ... 22.article

This is now officially a pandemic.
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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frmrCapCadet
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Re: Boeing in Crisis

Thu Mar 12, 2020 1:51 pm

I yet wonder, is Berkshire Hathaway sharpening it pencils, and determining what Boeing Commercial is worth? Boeing needs to buy trust, but all those loans are just to fix the MAX, Money for Nothing, some might say. Berkshire can provide trust for nothing. It has it.
Buffet: the airline business...has eaten up capital...like..no other (business)
 
FRNT787
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Re: Boeing in Crisis

Thu Mar 12, 2020 1:55 pm

Revelation wrote:

It's silly to trust anything Seeking Alpha writes.


In defense of Seeking Alpha on this one, the article (news brief) linked talks about the new order loss of 28 (they report that every month), the expected draw down of the loan (rather than burned through it) and the reports of temporary hiring freezes. The OP just misinterpreted the report.
 
Dieuwer
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Re: Boeing in Crisis

Thu Mar 12, 2020 1:58 pm

Boeing down to $160. No nothing misrepresenting.
 
mjoelnir
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Re: Boeing in Crisis

Thu Mar 12, 2020 2:05 pm

phxa340 wrote:
Wow this thread went off the rails quickly. To those saying they are glad this is happening to Boeing, how about you show some compassion for the hundreds of thousands of workers there that had nothing to do with managements missteps but are now paying the price? And if y’all think Airbus is somehow immune to this global crisis .... we’ll then ... I want what your smoking.


What poster has voiced being glad about the Boeing crisis?

For quite a while one has been bashed pointing to the problems at Boeing. The argument has always been, but the wise stock market does nor agree with you.
 
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Phosphorus
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Re: Boeing in Crisis

Thu Mar 12, 2020 2:19 pm

mjoelnir wrote:
phxa340 wrote:
Wow this thread went off the rails quickly. To those saying they are glad this is happening to Boeing, how about you show some compassion for the hundreds of thousands of workers there that had nothing to do with managements missteps but are now paying the price? And if y’all think Airbus is somehow immune to this global crisis .... we’ll then ... I want what your smoking.


What poster has voiced being glad about the Boeing crisis?

For quite a while one has been bashed pointing to the problems at Boeing. The argument has always been, but the wise stock market does nor agree with you.


Indeed. If there are members here who wish Boeing to go out of business -- sound them out. I would be surprised, if the list was long.

But the hollowing out, of previously admirable, engineering giant, bifurcating in the MAX fiasco, is evident. People who spoke about it -- are somehow enemies of Boeing. Now, for some reason Airbus is dragged into "whatabout" discussion...

Speaking of equity investors -- is it possible/feasible, that someone with deep pockets (e.g. Berkshire Hathaway, as suggested upthread), would take a stake in a "healthy BCA" (BCA without MAX) and/or Boeing Defense, along the lines of CSALP structure? Boeing would end up with a chunk of cash to solve its financing issues, while "healthy BCA" (or Boeing Defense) would be firewalled from the rest of the group?
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Revelation
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Re: Boeing in Crisis

Thu Mar 12, 2020 2:44 pm

This is not just a "Boeing In Crisis" moment:

Image

Ref: https://twitter.com/LeehamNews/status/1 ... 4767167489

This is what a pandemic looks like.

Dieuwer wrote:
Boeing down to $160. No nothing misrepresenting.

And virtuous Airbus down to 74 despite no evil stock buy backs.

It's 52 week trading range is 71.65 - 139.40 so it's off almost half from its 52 week peak.

I think this thread's narrative needs adjusting, a few victory laps need rescinding.
Last edited by Revelation on Thu Mar 12, 2020 3:03 pm, edited 1 time in total.
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
The heart has its seasons, its evenings and songs of its own
 
Weatherwatcher1
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Re: Boeing in Crisis

Thu Mar 12, 2020 3:03 pm

Revelation, Good point illustrating the pandemic. Airline stocks look the same. Many companies will suffer. Let’s not forget that Boeing is the worlds second largest defense company

Boeing has economy of scope in that it sells military and civilian aircraft. Commercial sales are way down, but Boeing has a robust defense business. Boeing is so much more than commercial aviation. It is a bigger and more diversified company than its competitors like Airbus or Lockheed Martin.

For those predicting bankruptcy for Boeing, the company Was in a better position prior to the 737MAX to withstand reduced production rates from a multi year crisis.

