• 1
  • 5
  • 6
  • 7
  • 8
  • 9
 
oschkosch
Posts: 535
Joined: Mon Oct 29, 2018 3:41 pm

Re: Boeing Financial Discussion 2020

Sat Mar 21, 2020 8:47 pm

Can Mr. M and Mr. M maybe carry on with their endless discussion elsewhere? Maybe via private message? It's a very interesting topic but this e-p*nis competition about trying to show off who has the biggest and knows more about accounting is rather pointless and rather boring.

It's a fact that all airlines and all plane manufacturers have a problem now and in the future. Can't we just leave it at that? Why can't you stop??

Gesendet von meinem SM-G950F mit Tapatalk
:stirthepot: :airplane: "This airplane is designed by clowns, who in turn are supervised by monkeys" :airplane: :stirthepot:
 
User avatar
Grizzly410
Posts: 354
Joined: Sun May 10, 2015 8:38 pm

Re: Boeing Financial Discussion 2020

Sat Mar 21, 2020 10:25 pm

oschkosch wrote:
Can Mr. M and Mr. M maybe carry on with their endless discussion elsewhere? Maybe via private message? It's a very interesting topic but this e-p*nis competition about trying to show off who has the biggest and knows more about accounting is rather pointless and rather boring.

It's a fact that all airlines and all plane manufacturers have a problem now and in the future. Can't we just leave it at that? Why can't you stop??

Gesendet von meinem SM-G950F mit Tapatalk


For once I'd say they are on topic, not been able to discuss Boeing accounting in "Boeing Financial Discussion 2020" is a strange idea to me.
I agree though that they should continue in private as the entire board is well aware of their respective position....

morrisond wrote:
Agreed - until you understand why negative equity is meaningless it is pointless. They were buying back stock at a price higher than what they initially sold it at. Look at the 2018 Year end the last year Pre-MAX - Treasury stock on the balance sheet keeps getting more and more negative.

It's an accounting entry it has no meaning. Boeing generated $15B from Operations in 2018 and bought back $9B in stock. They did not steal it from Customers or suppliers. They didn't need the cash.


I think the point about negative equity is it's not that important as long as cash keep flowing in. But that's not the case anymore. And one can see that's becoming a concern with the credit rating update to BBB.
How wise it was to buy for $9B for what is now worth something like $3B ! If they didn't need the cash then, they did later need it to the point to borrow nearly $14B.

Btw, I love how this article I searched to source the credit rating explains the loan is related to coronavirus when it was discussed for well before the outbreak.
"Boeing recently fully drew down all of a $13.8 billion credit line from big banks to ensure it has enough liquidity during the market volatility and air-travel disruptions caused by the coronavirus."
https://www.barrons.com/articles/boeing ... 1584449478
In order to be old and wise, one must first be young and dumb.
 
744SPX
Posts: 119
Joined: Mon Jan 27, 2020 6:20 pm

Re: Boeing Financial Discussion 2020

Sat Mar 21, 2020 10:50 pm

TaromA380 wrote:
Scotron12 wrote:
Boeing has suspended dividends & share buybacks until further notice. Also Calhoun will take no pay for the rest of this year.

Wait a minute, how is it possible ? I mean does Calhoun's job terms allows it ? Or else that's an abuse.

Imagine you are an employee and the hierarchy tells you that from now on till the 31th of December you're supposed to work for free. This cannot be real.


An abuse? Calhoun's net worth is over 20 million. He can work for free for the rest of his life and still live like a king.
 
User avatar
keesje
Posts: 13693
Joined: Thu Apr 12, 2001 2:08 am

Re: Boeing Financial Discussion 2020

Sun Mar 22, 2020 12:08 am

morrisond wrote:
It's an accounting entry it has no meaning. Boeing generated $15B from Operations in 2018 and bought back $9B in stock. They did not steal it from Customers or suppliers. They didn't need the cash.


