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SteinarN
Posts: 171
Joined: Mon Dec 29, 2014 1:26 pm

Re: Boeing Financial Discussion 2020

Wed Mar 25, 2020 7:01 pm

Northpole wrote:
SteinarN wrote:
Northpole wrote:
Well it seems they just got some 17 Bilion dollars from the US taxpayers


Do you have a link?


It is a Swedish Business Magazine called " Dagens Industri " which quotes an article in todays Washington Post... in short it says something like : 2.000 Billion Us dollars to " industries related to the Nations safety " > of which some 17 Billion Us dollars are aimed direct at / to Boeing. So I assume the article in todays Washington Post could bring some light ...


Ok, thanks.

I will be interesting to see what, if any conditions is attached to the money.

I think 17 billion is not that much in the situation Boeing finds it self in now.
 
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scbriml
Posts: 18547
Joined: Wed Jul 02, 2003 10:37 pm

Re: Boeing Financial Discussion 2020

Wed Mar 25, 2020 7:13 pm

SteinarN wrote:
Northpole wrote:
Well it seems they just got some 17 Bilion dollars from the US taxpayers


Do you have a link?


https://www.washingtonpost.com/business ... ronavirus/
Time flies like an arrow. Fruit flies like a banana!
There are 10 types of people in the World - those that understand binary and those that don't.
 
mjoelnir
Posts: 9388
Joined: Sun Feb 03, 2013 11:06 pm

Re: Boeing Financial Discussion 2020

Wed Mar 25, 2020 7:38 pm

morrisond wrote:
mjoelnir wrote:
morrisond wrote:

And if Net Earnings were anywhere associated with the reality of what a Company actually makes in this day and age and not a highly manipulated number then your analysis would make more sense.

The market long ago (rightly or wrongly - and I would agree with you - mostly wrongly) stopped looking at Net Earnings and started focusing on cash flow as the Net Number is more a concept than a fixed reality.

Numbers can be manipulated to show whatever you want and get whatever outcome you want.

In terms of Cash flow - various estimates place Boeing's cash savings at $1-1.3 Billion per month with MAX production stoppage - while still supporting their suppliers and Airline customers.

They burned $2.7B in free cash flow in the last quarter of 2019.

https://investors.boeing.com/investors/ ... fault.aspx

https://www.reuters.com/article/us-boei ... SKBN1YL0HS

That is how I got to Positive Cash flow going forward.

With Covid - I don't think a lot of there Airline customers will have a leg to stand on for delay compensation anymore as they probably really don't want those frames to RTS as they don't need the capacity and with where Fuel is - less costly to run old ones.

However the only real thing that matters this morning is that it looks like Boeing will restart MAX production on May 6. They would not do that unless they had assurance that it would be cleared to RTS again. The US needs the jobs and needs the MAX line to restart. I don't think it's going to be nearly as good as pre-Covid but it will be a restart and you can see Governments supporting deliveries with loan guarantees.

I have no idea if it will make it into the final version of the Bill winding it's way through the Senate - but it sounds like the DEM's are going to force Airlines to replace older Dirtier from an emissions standpoint airplanes.

The stock price is up 40-50% from it's bottom and looks like it will open at about $150 per share (currently over $140 as I started typing this reply before the markets opened up).

They may not need a bailout - just some loan guarantees - which there biggest competitor implicitly gets due to who owns it shares.

When MAX starts delivering again we can see what happens with cash flow and figure out how much of those frames have already been paid for.

I'll make a prediction that in the 12 months following MAX delivery restart - Boeing's cash flow will be quite large assuming there customers can finance their frames.


Yes I know that net earnings are inflated at Boeing, that makes the case worse.


They were at the beginning of 787 production but the last few years understated - which basically nets out. It depends on what year to what year you are looking at.

Are you Ignoring that it looks like Cash Flow would have been positive going forward with the stoppage in MAX production?


You are always making statements, back them up with numbers. Yes 787 deferred cost are down, but 777X and 737MAX deferred cost are rising.
Deferred cost for 737MAX combined with 777X reached 5.5 billion USD according the 2019 financial accounts.

With the stoppage of the MAX production the cash flow kept on being negative.

And you still refrain from backing up your statement that the stock buy backs were financed to a big part by borrowing. I showed you numbers, I did not even include what went to investment and development, the other drains on cash.
You changed the subject.
 
morrisond
Posts: 2499
Joined: Thu Jan 07, 2010 12:22 am

Re: Boeing Financial Discussion 2020

Wed Mar 25, 2020 8:26 pm

mjoelnir wrote:
morrisond wrote:
mjoelnir wrote:

Yes I know that net earnings are inflated at Boeing, that makes the case worse.