Defense, Space & Security is one of The Boeing Company’s [NYSE:BA] three business units. The world’s second-largest defense company, its strategy is to help customers meet mission requirements from the sea bed to outer space and to lead in six key markets: Commercial Derivative Aircraft, Military Rotorcraft, Human Space Exploration, Satellites, Autonomous Systems and Services. Its organization structure reflects this strategy through its eight divisions:

  • Autonomous Systems – Develops and produces remotely piloted aircraft and submersibles. Manages Boeing’s Insitu and Liquid Robotics subsidiaries.
  • Commercial Derivative Aircraft – Develops products for global military and government customers based on proven commercial platforms including Boeing’s world-class 7-series aircraft.
  • Global Operations – Leads Defense, Space & Security’s international subsidiaries (Boeing Defence Australia,
  • Boeing Defence India, Boeing Defense Saudi Arabia, Boeing Defence United Kingdom) while seeking opportunities for additional global growth.
  • Missile and Weapon Systems – Manages Boeing’s portfolio of strategic missile and defense systems and weapons systems.
  • Phantom Works – Creates and advances new products and capabilities by drawing on its expertise in innovation, advanced experimentation and prototyping.
  • Space and Launch – The world’s largest satellite manufacturer also offering other space and intelligence systems. The division houses Boeing’s more than 60 years of space exploration expertise and manages Boeing’s share of United Launch Alliance and United Space Alliance.
  • Strike, Surveillance and Mobility – Manages Boeing’s current and future portfolio of fixed-wing military and surveillance aircraft, including fighters and commercial derivitave platforms, and support of key platforms such as the executive transport fleet, which includes VC-25 (Air Force One).
  • Vertical Lift – The world’s largest provider of military rotorcraft with a diverse portfolio of cargo, tiltrotor and attack platforms.


https://www.boeing.com/company/about-bds/

For those predicting bankruptcy and bailouts, How many people on this forum knew that Boeing produces autonomous submarines and is the worlds largest satellite maker?
 
Weatherwatcher1
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Re: Boeing in Crisis

Thu Mar 12, 2020 3:08 pm

IWMBH wrote:
Boeing has definitely has some work to do, but they aren't in a crises.
They've the almost unlimited budget of the USA to thank for that, they will never allow BA to go bankrupt.
Also, airlines can't just order Airbus instead of Boeing, Airbus won't be able to fulfil that many orders.


Let’s not forget the amount of money that the US government spends on missiles, airplanes, helicopters, satellites, etc. Boeing is a diversified company. Boeing was able to offset Most of the losses in commercial Division with profitable growth in the defense business.
 
FluidFlow
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Re: Boeing in Crisis

Thu Mar 12, 2020 3:13 pm

Weatherwatcher1 wrote:
IWMBH wrote:
Boeing has definitely has some work to do, but they aren't in a crises.
They've the almost unlimited budget of the USA to thank for that, they will never allow BA to go bankrupt.
Also, airlines can't just order Airbus instead of Boeing, Airbus won't be able to fulfil that many orders.


Let’s not forget the amount of money that the US government spends on missiles, airplanes, helicopters, satellites, etc. Boeing is a diversified company. Boeing was able to offset Most of the losses in commercial Division with profitable growth in the defense business.


While the defense business clearly shields Boeing from going anywhere near bankruptcy, the failure of its commercial business reduces overall profitability and therefore the value of the company for investors. So the same reason why Airbus is down. No chances of any meaningful return on the investment, especially with the beating the travel industry is getting.

Boeing is clearly not going bankrupt but I would say the return to profitability for Boeing will take 2-3 times longer than with Airbus as it is not only Corona but the MAX on top. They will come back for sure, just slower.
 
iamlucky13
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Re: Boeing in Crisis

Thu Mar 12, 2020 3:21 pm

max999 wrote:
This article blames Boeing's current cash crunch crisis on its $43 billion stock buybacks over the last six years. https://wolfstreet.com/2020/01/20/after ... ax-fiasco/


If Boeing had focused on its business – such as designing a new plane instead of doctoring an ancient design to save money and time – and if it hadn’t blown $43 billion on share-buybacks but had invested this money in a new design, those two crashes wouldn’t have occurred, and it wouldn’t have to beg for cash now.