For years they didn't see a need to invest in new products, nor the need to create reserves for downturns.

So they focussed on the next quaterly and their own income. Buys backs & divident served those goals and the very moderately knowledgeable markets cheered. Doing the free cash flow mantras.

Weak vision & leadership in my opinion.
"Never mistake motion for action." Ernest Hemingway
 
morrisond
Posts: 2495
Joined: Thu Jan 07, 2010 12:22 am

Re: Boeing Financial Discussion 2020

Sun Mar 22, 2020 1:07 am

keesje wrote:
morrisond wrote:
It's an accounting entry it has no meaning. Boeing generated $15B from Operations in 2018 and bought back $9B in stock. They did not steal it from Customers or suppliers. They didn't need the cash.


For years they didn't see a need to invest in new products, nor the need to create reserves for downturns.

So they focussed on the next quaterly and their own income. Buys backs & divident served those goals and the very moderately knowledgeable markets cheered. Doing the free cash flow mantras.

Weak vision & leadership in my opinion.


I don't disagree - I have said the same for years - it's just a question of how much of a cushion. Without MAX they should have been able to weather this crisis just fine.

That is a big hit. If MAX had not happened Airbus may have been the only one needing a bailout if this drags on too long. Boeing does make a lot of money from Defense which may increase in spending going forward given how countries have stopped cooperating and started hoarding so much you can see paranoia growing and defence spending increasing majorly.

I half expect to wake up one morning and read Trump has bombed the Saudi Oil fields to save the US Oil & Gas industry.
 
Sokes
Posts: 831
Joined: Sat Mar 09, 2019 4:48 pm

Re: Boeing Financial Discussion 2020

Sun Mar 22, 2020 3:24 am

morrisond wrote:
He won't be doing it for free - he probably just did the math and any options he was granted at prices when he became CEO are essentially worthless. He will take new ones probably at whatever post bailout price Boeing is trading at. He is not being altruistic.

People dislike, but tolerate, that management can fill it's pocket. There is always a risk that regulation can change. So in times when people are upset symbolic repentance is shown. Calhoun will be compensated for his services concerning saving the existing regulation in later contracts, even if it's not Boeing.
Why can't the world be a little bit more autistic?
 
Sokes
Posts: 831
Joined: Sat Mar 09, 2019 4:48 pm

Re: Boeing Financial Discussion 2020

Sun Mar 22, 2020 3:45 am

keesje wrote:
For years they didn't see a need to invest in new products, nor the need to create reserves for downturns.

morrisond wrote:
Without MAX they should have been able to weather this crisis just fine.

Without share buybacks there wouldn't be a MAX.
Why can't the world be a little bit more autistic?
 
Sokes
Posts: 831
Joined: Sat Mar 09, 2019 4:48 pm

Re: Boeing Financial Discussion 2020

Sun Mar 22, 2020 4:06 am

744SPX wrote:
Imagine you are an employee and the hierarchy tells you that from now on till the 31th of December you're supposed to work for free. This cannot be real.

If Boeing is willing to give me his position I'm willing to do it for free.
I would request Berkshire hathaway to buy 30% of the company through new share issue. That should be enough control to ensure reasonable policies in future. It would also be enough new equity to deal with the crisis.

After that I would ask the leading engineers what has to be done.
After the crisis is over I would take a writedown of 10 billion $ of B787 deferred production cost. 10 billion $ remaining should be o.k..
After that I would discuss with morrisond on a.net why so much equity is a good thing. Though 8 billion negative equity now, 10 billion writedown on deferred cost and losses from MAX will probably use up most, if not all, of the new equity.