They were at the beginning of 787 production but the last few years understated - which basically nets out. It depends on what year to what year you are looking at.

Are you Ignoring that it looks like Cash Flow would have been positive going forward with the stoppage in MAX production?


You are always making statements, back them up with numbers. Yes 787 deferred cost are down, but 777X and 737MAX deferred cost are rising.
Deferred cost for 737MAX combined with 777X reached 5.5 billion USD according the 2019 financial accounts.

With the stoppage of the MAX production the cash flow kept on being negative.

And you still refrain from backing up your statement that the stock buy backs were financed to a big part by borrowing. I showed you numbers, I did not even include what went to investment and development, the other drains on cash.
You changed the subject.


No I showed you Boeing was -$2.7B in the last Quarter of 2019 - Free Cash Flow and the other article showed Analysts were estimating production stoppage would save them $1-1.3B per month in Free cash flow. -2.7B plus 3-3.9B is a positive number.

I didn't say Stock buybacks were financed by borrowing - you did and still haven't shown anything other a rise accounts payable (which would rise with more Airplanes in the production system - they could not use this to repurchase stock) and an increase in Advances is accounted for in increased Inventories.

In 2015 they netted this number out - it seems like they do not now and then who the hell knows what portion is included now or not. They have sped up their production lines so maybe have they have to hold less inventory - impossible to know for sure.

https://s2.q4cdn.com/661678649/files/do ... 722_nr.pdf

https://s2.q4cdn.com/661678649/files/do ... elease.pdf
 
Sokes
Posts: 852
Joined: Sat Mar 09, 2019 4:48 pm

Re: Boeing Financial Discussion 2020

Thu Mar 26, 2020 3:46 am

I go off topic. Skip this post if not interested in money supply/ government debt.

Gremlinzzzz wrote:
1. It is wrong to think that deflation is something that makes people delay purchases. Look at air travel as an example...

Strong point. You are right.

Sokes wrote:
If basic needs are not satisfied people are willing to pay high real interest, e.g. if there is not enough housing. I believe that capitalism satisfies needs and once these are met I see no reason why interest rate after inflation shouldn't be slightly negative. On the other side cheap interest rate leads to stupid investments like another car factory when there already is excess manufacturing capacity in the world. So what to do?
I believe in markets. The interest rate should be decided by the market and not by some politician who wants to bail out his donor friends.
You may focus on the word "believe". I don't think this was tried. I have no evidence to support this believe. In other words: I believe it should be tried.

Gremlinzzzz wrote:
2. Government interest rates always need to be higher than inflation rate. There is a cost to borrowing that involves the calculation of what inflation is, the risk attached to loaning the money to any party, and a premium that should make it worth the time. That is simple economics on how banking works.

I was actually thinking a lot after I wrote it, because even I felt uneasy about it.
I stick to my yearly money increase of 5%. That should lead to inflation of 2-3%. To avoid stupid investments or excessive gambling I estimate a minimum interest rate of 4% ( = 1,5% real interest rate) is required. So yes, you are right.
If demand for credit is so low that interest rate falls below 4% the government has to absorb the excess savings.
Maybe deficit spending has a bad name because the political left likes deficit spending even during the biggest booms. My proposal means that if there is enough demand for credit from private players to keep interest above 4%, the government has to finance itself with the 5% new money plus whatever tax they charge.

Germany earlier had a rule in the constitution that new government debt mustn't exceed investments. That sounds reasonable to me. I would even say shouldn't exceed 66% of investments. In 2008 politics wanted to lower interest to close to 0%. Those who believe in strong money got upset. The compromise was that Germany added to the constitution that new debt must not exceed 0,35% of GDP/ year.
Image

I believe that's double stupid. I don't like low interest rate and I believe excess savings have to be absorbed by governments.
Contradicting evidence: Low interest for Chinese and German and other savings uplifted billions of the real poor in the world out of worst poverty and also enabled renewable energies.

Gremlinzzzz wrote:
3. The expansion of gold has been an almost constant 2%. People that do not like honest economics, and those that would print colored paper to acquire things of far greater value are the only ones that have issue with it, the ones that make a lot of money in the absence of an asset based currency system.