Boeing was talking fairly seriously about a new plane at the time of the A320 NEO launch. Airlines said they didn't want to wait.

When an investment newsletter (please visit this SEC link if you think these are publications anyone should pay attention to) suggests a new plane was necessary to prevent the MAX crashes, despite the overwhelming majority of regulators and experts around the world instead concluding the MAX can be safe with properly implemented flight controls, there's no reason to choose the investment newsletter.

mjoelnir wrote:
Of course Boeing burning cash on stock buy backs is a big part of Boeing crisis. To artificially elevate the stock price, Boeing used every available cash for the buy backs, instead of developing new frames, or building reserves for bad times.


Stock buybacks do not "prop up" shareholder value at the expense of programs.

Stock buybacks are one of two primary ways to spend money the company has decided to allocate to shareholders. Dividends provide returns directly. Buybacks concentrate future dividends among a smaller pool of shares, ideally resulting in higher long term returns.

Stock buybacks and dividends are both spent from the excess after business needs are met. They are part of the profits that investors initially bought an ownership share in the company for.

Whether a buyback or dividend is the most prudent move compared to re-investing in business activities at any given juncture is always up for debate, and major disasters like a global pandemic always provide a lot of hindsight. Regarding the crashes, the big issue was not the payouts to the investors. It was the flawed risk analysis for the MAX flight controls, which would have taken an extremely, extremely tiny percentage of that $43 billion to have gotten right in the first place.
 
goosebayguy
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Re: Boeing in Crisis

Thu Mar 12, 2020 3:30 pm

Boeing is fine for now but will be screwed if the FAA decide that an unstable passenger plane is an idea too far. Boeing should have bitten the bullet and gone for a complete redesign of the 737 yet it persists with the failed MAX.
 
raylee67
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Re: Boeing in Crisis

Thu Mar 12, 2020 3:39 pm

Dieuwer wrote:
Just announced that Boeing has booked 46 cancellations with a net loss of 28 orders AND has blown through it entire $14B loan to keep it afloat!



Um... It did not BLOWN THRU its $14B loan. The article clearly says it "draws down" on the loan. If you have had a personal revolving credit line before, you would know what it means. This is how it works. During good times, you negotiated with a bank (or any lender) to provide you with a credit line. Say you get a $1000 credit line from your bank. You get the line, but you have not touched it. You don't get charged and you don't need to pay any interest, because you have not actually taken any of that $1000 out. The $1000 is still with the bank, but you have the right to take up to $1000 out any time.

What Boeing does, is that in the current state of financial panic, it is rightfully afraid that the terms of the line may change, or it may need some cash suddenly, so out of caution, it decided to draw the money out from the line first, and put that in its own bank account. The net effect is that it means it needs to start paying interest in whatever amount it has drawn, but it also means that it would be able to access the cash much faster if needed sometime down the road.

The bigger thing is, from Accounting perspective, the $14B will now appear in the balance sheet and cash flow statement of Boeing, i.e. $14B in asset and liabilities, and also $14B of cash sitting there. If the money is in the line and not drawn, it's not an asset of Boeing.

Many companies are doing this in the last two days, not just Boeing, but notably many in the travel industry. That's why the Fed has boosted its Repo participation to provide more cash into the market, so that banks can facilitate the "drawing down" of line of credit by so many companies at the same time. The market is certainly distressed and liquidity is getting scarce, but Boeing and many participants of the hard-hit industries are far from running out of cash.

Note that bankruptcy means it cannot meet its immediate cash obligation, e.g. if it has a loan to repay on X day that it doesn't have sufficient cash to do. Even if a company does not have cash reserve to repay that loan, but somehow it can get another loan in the market to get the cash to repay the maturing loan, it would not go bankrupt.
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mjoelnir
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Re: Boeing in Crisis

Thu Mar 12, 2020 3:54 pm

iamlucky13 wrote:
mjoelnir wrote:
Of course Boeing burning cash on stock buy backs is a big part of Boeing crisis. To artificially elevate the stock price, Boeing used every available cash for the buy backs, instead of developing new frames, or building reserves for bad times.


Stock buybacks do not "prop up" shareholder value at the expense of programs.

Stock buybacks are one of two primary ways to spend money the company has decided to allocate to shareholders. Dividends provide returns directly. Buybacks concentrate future dividends among a smaller pool of shares, ideally resulting in higher long term returns.