On a less cynical note morrisond may actually be right. Zero or close to zero interest supports a Zombie economy. Companies with hopeless too much debt carry on just fine.
Do we desire an economic system without constructive destruction? Isn't it a good thing if means of production are taken away from people who are obvious incapable?
Why can't the world be a little bit more autistic?
 
michael478
Posts: 6
Joined: Sat Mar 21, 2020 6:17 pm

Re: Boeing Financial Discussion 2020

Sun Mar 22, 2020 7:12 am

morrisond wrote:

I don't disagree - I have said the same for years - it's just a question of how much of a cushion. Without MAX they should have been able to weather this crisis just fine.

That is a big hit. If MAX had not happened Airbus may have been the only one needing a bailout if this drags on too long. Boeing does make a lot of money from Defense which may increase in spending going forward given how countries have stopped cooperating and started hoarding so much you can see paranoia growing and defence spending increasing majorly.

I half expect to wake up one morning and read Trump has bombed the Saudi Oil fields to save the US Oil & Gas industry.


But max did happen. It was 100% boeings fault and it wasnt an accident. Sacrificing quality in order to increase profits and shorten time to market is a concious decision. Not to mention the faa coercing and tricking so they wouldnt pay attention, which further proves they knew what they were doing. Argueing that its impossible to know that would lead to accidents takes a lot of nerve imo.

And most economist were warning of an upcoming recession so boeing should have been more prudent with their money. The economy does enter recessions every few years, that is predictable and a known fact even if the reason for the recession may not be easy to predict (e.g. coronavirus or sub prime morgage crisis). Of coarse boeing knew that but chose not to prepare so they dont deserve help even though they are gonna get it.

As for airbus, they said that IF situation persists for many more months they MAY need assistance

How do you read that and conclude that airbus is getting bailed out?
 
LJ
Posts: 5069
Joined: Wed Nov 17, 1999 8:28 pm

Re: Boeing Financial Discussion 2020

Sun Mar 22, 2020 7:36 am

Grizzly410 wrote:
Btw, I love how this article I searched to source the credit rating explains the loan is related to coronavirus when it was discussed for well before the outbreak.
"Boeing recently fully drew down all of a $13.8 billion credit line from big banks to ensure it has enough liquidity during the market volatility and air-travel disruptions caused by the coronavirus."
https://www.barrons.com/articles/boeing ... 1584449478


Actually, the article is correct. A credit line becomes a loan when it's drawn. Boeing didn't draw most of the loan until the corona crisis and thus the article is correct. Credit lines are off balance and are only an issue for party which provides the credit line (as it may impact its liquidity). The receiver of credit lines only needs to disclose it due to compliance reasons and and it is positive news for a company (it shows confidence in your company). Credit agencies don't downgrade on getting a credit line as, as mentioned before, there is no liability attached to it.
 
morrisond
Posts: 2495
Joined: Thu Jan 07, 2010 12:22 am

Re: Boeing Financial Discussion 2020

Sun Mar 22, 2020 2:27 pm

michael478 wrote:
morrisond wrote:

I don't disagree - I have said the same for years - it's just a question of how much of a cushion. Without MAX they should have been able to weather this crisis just fine.

That is a big hit. If MAX had not happened Airbus may have been the only one needing a bailout if this drags on too long. Boeing does make a lot of money from Defense which may increase in spending going forward given how countries have stopped cooperating and started hoarding so much you can see paranoia growing and defence spending increasing majorly.

I half expect to wake up one morning and read Trump has bombed the Saudi Oil fields to save the US Oil & Gas industry.


But max did happen. It was 100% boeings fault and it wasnt an accident. Sacrificing quality in order to increase profits and shorten time to market is a concious decision. Not to mention the faa coercing and tricking so they wouldnt pay attention, which further proves they knew what they were doing. Argueing that its impossible to know that would lead to accidents takes a lot of nerve imo.

And most economist were warning of an upcoming recession so boeing should have been more prudent with their money. The economy does enter recessions every few years, that is predictable and a known fact even if the reason for the recession may not be easy to predict (e.g. coronavirus or sub prime morgage crisis). Of coarse boeing knew that but chose not to prepare so they dont deserve help even though they are gonna get it.