I prefer Milton Friedman's 5%. Rulers under gold standard were tempted to dilute the gold content of coins. The only way to got rid of excess debt in the middle ages was to kill the Jews. I know in India there were cases where over-indebted villagers would threaten the moneylenders to give the debt documents or get killed. The Indian villagers were more civilized than middle age Europeans. As I wrote above, debt is inherent unstable. If there is no way to decrease the value of savings, savers may suddenly face a currency reform, a knife at their throat or other means to destroy all their savings.
Does money increase 5% and minimum interest 4% contradict that? I don't know. I believe it should be tried.

Do you write a lot?
Before I started posting on a.net I would write about topics of interest for myself. Writing slows down the thought process. Because of that slowdown one becomes aware of assumptions never reflected properly. Hardly any of my posts here in which I don't have to google something to make sure it's not just an assumption. One also becomes aware of contradicting evidence, like in the quote of myself above. I believe mature thought over a topic requires to write an essay about it. I also read a lot. But that's not enough.
You are quite a challenge for me. I'm looking forward for more discussions with you.
Why can't the world be a little bit more autistic?
 
Sokes
Posts: 852
Joined: Sat Mar 09, 2019 4:48 pm

Re: Boeing Financial Discussion 2020

Thu Mar 26, 2020 4:02 am

morrisond wrote:
Gremlinzzzz wrote:
morrisond wrote:
Boeing is trading at $165ish right now - if they sold back some of the shares they bought back from the market previously right now they could easily raise $10-15 Billion.

There has been $8B in trading in Boeing just today.

It would be poor form. They bought some of those shares at a steep premium. Selling them now for less is a poir business move with interest rates qhere they are.


Sure with Government Guarantees on that debt why not - just borrow more - more debt fixes all things....


If this is a joke, it was a good one.
However as it comes from you I'm afraid it is meant serious.
But I do appreciate that you help us understand the Boeing mentality.
Why can't the world be a little bit more autistic?
 
Gremlinzzzz
Posts: 19
Joined: Fri Jan 24, 2020 4:28 am

Re: Boeing Financial Discussion 2020

Thu Mar 26, 2020 4:07 am

Sokes wrote:
I go off topic. Skip this post if not interested in money supply/ government debt.

Gremlinzzzz wrote:
1. It is wrong to think that deflation is something that makes people delay purchases. Look at air travel as an example...

Strong point. You are right.

Sokes wrote:
If basic needs are not satisfied people are willing to pay high real interest, e.g. if there is not enough housing. I believe that capitalism satisfies needs and once these are met I see no reason why interest rate after inflation shouldn't be slightly negative. On the other side cheap interest rate leads to stupid investments like another car factory when there already is excess manufacturing capacity in the world. So what to do?
I believe in markets. The interest rate should be decided by the market and not by some politician who wants to bail out his donor friends.
You may focus on the word "believe". I don't think this was tried. I have no evidence to support this believe. In other words: I believe it should be tried.

Gremlinzzzz wrote:
2. Government interest rates always need to be higher than inflation rate. There is a cost to borrowing that involves the calculation of what inflation is, the risk attached to loaning the money to any party, and a premium that should make it worth the time. That is simple economics on how banking works.

I was actually thinking a lot after I wrote it, because even I felt uneasy about it.
I stick to my yearly money increase of 5%. That should lead to inflation of 2-3%. To avoid stupid investments or excessive gambling I estimate a minimum interest rate of 4% ( = 1,5% real interest rate) is required. So yes, you are right.
If demand for credit is so low that interest rate falls below 4% the government has to absorb the excess savings.
Maybe deficit spending has a bad name because the political left likes deficit spending even during the biggest booms. My proposal means that if there is enough demand for credit from private players to keep interest above 4%, the government has to finance itself with the 5% new money plus whatever tax they charge.

Germany earlier had a rule in the constitution that new government debt mustn't exceed investments. That sounds reasonable to me. I would even say shouldn't exceed 66% of investments. In 2008 politics wanted to lower interest to close to 0%. Those who believe in strong money got upset. The compromise was that Germany added to the constitution that new debt must not exceed 0,35% of GDP/ year.
Image

I believe that's double stupid. I don't like low interest rate and I believe excess savings have to be absorbed by governments.
Contradicting evidence: Low interest for Chinese and German and other savings uplifted billions of the real poor in the world out of worst poverty and also enabled renewable energies.