Stock buybacks and dividends are both spent from the excess after business needs are met. They are part of the profits that investors initially bought an ownership share in the company for.

Whether a buyback or dividend is the most prudent move compared to re-investing in business activities at any given juncture is always up for debate, and major disasters like a global pandemic always provide a lot of hindsight. Regarding the crashes, the big issue was not the payouts to the investors. It was the flawed risk analysis for the MAX flight controls, which would have taken an extremely, extremely tiny percentage of that $43 billion to have gotten right in the first place.


The stock buy backs at Boeing was not done out of excess cash or capital. Boeing went straight to the brink, going for no or negative equity. That is going for the foundation of the company. Liabilities are not longer covered by assets. Add to that, that because in program for cost accounting the deferred cost are booked to assets, a big part of the booked assets are non existing. Real equity at Boeing is about 30 billion USD negative. So it would have been prudent to not do 35 billions of the stock buy backs in the last 6 years. 8 Billion would have been prudent, 43 billion is burning the foundations.
Having a healthy equity, is exactly necessary when a major disaster happens. Boeing used the good times to burn its cash or better capital. It seems that the gamblers at the casino called stock market always forget that there will be bear market coming one day.

You can make yourself the calculation. Stock buy backs done at 350 USD stock price are worth what at 160 USD today. Stock buy backs are a gamble, both for the company as well as the shareholders.

People sometimes forget that stock buy backs were banned until the Regan area. There were good reasons for that. We have seen what loosening of all controls, agreed upon after the great recession, have done to the financial markets. Dividends are the proper way to compensate shareholders.
 
ILNFlyer
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Re: Boeing in Crisis

Thu Mar 12, 2020 4:10 pm

Revelation wrote:
Dieuwer wrote:
Just announced that Boeing has booked 46 cancellations with a net loss of 28 orders AND has blown through it entire $14B loan to keep it afloat!

https://seekingalpha.com/news/3550618-b ... -28-orders

I predict that if Boeing does not get a government bailout (soon), it will go bankrupt.

FAKE NEWS!

The source news article ( https://finance.yahoo.com/news/boeing-p ... 02730.html ) says:

“They want to have cash on the balance sheet,” said Bloomberg Intelligence’s Matthew Geudtner.

... so it's not "blown through" already.

It's silly to trust anything Seeking Alpha writes.


Thank you for bringing sanity to this thread.
 
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Revelation
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Re: Boeing in Crisis

Thu Mar 12, 2020 4:34 pm

The two largest aviation manufacturer's stocks are taking a beating.

Here's the year to date graph for both:

Image

Ref: https://twitter.com/LeehamNews/status/1 ... 4767167489
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o0OOO0oChris
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Re: Boeing in Crisis

Thu Mar 12, 2020 4:41 pm

This is a really bad situation only to get worse. I think this excellent article gives a conclusive look in what`s to come:
https://medium.com/@tomaspueyo/coronavirus-act-today-or-people-will-die-f4d3d9cd99ca

In northern Italy, ICU capacities are overwhelmed and the doctors have to decide just like in wartimes, who will get the equipment needed to survive based on their chances to survive. People over 80 coming to the hospitals with severe pneumonia are getting sent back to die.

Just imagine: A company urgently needing cash to settle a deadly error and cover a grounding of their most popular product faces a time where airlines cut flights and ground their equipment desperatly trying to defere any new plane on order. So even if the 737 is ungrounded, the airlines will be unwilling to pick up the stored 737s for some time, cutting the desperaty needed cashflow for boeing.

So Boeing will definitely need a lot more money. And where can it get that kind of money?
- Stocks are butchererd down and that`s the way it will go on for a whole. People are selling everything including gold and bitcoin. Getting a few billions from markets by issuing shares (they bought back ..) is out of question as it would crush shareprices even further.
- Banks will probably avoid giving loan to anybody in the business with the unpreceded current crisis at hand.
- Planes will get defered a lot- some of the most growing customers will probably get burned as their capital exposure is optimistically maxed out anyway. So little money coming in from the core business.
- Government will probably help, but not until something like chapter 11 comes along. Has to be something bulletproof after that subsidy-game they played on airbus and the EU. Maybe they get some injection through Nasa to overpay for another orbital test flight?

Will be interesting - and hard - to see how this will play out. I whish them luck. The Skies would get boring if manufacturers die out.
 