As for airbus, they said that IF situation persists for many more months they MAY need assistance

How do you read that and conclude that airbus is getting bailed out?


Name me one Major Economist other than David Rosenberg (A Canadian) who has been warning of a recession pre-Covid. You will most likely not find many from the Major banks or Securities firms who were doing the same - it was not most. It was very few at best.

To quote myself from above "Airbus may have been the only one needing a bailout if this drags on too long." I said may and for too long. Please read before you attack.

What other Aerospace company would have been able to afford building 400(I can't find a number of actual undelivered 737 MAX) whitetail aircraft without a bailout?

They were fine without MAX happening - they had ample reserves. Both in the space of basically 12 months very difficult to get through - unless they do what I suggested above which is sell shares and sell the MAX's to the Government.

Boeing is in big trouble right now and Airbus will be as well.

Unfortunately for Boeing's workers it is a lot easier to get rid of a worker in the States than in Europe - and with 737 Production already shut down and a lot of those possibly not assuming they were ever going back to work - less of a psychological shock.
 
mjoelnir
Posts: 9388
Joined: Sun Feb 03, 2013 11:06 pm

Re: Boeing Financial Discussion 2020

Sun Mar 22, 2020 2:53 pm

morrisond wrote:
michael478 wrote:
morrisond wrote:

I don't disagree - I have said the same for years - it's just a question of how much of a cushion. Without MAX they should have been able to weather this crisis just fine.

That is a big hit. If MAX had not happened Airbus may have been the only one needing a bailout if this drags on too long. Boeing does make a lot of money from Defense which may increase in spending going forward given how countries have stopped cooperating and started hoarding so much you can see paranoia growing and defence spending increasing majorly.

I half expect to wake up one morning and read Trump has bombed the Saudi Oil fields to save the US Oil & Gas industry.


But max did happen. It was 100% boeings fault and it wasnt an accident. Sacrificing quality in order to increase profits and shorten time to market is a concious decision. Not to mention the faa coercing and tricking so they wouldnt pay attention, which further proves they knew what they were doing. Argueing that its impossible to know that would lead to accidents takes a lot of nerve imo.

And most economist were warning of an upcoming recession so boeing should have been more prudent with their money. The economy does enter recessions every few years, that is predictable and a known fact even if the reason for the recession may not be easy to predict (e.g. coronavirus or sub prime morgage crisis). Of coarse boeing knew that but chose not to prepare so they dont deserve help even though they are gonna get it.

As for airbus, they said that IF situation persists for many more months they MAY need assistance

How do you read that and conclude that airbus is getting bailed out?


Name me one Major Economist other than David Rosenberg (A Canadian) who has been warning of a recession pre-Covid. You will most likely not find many from the Major banks or Securities firms who were doing the same - it was not most. It was very few at best.

To quote myself from above "Airbus may have been the only one needing a bailout if this drags on too long." I said may and for too long. Please read before you attack.

What other Aerospace company would have been able to afford building 400(I can't find a number of actual undelivered 737 MAX) whitetail aircraft without a bailout?

They were fine without MAX happening - they had ample reserves. Both in the space of basically 12 months very difficult to get through - unless they do what I suggested above which is sell shares and sell the MAX's to the Government.

Boeing is in big trouble right now and Airbus will be as well.

Unfortunately for Boeing's workers it is a lot easier to get rid of a worker in the States than in Europe - and with 737 Production already shut down and a lot of those possibly not assuming they were ever going back to work - less of a psychological shock.


You seem to live in a fantasy world. Boeing is in deep trouble and not because of the coronavirus, but because everything what happened before.