Gremlinzzzz wrote:
3. The expansion of gold has been an almost constant 2%. People that do not like honest economics, and those that would print colored paper to acquire things of far greater value are the only ones that have issue with it, the ones that make a lot of money in the absence of an asset based currency system.


I prefer Milton Friedman's 5%. Rulers under gold standard were tempted to dilute the gold content of coins. The only way to got rid of excess debt in the middle ages was to kill the Jews. I know in India there were cases where over-indebted villagers would threaten the moneylenders to give the debt documents or get killed. The Indian villagers were more civilized than middle age Europeans. As I wrote above, debt is inherent unstable. If there is no way to decrease the value of savings, savers may suddenly face a currency reform, a knife at their throat or other means to destroy all their savings.
Does money increase 5% and minimum interest 4% contradict that? I don't know. I believe it should be tried.

Do you write a lot?
Before I started posting on a.net I would write about topics of interest for myself. Writing slows down the thought process. Because of that slowdown one becomes aware of assumptions never reflected properly. Hardly any of my posts here in which I don't have to google something to make sure it's not just an assumption. One also becomes aware of contradicting evidence, like in the quote of myself above. I believe mature thought over a topic requires to write an essay about it. I also read a lot. But that's not enough.
You are quite a challenge for me. I'm looking forward for more discussions with you.
I read a bit, and listen to people who now quite a lot more than I do as pertains money.
 
Scotron12
Posts: 434
Joined: Fri Mar 01, 2019 2:13 pm

Re: Boeing Financial Discussion 2020

Thu Mar 26, 2020 10:02 am

Boeing may not like the conditions that come with US help for the aviation sector.

Main conditions are:

Executive pay
Dividends to shareholders
Stock Buy-backs
The government to get warrants allowing to buy stock.

As Calhoun already stated he will not take any money if it meant the government taking a company stake, looks like a take it or leave it question.

https://www.seattletimes.com/business/b ... us-crisis/
 
StTim
Posts: 3620
Joined: Thu Aug 08, 2013 7:39 am

Re: Boeing Financial Discussion 2020

Thu Mar 26, 2020 11:33 am

Sokes wrote:
morrisond wrote:
Gremlinzzzz wrote:
It would be poor form. They bought some of those shares at a steep premium. Selling them now for less is a poir business move with interest rates qhere they are.


Sure with Government Guarantees on that debt why not - just borrow more - more debt fixes all things....


If this is a joke, it was a good one.
However as it comes from you I'm afraid it is meant serious.
But I do appreciate that you help us understand the Boeing mentality.


I believe it was sarcasm.
 
morrisond
Posts: 2499
Joined: Thu Jan 07, 2010 12:22 am

Re: Boeing Financial Discussion 2020

Thu Mar 26, 2020 12:37 pm

Sokes wrote:
morrisond wrote:
Gremlinzzzz wrote:
It would be poor form. They bought some of those shares at a steep premium. Selling them now for less is a poir business move with interest rates qhere they are.


Sure with Government Guarantees on that debt why not - just borrow more - more debt fixes all things....


If this is a joke, it was a good one.
However as it comes from you I'm afraid it is meant serious.
But I do appreciate that you help us understand the Boeing mentality.


It was a joke - if you knew me personally you would know I have been talking about it for years.

The great financial crisis was because there was too much debt - so we fixed it by issuing more - I think Global Debt has tripled worldwide since or soon will.

The only real way to get rid of it is severe austerity for a long time which won't happen when it's too easy to buy votes - or default/writeoffs
 
744SPX
Posts: 121
Joined: Mon Jan 27, 2020 6:20 pm

Re: Boeing Financial Discussion 2020

Thu Mar 26, 2020 2:25 pm

Scotron12 wrote:
Boeing may not like the conditions that come with US help for the aviation sector.

Main conditions are:

Executive pay
Dividends to shareholders
Stock Buy-backs
The government to get warrants allowing to buy stock.

As Calhoun already stated he will not take any money if it meant the government taking a company stake, looks like a take it or leave it question.

https://www.seattletimes.com/business/b ... us-crisis/


Why do I get the feeling they will find a way to get the 17 billion without having to adhere to these conditions?

"Funny" how close 17 billion is to the predicted 18 billion cost from the MAX debacle...
 
astuteman
Posts: 7093
Joined: Mon Jan 24, 2005 7:50 pm

Re: Boeing Financial Discussion 2020

Thu Mar 26, 2020 2:49 pm

744SPX wrote:
Scotron12 wrote:
Boeing may not like the conditions that come with US help for the aviation sector.