WayexTDI
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Re: Boeing in Crisis

Thu Mar 12, 2020 4:46 pm

jeffrey0032j wrote:
WayexTDI wrote:
jeffrey0032j wrote:
If Boeing is in a public crisis, Airbus is in a hidden crisis. Airbus hasn't even attempted to clear any of their dubious orders even before the coronavirus crisis.

Not sure the comparison stands. Airbus does not have its cash cow grounded for a year, with stopped deliveries and manufacturing.
Boeing effectively has only 1 program running somehow smoothly right now (the 787), whereas Airbus has 3 (the A220, the A320Family & the A350).

Nothing to do with which program is running, but the amount of cancellations that one can expect. The 737 Max has gone past most of the order book fat trimming. Airbus on the other hand hasn't started on it.

Actually, I think the 737 MAX cancellations we've seen since 1/1/20 are just the beginning: between COVID-19 (weak airlines going under) and the (still) uncertainly as to when the 737 MAX will get back in the air, there will be more cancellations.
 
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Momo1435
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Re: Boeing in Crisis

Thu Mar 12, 2020 4:48 pm

The problem with the discussion is that too many people see it too black and white and are offended if someone has an alternative opinion.

Because of this some real issues are overlooked and other things that are not as bad as people think are overblown.

Obviously Boeing has issues, which are big enough to talk about a crisis. With the most clear one the grounding of the MAX. But 40 conversions of MAX orders to 787 orders isn't as big of a deal. It will be different when we see outright cancellations in larger numbers then this.

The financial situation will only be a big issue when Boeing losses it's access to financing, which is not the case at this moment in time. The money spend on share-buy-backs could have been much better used, but that is not an issue right now. It's more something that should be a part of a larger very needed change at Boeing. I would rather see that as a challenge then as a crisis.
 
SteinarN
Posts: 178
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Re: Boeing in Crisis

Thu Mar 12, 2020 4:51 pm

Revelation wrote:
The two largest aviation manufacturer's stocks are taking a beating.

Here's the year to date graph for both:

Image

Ref: https://twitter.com/LeehamNews/status/1 ... 4767167489


Year to date Boeing have lost 48 percent.
Year to date Airbus have lost 46 percent.

Since all time high 13 months ago Boeing have lost 62 percent
Since all time high one and a half month ago Airbus have lost 49 percent.
 
WayexTDI
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Re: Boeing in Crisis

Thu Mar 12, 2020 4:54 pm

Revelation wrote:
keesje wrote:
Away with all the triumphant non-sense and stir the pot icons.
Peoples jobs are on the line at Boeing and their huge supply chain.
Families are watching with growing fear.

Unfortunately the same is true for Airbus:

Airbus has advised a number of workers at its Spanish Getafe plant to take quarantine precautions after a coronavirus diagnosis for one of the facility’s employees.

The airframer says it has advised a 14-day self-quarantine for those who have been in direct contact with the worker, who is receiving medical treatment.

Airbus says it is “following medical protocols” and implemented personnel guidelines relating to social interaction, travel, and visits to its operations.

Ref: https://www.flightglobal.com/air-transp ... 22.article

This is now officially a pandemic.

I think you're mixing the reasons being the 2 situations:
- Boeing is suffering and has laid-off or furloughed thousands of workers due to the 737 MAX grounding, which is 100% due to Boeing's actions;
- Airbus is following the COVID-19 medical guidelines and asking their workers to self-quarantine, which is 0% due to Airbus (or Boeing, or whoever else) actions.

The end-result is similar, but the cause is not.
 
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Dutchy
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Re: Boeing in Crisis

Thu Mar 12, 2020 4:58 pm

Momo1435 wrote:
The problem with the discussion is that too many people see it too black and white and are offended if someone has an alternative opinion.

Because of this some real issues are overlooked and other things that are not as bad as people think are overblown.

Obviously Boeing has issues, which are big enough to talk about a crisis. With the most clear one the grounding of the MAX. But 40 conversions of MAX orders to 787 orders isn't as big of a deal. It will be different when we see outright cancellations in larger numbers then this.

The financial situation will only be a big issue when Boeing losses it's access to financing, which is not the case at this moment in time. The money spend on share-buy-backs could have been much better used, but that is not an issue right now. It's more something that should be a part of a larger very needed change at Boeing. I would rather see that as a challenge then as a crisis.