At the end of 2019 Boeing had negative cash flow from operations.
Boeing owed 33 billion more than they owned. I know that you do not understand this as a problem. You have to go to some persons that understands bookkeeping to explain it to you.
Huge current (short term) liabilities have to be served.
Boeing can not deliver it's most sold frame the 737MAX. They have to reduce the production rate of the 787, because the backlog is disappearing and the 777X is late. The military side does not have the earnings to way up against the loss of revenue on the commercial airplane side.
Boeing has stacked a huge inventory of unsalable frames.

Boeing did not need the coronavirus pandemic to get into trouble, they managed to do that all by themselves, mainly because they were squandering their capital. What the the coronavirus crisis brought was a reevaluation of the stock market. Boeing went down more than the average, because instead of the gamblers frenzy, investors took a real good look ad Boeing' problems and realized their is not much substance there.
 
morrisond
Posts: 2495
Joined: Thu Jan 07, 2010 12:22 am

Re: Boeing Financial Discussion 2020

Sun Mar 22, 2020 3:11 pm

mjoelnir wrote:
morrisond wrote:
michael478 wrote:

But max did happen. It was 100% boeings fault and it wasnt an accident. Sacrificing quality in order to increase profits and shorten time to market is a concious decision. Not to mention the faa coercing and tricking so they wouldnt pay attention, which further proves they knew what they were doing. Argueing that its impossible to know that would lead to accidents takes a lot of nerve imo.

And most economist were warning of an upcoming recession so boeing should have been more prudent with their money. The economy does enter recessions every few years, that is predictable and a known fact even if the reason for the recession may not be easy to predict (e.g. coronavirus or sub prime morgage crisis). Of coarse boeing knew that but chose not to prepare so they dont deserve help even though they are gonna get it.

As for airbus, they said that IF situation persists for many more months they MAY need assistance

How do you read that and conclude that airbus is getting bailed out?


Name me one Major Economist other than David Rosenberg (A Canadian) who has been warning of a recession pre-Covid. You will most likely not find many from the Major banks or Securities firms who were doing the same - it was not most. It was very few at best.

To quote myself from above "Airbus may have been the only one needing a bailout if this drags on too long." I said may and for too long. Please read before you attack.

What other Aerospace company would have been able to afford building 400(I can't find a number of actual undelivered 737 MAX) whitetail aircraft without a bailout?

They were fine without MAX happening - they had ample reserves. Both in the space of basically 12 months very difficult to get through - unless they do what I suggested above which is sell shares and sell the MAX's to the Government.

Boeing is in big trouble right now and Airbus will be as well.

Unfortunately for Boeing's workers it is a lot easier to get rid of a worker in the States than in Europe - and with 737 Production already shut down and a lot of those possibly not assuming they were ever going back to work - less of a psychological shock.


You seem to live in a fantasy world. Boeing is in deep trouble and not because of the coronavirus, but because everything what happened before.

At the end of 2019 Boeing had negative cash flow from operations.
Boeing owed 33 billion more than they owned. I know that you do not understand this as a problem. You have to go to some persons that understands bookkeeping to explain it to you.
Huge current (short term) liabilities have to be served.
Boeing can not deliver it's most sold frame the 737MAX. They have to reduce the production rate of the 787, because the backlog is disappearing and the 777X is late. The military side does not have the earnings to way up against the loss of revenue on the commercial airplane side.
Boeing has stacked a huge inventory of unsalable frames.

Boeing did not need the coronavirus pandemic to get into trouble, they managed to do that all by themselves, mainly because they were squandering their capital. What the the coronavirus crisis brought was a reevaluation of the stock market. Boeing went down more than the average, because instead of the gamblers frenzy, investors took a real good look ad Boeing' problems and realized their is not much substance there.


You really don't understand cash flow - with 737 Production stoppage they were cash flow positive on a go forward basis. That is what mattered. They would have been fine and if 737 never RTS then they would have permanently laid off those workers and have great cash flow from there other programs.

Please answer everyone's question - who do they owe there 787 and 737 MAX deferred production costs too? Do you believe they still haven't paid suppliers for parts used on 787 production 5 years ago?