Main conditions are:

Executive pay
Dividends to shareholders
Stock Buy-backs
The government to get warrants allowing to buy stock.

As Calhoun already stated he will not take any money if it meant the government taking a company stake, looks like a take it or leave it question.

https://www.seattletimes.com/business/b ... us-crisis/


Why do I get the feeling they will find a way to get the 17 billion without having to adhere to these conditions?

"Funny" how close 17 billion is to the predicted 18 billion cost from the MAX debacle...


Be interesting to see what happens to all the WTO shenanigans on the back of all this ……

Rgds
 
Sokes
Posts: 852
Joined: Sat Mar 09, 2019 4:48 pm

Re: Boeing Financial Discussion 2020

Thu Mar 26, 2020 3:04 pm

morrisond wrote:
Sokes wrote:
morrisond wrote:

Sure with Government Guarantees on that debt why not - just borrow more - more debt fixes all things....


If this is a joke, it was a good one.
However as it comes from you I'm afraid it is meant serious.
But I do appreciate that you help us understand the Boeing mentality.


It was a joke - if you knew me personally you would know I have been talking about it for years.


Before this topic I used to read your posts with interests. Indeed I was wondering what happened to you that you argue so dogmatic pro-Boeing. Do you hold Boeing stock?
Anyway I believe you that you made a joke. I'm sorry for my sarcastic remark.
Why can't the world be a little bit more autistic?
 
Sokes
Posts: 852
Joined: Sat Mar 09, 2019 4:48 pm

Re: Boeing Financial Discussion 2020

Thu Mar 26, 2020 3:24 pm

morrisond wrote:
Boeing is trading at $165ish right now - if they sold back some of the shares they bought back from the market previously right now they could easily raise $10-15 Billion.

There has been $8B in trading in Boeing just today.


Northpole wrote:
Well it seems they just got some 17 Bilion dollars from the US taxpayers


Arbitrary decisions are always a fantastic opportunity to make money. I guess some business friends of politicians got a hint about planned policies. How much of the gains will find it's way back into politics?
https://finance.yahoo.com/chart/BA/#eyJ ... QiOm51bGx9

I heared this joke in India:
An Indian politician visits a foreign politician. He is impressed with the house and asks: "How can you afford such a house?" The foreign politician says: "You see this road? 20%"
Next year the foreign politician visits the Indian politician who lives in a palace. The foreign politician asks: "How can you afford?" The Indian politician asks:"Can you see that bridge there?" The foreign politician says "No, I can't see any bridge."
"Well, 100%."

One should assume that Boeing shows some gratefulness. I guess they believe they can always go back to the offer. And maybe some political friends can still achieve a better offer?
Why can't the world be a little bit more autistic?
 
morrisond
Posts: 2499
Joined: Thu Jan 07, 2010 12:22 am

Re: Boeing Financial Discussion 2020

Thu Mar 26, 2020 4:25 pm

Sokes wrote:
morrisond wrote:
Sokes wrote:

If this is a joke, it was a good one.
However as it comes from you I'm afraid it is meant serious.
But I do appreciate that you help us understand the Boeing mentality.


It was a joke - if you knew me personally you would know I have been talking about it for years.


Before this topic I used to read your posts with interests. Indeed I was wondering what happened to you that you argue so dogmatic pro-Boeing. Do you hold Boeing stock?
Anyway I believe you that you made a joke. I'm sorry for my sarcastic remark.


No I don't right now. I sold it a few years ago - Boeing shouldn't trade at a 20+ multiple - it's too cyclical - 10-12x is a better number.

And it wasn't really pro-Boeing - it was pro Pilot Training. I would have been making the same Arguments if Airbus had been in the same situation.
 
FLALEFTY
Posts: 557
Joined: Tue Jan 31, 2006 11:33 am

Re: Boeing Financial Discussion 2020

Thu Mar 26, 2020 4:53 pm

Scotron12 wrote:
Boeing may not like the conditions that come with US help for the aviation sector.

Main conditions are:

Executive pay
Dividends to shareholders
Stock Buy-backs
The government to get warrants allowing to buy stock.

As Calhoun already stated he will not take any money if it meant the government taking a company stake, looks like a take it or leave it question.

https://www.seattletimes.com/business/b ... us-crisis/


Give it time, Calhoun will be flying back to Washington begging for this bailout money in due time. Boeing is having to borrow to pay off debt and soon enough, the traditional financial industry will tell Calhoun, "No Mas!"