Semantics, but I would call it a crisis. The CEO of Boeing should not let this crisis get to waste.
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MSPNWA
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Re: Boeing in Crisis

Thu Mar 12, 2020 4:58 pm

WayexTDI wrote:
Actually, I think the 737 MAX cancellations we've seen since 1/1/20 are just the beginning: between COVID-19 (weak airlines going under) and the (still) uncertainly as to when the 737 MAX will get back in the air, there will be more cancellations.


There will be more cancellations and deferrals of every aircraft. I think what will be important going forward is who the order book consists of, not just what. An order is only good if you have a customer who can buy it.

In a way the crisis occurring during the MAX line suspension and grounding could be a good break for Boeing for a change.
 
Adipocere
Posts: 323
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Re: Boeing in Crisis

Thu Mar 12, 2020 5:27 pm

phxa340 wrote:
Wow this thread went off the rails quickly. To those saying they are glad this is happening to Boeing, how about you show some compassion for the hundreds of thousands of workers there that had nothing to do with managements missteps but are now paying the price? And if y’all think Airbus is somehow immune to this global crisis .... we’ll then ... I want what your smoking.


I don’t buy that the only bad guys in Boeing were the suits. The other hand that clapped were the software engineers, technical leader and other front line folks involved in the scandal. While Muilenburg and the suits had their public reckoning in front of Congress and some publicly lost their jobs : I don’t know of any such accountability applied to the engineers, technicians and technical leaders who were all too happy to go along with shenanigans while their stock and pay were goosed. Their actions cost unimaginable pain in 349 families, so crying about losing jobs and pensions aren’t really going to elicit any sympathy.
 
StTim
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Re: Boeing in Crisis

Thu Mar 12, 2020 5:43 pm

No one should be happy at the hole that Boeing finds itself in. A lot of people are suffering (or have suffered) for it. That we now also find the world in upheaval (financial and potentially structural) because of a pandemic is a double whammy.

I was always one who disliked the strategy Boeing had to return so much cash to the shareholders in the form of high dividends and share buy backs. It is an admission that the management of the company has no idea what the money can be used for in order to create future value and so it is handing money back in the hope that the shareholders have a better idea.

It is also a case that they do not build defence funds in the good times. There was an engineering company in the UK back in my engineering days called General Electric run by a guy called Lord Weinstock. It was a profitable if unspectacular company that sat on a cash mountain. Each reporting season the luminaries in the city used to castigate GEC (and Weinstock) for not splashing that cash. Well he retired eventually and the new board decided to splash that cash on sexy new engineering areas. They lost the lot and effectively bankrupt the company. The moral of the story is that long term in mature industries is not achieved by short term strategies.
 
mig17
Posts: 321
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Re: Boeing in Crisis

Thu Mar 12, 2020 5:44 pm

MSPNWA wrote:
WayexTDI wrote:
Actually, I think the 737 MAX cancellations we've seen since 1/1/20 are just the beginning: between COVID-19 (weak airlines going under) and the (still) uncertainly as to when the 737 MAX will get back in the air, there will be more cancellations.


There will be more cancellations and deferrals of every aircraft. I think what will be important going forward is who the order book consists of, not just what. An order is only good if you have a customer who can buy it.

In a way the crisis occurring during the MAX line suspension and grounding could be a good break for Boeing for a change.

A new crisis above an ongoing one isn't a break, except if you are a politician maybe.
I would even say that the COVID crisis makes the MAX recovery even more uncertain. Now that they do not absolutely need new planes asap, "airlines with a MAX problem" will be more encline to simply cancel. And for Boeing, the cash situation is now critical. They will need cash to return the MAX into service and / or launch a new design. They also need cash to finish certifying the 777-X who is going to sell even worst than before for some time now. And the only aircraft still bringing in cash, the 787, is now also impacted by COVID-19 …

Of course you could say that the combination of the two crisis not impacting twice the 737 MAX, but the risk of the second crisis amplifying the first one is just to great to be ignored.