Yes they are in trouble because of MAX and Corvid together - they had the strength to withstand one - but not two - and if it wasn't so easy to get a handouts from the US government - Boeing could solve it's financial issues right now by itself by issuing new stock and stopping paying it's 737 workers which is a lot easier to do for them than it would be if they were operating in Europe.
 
Ertro
Posts: 108
Joined: Thu Apr 04, 2019 9:28 pm

Re: Boeing Financial Discussion 2020

Sun Mar 22, 2020 5:36 pm

morrisond wrote:
Name me one Major Economist other than David Rosenberg (A Canadian) who has been warning of a recession pre-Covid.


"There is a significant chance the world economy is headed for a recession in 2019, according to Nobel Prize-winning economist Paul Krugman .... I think that there is a quite good chance that we will have a recession late this year (or) next year."

https://www.cnbc.com/2019/02/11/paul-kr ... -2020.html

There are not many who talk about it in public and especially not from the major banks as that would run against the interests of those banks and institutions. So they don't talk about recession even though they are absolutely sure it is going to happen.

The major problem is the timing of it. Predicting the timing the start of recession is equally impossible as timing of major earthquakes and there is a lot of money to be made in the peak hype bubble just before the recession hits and the guess for the timing could easily be off by several years and then you look like an idiot. It is much safer to go with the herd and predict ever lasting growth without any end. The timing for start of recession does not follow on any rational analysis as the hype bubble is firmly in irrational domain.
 
morrisond
Posts: 2495
Joined: Thu Jan 07, 2010 12:22 am

Re: Boeing Financial Discussion 2020

Sun Mar 22, 2020 7:13 pm

Ertro wrote:
morrisond wrote:
Name me one Major Economist other than David Rosenberg (A Canadian) who has been warning of a recession pre-Covid.


"There is a significant chance the world economy is headed for a recession in 2019, according to Nobel Prize-winning economist Paul Krugman .... I think that there is a quite good chance that we will have a recession late this year (or) next year."

https://www.cnbc.com/2019/02/11/paul-kr ... -2020.html

There are not many who talk about it in public and especially not from the major banks as that would run against the interests of those banks and institutions. So they don't talk about recession even though they are absolutely sure it is going to happen.

The major problem is the timing of it. Predicting the timing the start of recession is equally impossible as timing of major earthquakes and there is a lot of money to be made in the peak hype bubble just before the recession hits and the guess for the timing could easily be off by several years and then you look like an idiot. It is much safer to go with the herd and predict ever lasting growth without any end. The timing for start of recession does not follow on any rational analysis as the hype bubble is firmly in irrational domain.


I forgot about Krugman - and I would agree with most of the rest of your statement - other than when you know it's irrational really start to reduce risk. I have met a lot of those bank economists and they are not as smart as many assume. A lot of there comp is tied to the firm doing well so they tend to brainwash themselves. You don't have to go to zero risk but don't worry too much if stocks go up 20% and you only made 10% - you will save it many times over on the downside as people are now unfortunately finding out.
 
Sokes
Posts: 831
Joined: Sat Mar 09, 2019 4:48 pm

Re: Boeing Financial Discussion 2020

Sun Mar 22, 2020 7:23 pm

morrisond wrote:
Name me one Major Economist other than David Rosenberg (A Canadian) who has been warning of a recession pre-Covid. You will most likely not find many from the Major banks or Securities firms who were doing the same - it was not most. It was very few at best.


Does it surprise you that bankers are optimists?
When they don't beg for taxpayer money they like to gamble. How to gamble and at the same time warn of recession?