I still think that many of the foreign airlines that have open orders for the 737MAX and 777X are probably looking for contract loopholes to get out of these orders.

I wonder what sort of bonus structure Calhoun has for leading Boeing into bankruptcy?
 
DenverTed
Posts: 463
Joined: Wed Mar 27, 2019 11:12 pm

Re: Boeing Financial Discussion 2020

Thu Mar 26, 2020 4:59 pm

Does Boeing have to pay any penalties on MAX that airlines own that are not flying? They would be parked anyway, so tough to argue for economic damage.
 
User avatar
scbriml
Posts: 18547
Joined: Wed Jul 02, 2003 10:37 pm

Re: Boeing Financial Discussion 2020

Thu Mar 26, 2020 5:12 pm

DenverTed wrote:
Does Boeing have to pay any penalties on MAX that airlines own that are not flying? They would be parked anyway, so tough to argue for economic damage.


What about the best part of a year they were grounded before Covid-19 started disrupting operations?
Time flies like an arrow. Fruit flies like a banana!
There are 10 types of people in the World - those that understand binary and those that don't.
 
DenverTed
Posts: 463
Joined: Wed Mar 27, 2019 11:12 pm

Re: Boeing Financial Discussion 2020

Thu Mar 26, 2020 5:41 pm

scbriml wrote:
DenverTed wrote:
Does Boeing have to pay any penalties on MAX that airlines own that are not flying? They would be parked anyway, so tough to argue for economic damage.


What about the best part of a year they were grounded before Covid-19 started disrupting operations?

Mar2019 to Mar2020 for sure. Just wondering if there will be zero need for Mar2020 to Mar2021.
 
744SPX
Posts: 121
Joined: Mon Jan 27, 2020 6:20 pm

Re: Boeing Financial Discussion 2020

Thu Mar 26, 2020 5:44 pm

DenverTed wrote:
scbriml wrote:
DenverTed wrote:
Does Boeing have to pay any penalties on MAX that airlines own that are not flying? They would be parked anyway, so tough to argue for economic damage.


What about the best part of a year they were grounded before Covid-19 started disrupting operations?

Mar2019 to Mar2020 for sure. Just wondering if there will be zero need for Mar2020 to Mar2021.


That's the real question.
 
LJ
Posts: 5070
Joined: Wed Nov 17, 1999 8:28 pm

Re: Boeing Financial Discussion 2020

Thu Mar 26, 2020 5:56 pm

DenverTed wrote:
scbriml wrote:
DenverTed wrote:
Does Boeing have to pay any penalties on MAX that airlines own that are not flying? They would be parked anyway, so tough to argue for economic damage.


What about the best part of a year they were grounded before Covid-19 started disrupting operations?

Mar2019 to Mar2020 for sure. Just wondering if there will be zero need for Mar2020 to Mar2021.


The question of "need" is irrelevant. Boeing has a contractual obligation to deliver. The only reason why Boeing wouldn't have to pay is when the airline defers acceptance of the aircraft themselves. Should the contract exclude "force majeure" then it can only decide not to pay for the time that "force majeure" is in place.
 
StTim
Posts: 3620
Joined: Thu Aug 08, 2013 7:39 am

Re: Boeing Financial Discussion 2020

Thu Mar 26, 2020 5:57 pm

744SPX wrote:
DenverTed wrote:
scbriml wrote:

What about the best part of a year they were grounded before Covid-19 started disrupting operations?

Mar2019 to Mar2020 for sure. Just wondering if there will be zero need for Mar2020 to Mar2021.


That's the real question.



But surely in these times an airline would fly the planes with the least variable costs,

As new frames the MAX would burn less fuel and have lower maintenance costs so would be the ones you would go to.
 
User avatar
scbriml
Posts: 18547
Joined: Wed Jul 02, 2003 10:37 pm

Re: Boeing Financial Discussion 2020

Thu Mar 26, 2020 7:13 pm

LJ wrote:
DenverTed wrote:
scbriml wrote:

What about the best part of a year they were grounded before Covid-19 started disrupting operations?

Mar2019 to Mar2020 for sure. Just wondering if there will be zero need for Mar2020 to Mar2021.


The question of "need" is irrelevant. Boeing has a contractual obligation to deliver. The only reason why Boeing wouldn't have to pay is when the airline defers acceptance of the aircraft themselves. Should the contract exclude "force majeure" then it can only decide not to pay for the time that "force majeure" is in place.