The only break would be that Airbus (and the entire air travel industry) is also in deep trouble now. But is it really a good new for Boeing?
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wingman
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Re: Boeing in Crisis

Thu Mar 12, 2020 5:58 pm

It certainly gives Boeing some breathing room on recertification. The downside for Airbus if this turns into a long-term sector rout is their own wind down. 5-6 plants in five countries? That's a massive logistical undertaking and Boeing has already been through that excruciating pain. The worse and worst case scenarios are ugly for both parties. But in some ways I look at Boeing as already having adjusted to the "hurricane" by learning to survive on food scraps and having the main part of the house shuttered. Not the greatest analogy perhaps and with any luck it doesn't bear out.
 
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Phosphorus
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Re: Boeing in Crisis

Thu Mar 12, 2020 7:04 pm

o0OOO0oChris wrote:
....
- Government will probably help, but not until something like chapter 11 comes along. Has to be something bulletproof after that subsidy-game they played on airbus and the EU. Maybe they get some injection through Nasa to overpay for another orbital test flight?
....


Now that would require a fair bit of bipartisanship and Nomex underwear. NASA is a ~22.6 bn$ agency, and a bulls-eye of "wasteful government spending" and "contractor largess" and other types of fairly venomous criticism from both "down with big government" and "down with government contractor fat cats" crowds, in Congress and among general public. Quite ironic, if you think that total US federal budget is pushing 5 tn$ (above 4.5 tn$ for sure).

So, passing a few billion via them to Boeing will be a way noisier undertaking, than a double or triple the money via virtually any other government channel -- DARPA, NRO, etc. Heck, even DOT or DHS probably would be less controversial than NASA...
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ShamrockBoi330
Posts: 353
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Re: Boeing in Crisis

Thu Mar 12, 2020 8:01 pm

Is there a list of who the stored (What is it, circa 300?) MAX jets are for?

Given the current storm clouds, it would be interesting to see how likely these already built and stored jets are to be either delivered (best case), deferred or outright cancelled (worst case).
 
oschkosch
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Re: Boeing in Crisis

Thu Mar 12, 2020 8:12 pm

ShamrockBoi330 wrote:
Is there a list of who the stored (What is it, circa 300?) MAX jets are for?

Given the current storm clouds, it would be interesting to see how likely these already built and stored jets are to be either delivered (best case), deferred or outright cancelled (worst case).
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o0OOO0oChris
Posts: 114
Joined: Sun May 13, 2012 10:27 pm

Re: Boeing in Crisis

Thu Mar 12, 2020 8:12 pm

ShamrockBoi330 wrote:
Is there a list of who the stored (What is it, circa 300?) MAX jets are for?

Given the current storm clouds, it would be interesting to see how likely these already built and stored jets are to be either delivered (best case), deferred or outright cancelled (worst case).

I don`t think a already build and painted Jet can be cancelled? With all customer specific tunes applied?
Probably just defered at most.
 
o0OOO0oChris
Posts: 114
Joined: Sun May 13, 2012 10:27 pm

Re: Boeing in Crisis

Thu Mar 12, 2020 8:13 pm

Phosphorus wrote:
So, passing a few billion via them to Boeing will be a way noisier undertaking, than a double or triple the money via virtually any other government channel -- DARPA, NRO, etc. Heck, even DOT or DHS probably would be less controversial than NASA...

Ok, you got a point are most probably right.
 
leghorn
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Re: Boeing in Crisis

Thu Mar 12, 2020 8:16 pm

Boeing need to figure out how they can rework built Max8 planes as Max200s as cheaply and quickly as possible.
They'll be selling them at or below cost to Ryanair but it'll keep the wheels turning for the next few years.
 
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Phosphorus
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Re: Boeing in Crisis

Thu Mar 12, 2020 8:29 pm

o0OOO0oChris wrote:
ShamrockBoi330 wrote:
Is there a list of who the stored (What is it, circa 300?) MAX jets are for?

Given the current storm clouds, it would be interesting to see how likely these already built and stored jets are to be either delivered (best case), deferred or outright cancelled (worst case).

I don`t think a already build and painted Jet can be cancelled? With all customer specific tunes applied?
Probably just defered at most.

Well, the fact that a plane is not airworthy, and not fit for purpose it was ordered for, would probably be a start.
Of course, airlines and airframers prefer to bargain -- than to go to court. But if came to that -- the fact that a said Jet is not legally flyable, would probably influence a jury.
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airzona11
Posts: 1769
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Re: Boeing in Crisis

Thu Mar 12, 2020 8:40 pm

IF chasing share price is root of all the evil of Boeing, how are the same posters explaining the near-identical share price fall of Airbus?
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