I can tell you a full economic school that believes that cheap money will sooner or later lead to trouble: monetarism.
That doesn't mean that monetarists can predict a downturn next year or in ten years. I got a nice quote for you which even fits the Boeing stock:

"In the spring of 1927, three august pilgrims-Montagu Norman, the governer of the bank of England, the durable Hjalmer Schacht, then Governor of the Reichsbank, and Charles Rist, the Deputy Governor of the bank of France-came to the United States to urge an easy money policy. (They had previously pled with success for a roughly similar policy in 1925.)
The Federal Reserve obliged.The rediscount rate of the New York Federal Reserve Bank was cut from 4 to 3,5 per cent. Government securities were purchased in considerable volume with the mathematical consequence of leaving the banks and individuals who had sold them with money to spare. Adolph C. Miller, a dissenting member of the Federal Reserve Board, subsequently described this as "the greatest and boldest operation ever undertaken by the Federal Reserve system, and ... [it] it resulted in one of the most costly errors committed by it or any other banking system in the last 75 years!"
The funds that the Federal Reserve made available were either invested in common stocks or (and more important) they became available to help finance the purchase of common stocks by others."
John Kenneth Galbraith, "The Great Crash 1929", chapter "Vision and boundless hope and optimism", 1954

I don't know how the authority for the Federal Reserve Bank to buy government obligation directly from the treasury fits to the gold standard. It seems that was a 1914 law. For more info see p. 119 of https://fraser.stlouisfed.org/files/doc ... rchgov.pdf

"most costly error... in the last 75 years"
From 1929 to Greenspan's monetary's magic was how many years?
Why can't the world be a little bit more autistic?
 
TObound
Posts: 746
Joined: Mon May 27, 2019 12:54 am

Re: Boeing Financial Discussion 2020

Sun Mar 22, 2020 7:26 pm

Economists have been warning for years. And there's been growing alarm over the debt bubble. But everyone was happy to ignore it because everyone was partaking. It's not just Boeing. Consumers are loaded up with debt. Governments are loaded up with debt. And here's some news about record corporate debt at the end of 2019:

https://www.investopedia.com/why-record ... 20-4778100

The part that companies like airlines and Boeing deserve fault for is that they know exactly how fragile this sector is. Remember the Icelandic volcano? Diversions from war in Ukraine, Syria, India-Pakistan, etc. Nobody should be more wary of black swans than airlines and airplane makers. Strong balance sheets should be mandatory. Their investors (shareholders) got greedy though. And they happily voted for nice dividends and buybacks over paying down debts and building up cash reserves. The companies should be bailed out. The investors should be zeroed out. That's the only way to introduce some moral hazard that prevents such irresponsibility taking root again.
 
michael478
Posts: 6
Joined: Sat Mar 21, 2020 6:17 pm

Re: Boeing Financial Discussion 2020

Sun Mar 22, 2020 8:48 pm

morrisond wrote:

Name me one Major Economist other than David Rosenberg (A Canadian) who has been warning of a recession pre-Covid. You will most likely not find many from the Major banks or Securities firms who were doing the same - it was not most. It was very few at best.

To quote myself from above "Airbus may have been the only one needing a bailout if this drags on too long." I said may and for too long. Please read before you attack.

What other Aerospace company would have been able to afford building 400(I can't find a number of actual undelivered 737 MAX) whitetail aircraft without a bailout?

They were fine without MAX happening - they had ample reserves. Both in the space of basically 12 months very difficult to get through - unless they do what I suggested above which is sell shares and sell the MAX's to the Government.

Boeing is in big trouble right now and Airbus will be as well.

Unfortunately for Boeing's workers it is a lot easier to get rid of a worker in the States than in Europe - and with 737 Production already shut down and a lot of those possibly not assuming they were ever going back to work - less of a psychological shock.



Personally i read the financial times. There have been warnings of an upcoming recession in almost every article for a while now. Especially since trump started trade wars with everyone but even before that.

Also as i said economies enter recessions every few years so you dont need economists telling you that you need to prepare.