For the undelivered frames, it would be surprising if Boeing’s contracts didn’t specify an upper limit for compensation for late delivery. Loss of revenue from delivered frames that are now grounded would be different, and I don’t know if any limit would apply for them.
Time flies like an arrow. Fruit flies like a banana!
There are 10 types of people in the World - those that understand binary and those that don't.
 
User avatar
Phosphorus
Posts: 833
Joined: Tue May 16, 2017 11:38 am

Re: Boeing Financial Discussion 2020

Thu Mar 26, 2020 9:02 pm

StTim wrote:
744SPX wrote:
DenverTed wrote:
Mar2019 to Mar2020 for sure. Just wondering if there will be zero need for Mar2020 to Mar2021.


That's the real question.



But surely in these times an airline would fly the planes with the least variable costs,

As new frames the MAX would burn less fuel and have lower maintenance costs so would be the ones you would go to.


Wouldn't it be more profitable for the airlines to simply demand money back for MAX (failure to deliver goods that meet expected purpose)? Cash value for new airplane on hand, and slightly higher variable cost for using older planes on flying (very much) reduced schedule is superior to having spent a lot of money on new planes to fly this same reduced schedule.
With IATA projecting 250+bn$ losses for airline industry in 2020, cash is king, and many airlines do not have enough cash to make it...

Of course, Boeing would use every lever to avoid returning deposits to customers...
AN4 A40 L4T TU3 TU5 IL6 ILW I93 F50 F70 100 146 ARJ AT7 DH4 L10 CRJ ERJ E90 E95 DC-9 MD-8X YK4 YK2 SF3 S20 319 320 321 332 333 343 346 722 732 733 734 735 73G 738 739 744 74M 757 767 777
Ceterum autem censeo, Moscovia esse delendam
 
StTim
Posts: 3620
Joined: Thu Aug 08, 2013 7:39 am

Re: Boeing Financial Discussion 2020

Thu Mar 26, 2020 9:37 pm

Phosphorus wrote:
StTim wrote:
744SPX wrote:

That's the real question.



But surely in these times an airline would fly the planes with the least variable costs,

As new frames the MAX would burn less fuel and have lower maintenance costs so would be the ones you would go to.


Wouldn't it be more profitable for the airlines to simply demand money back for MAX (failure to deliver goods that meet expected purpose)? Cash value for new airplane on hand, and slightly higher variable cost for using older planes on flying (very much) reduced schedule is superior to having spent a lot of money on new planes to fly this same reduced schedule.
With IATA projecting 250+bn$ losses for airline industry in 2020, cash is king, and many airlines do not have enough cash to make it...

Of course, Boeing would use every lever to avoid returning deposits to customers...


I was talking those customers who had accepted frames.
 
Sokes
Posts: 852
Joined: Sat Mar 09, 2019 4:48 pm

Re: Boeing Financial Discussion 2020

Fri Mar 27, 2020 2:32 am

Continuing with my earlier money supply/ debt discussion, skip if not interested:
From "Airbus financial discussion 2020", viewtopic.php?f=3&t=1443007&p=22105773#p22105773 , post 80

brindabella wrote:
Many cogent observers over many years have identified that it is IMPOSSIBLE for interest-rates/inflation to rise.
Why so?
Because a huge majority of countries/economies are critically indebted, and CANNOT allow interest-rates to rise.
Or basically the world goes bust.

I'm afraid you are right.
Excluding the US which is reserve currency:
The world would have to agree that those countries which have trade surplus need to enact more labor friendly regulation and vice versa.
Slowly manufacturing would shift to a more balanced situation.
As a German living in India I have observed:
Trade surplus goes hand in hand with a weak currency. Savings leave the country, assets remain below fair value.
Trade deficit goes hand in hand with a strong currency. More is consumed than produced. Assets trade above fair value.
Trade imbalances do not have a tendency to find an equilibrium. I rather believe the opposite.

Market participants are well advised to follow "The trend is your friend" unless evaluations reach extreme unrealistic levels. Even at extreme unrealistic valuations the trend can continue for many more years. If the bubble bust investors may get a bailout. It may take the form of tax money like in Boeing's case. It may take the form of low interest rates. And if even that fails government can do unlimited quantitative easing. I never heard of a bailout for investors who don't follow the herd. "The trend is your friend" is rational investing as long as bailouts can be expected. Sometimes, like with Bombardier in Canada, there can be politicians with balls and principles. So it doesn't always work. But it mostly works.

Around 1990 I learned in school that South American countries took huge foreign debt, which they were unable to repay. The resulting level of poverty was compared with the wealth before the bubble bust. But shouldn't it be compared with the level of wealth before foreign debt was taken?
Stupid foreign money led to very desirable changes in India. Even laws start changing towards the better.
I believe an economy which is far less cyclical is possible. But I still struggle to answer if it is really desirable.
Why can't the world be a little bit more autistic?
 
mjoelnir
Posts: 9388
Joined: Sun Feb 03, 2013 11:06 pm

Re: Boeing Financial Discussion 2020

Fri Mar 27, 2020 2:20 pm

scbriml wrote:
LJ wrote:
DenverTed wrote:
Mar2019 to Mar2020 for sure. Just wondering if there will be zero need for Mar2020 to Mar2021.


The question of "need" is irrelevant. Boeing has a contractual obligation to deliver. The only reason why Boeing wouldn't have to pay is when the airline defers acceptance of the aircraft themselves. Should the contract exclude "force majeure" then it can only decide not to pay for the time that "force majeure" is in place.


For the undelivered frames, it would be surprising if Boeing’s contracts didn’t specify an upper limit for compensation for late delivery. Loss of revenue from delivered frames that are now grounded would be different, and I don’t know if any limit would apply for them.[/quote

It may well be that Boeing's contracts specify an upper limit for latE delivery compensation. But there will not be contracts allowing Boeing and unlimited delay. So I would assume that when Boeing does not deliver inside a certain time frame, the customer is able to cancel with full return of pre and progress payments.
 
Scotron12
Posts: 434
Joined: Fri Mar 01, 2019 2:13 pm

Re: Boeing Financial Discussion 2020

Fri Mar 27, 2020 2:40 pm

Mnuchin says that Boeing has not asked for any bailout money. Guess Calhoun is sticking to his guns on no equity?

https://news.yahoo.com/u-not-bailing-ai ... 18792.html
 
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keesje
Posts: 13703
Joined: Thu Apr 12, 2001 2:08 am

Re: Boeing Financial Discussion 2020

Thu Apr 02, 2020 9:13 am

Scotron12 wrote:
Mnuchin says that Boeing has not asked for any bailout money. Guess Calhoun is sticking to his guns on no equity?

https://news.yahoo.com/u-not-bailing-ai ... 18792.html


He knows Boeing is to big to fail. Trump acknowledged.
"Never mistake motion for action." Ernest Hemingway
 
Scotron12
Posts: 434
Joined: Fri Mar 01, 2019 2:13 pm

Re: Boeing Financial Discussion 2020

Thu Apr 02, 2020 9:19 am

Boeing set to offer all employees voluntary buyouts later today. No clue where.

Guess no RTS on B737MAX anytime soon??

https://www.bloomberg.com/news/articles ... -employees
 
User avatar
scbriml
Posts: 18547
Joined: Wed Jul 02, 2003 10:37 pm

Re: Boeing Financial Discussion 2020

Thu Apr 02, 2020 9:53 am

Scotron12 wrote:
Boeing set to offer all employees voluntary buyouts later today. No clue where.

Guess no RTS on B737MAX anytime soon??

https://www.bloomberg.com/news/articles ... -employees


If it’s being offered to all employees, then presumably it encompasses all Boeing locations?

RTS of MAX is becoming less important by the day, but it will still happen. I’m not so sure about production restarting next month though.
Time flies like an arrow. Fruit flies like a banana!
There are 10 types of people in the World - those that understand binary and those that don't.
 
Scotron12
Posts: 434
Joined: Fri Mar 01, 2019 2:13 pm

Re: Boeing Financial Discussion 2020

Thu Apr 02, 2020 10:06 am

scbriml wrote:
Scotron12 wrote:
Boeing set to offer all employees voluntary buyouts later today. No clue where.

Guess no RTS on B737MAX anytime soon??

https://www.bloomberg.com/news/articles ... -employees


If it’s being offered to all employees, then presumably it encompasses all Boeing locations?

RTS of MAX is becoming less important by the day, but it will still happen. I’m not so sure about production restarting next month though.


Kinda seems the holy grail of RTS goes on and on. I think the talk of restarting production was a bit more wishful thinking than reality. Even they mananged it, no carriers are in a condition to take them!
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