And yes not many companies could survive the max fiasco and a recession but as i already mentioned, the max fiasco is 100% boeings fault and totally foreseable They cut dangerous corners and took unreasonable risks in order to maximise margins and reduce time to market. They expected and knew that this would create issues with the plane which is why they strongarmed the faa into passing it through without taking a close look or ignoring any problems they found.

So they knew a recession was possible but didnt save, they knew that their choices regarding the max would create a lemon which they would have to pay for down the line but chose cashing in today over peoples lives, and over the long term survival of boeing for that matter. But now they want a bail out? They probably did that stuff because they were expecting a bailout. A bailout now will lead to more maxes and more bailouts in the future. The decision makers need to be put in jail and the shateholders need to be wiped out if there is to be a bail out. There need to be consequences to these horrible actions. As far as im concerned boeing is guilty of first degree murder. The two crashes were no accident.


in summary, economic downturn, forceable, did not prepare, 100% boeings fault, max issues, self-created, forceable, consciously covered up, 100% boeings fault, no bailout. Also boeing has been screaming about airbus subsidies, even though boeing already enjoyed them before asking for a bailout. The only thing i hate more than a murderer is a hypocrite, and boeing is both

The only one who has asked for a bailout is 'government assistance is bad' boeing. So give it a rest with the 'the only one who would need a bailout is airbus' rhetoric, you lose any sort of credibility because you reveal you would excuse any sort of behaviour by boeing
 
morrisond
Posts: 2495
Joined: Thu Jan 07, 2010 12:22 am

Re: Boeing Financial Discussion 2020

Sun Mar 22, 2020 11:08 pm

Sokes wrote:
morrisond wrote:
Name me one Major Economist other than David Rosenberg (A Canadian) who has been warning of a recession pre-Covid. You will most likely not find many from the Major banks or Securities firms who were doing the same - it was not most. It was very few at best.


Does it surprise you that bankers are optimists?
When they don't beg for taxpayer money they like to gamble. How to gamble and at the same time warn of recession?

I can tell you a full economic school that believes that cheap money will sooner or later lead to trouble: monetarism.
That doesn't mean that monetarists can predict a downturn next year or in ten years. I got a nice quote for you which even fits the Boeing stock:

"In the spring of 1927, three august pilgrims-Montagu Norman, the governer of the bank of England, the durable Hjalmer Schacht, then Governor of the Reichsbank, and Charles Rist, the Deputy Governor of the bank of France-came to the United States to urge an easy money policy. (They had previously pled with success for a roughly similar policy in 1925.)
The Federal Reserve obliged.The rediscount rate of the New York Federal Reserve Bank was cut from 4 to 3,5 per cent. Government securities were purchased in considerable volume with the mathematical consequence of leaving the banks and individuals who had sold them with money to spare. Adolph C. Miller, a dissenting member of the Federal Reserve Board, subsequently described this as "the greatest and boldest operation ever undertaken by the Federal Reserve system, and ... [it] it resulted in one of the most costly errors committed by it or any other banking system in the last 75 years!"
The funds that the Federal Reserve made available were either invested in common stocks or (and more important) they became available to help finance the purchase of common stocks by others."
John Kenneth Galbraith, "The Great Crash 1929", chapter "Vision and boundless hope and optimism", 1954

I don't know how the authority for the Federal Reserve Bank to buy government obligation directly from the treasury fits to the gold standard. It seems that was a 1914 law. For more info see p. 119 of https://fraser.stlouisfed.org/files/doc ... rchgov.pdf

"most costly error... in the last 75 years"
From 1929 to Greenspan's monetary's magic was how many years?


No it doesn't surprise me at all - most bankers and people in my industry are idiots. I have been one of those warning of what may be coming for years and have managed my clients funds very effectively throughout every one crisis in the last 30 years. I called 10 of the last 8 downturns (yes I said that intentionally as it is really hard to pick the moment in time when things turn).

When Clinton repealed Glass-Steagall pre the tech crash that was kind of the beginning of the end.

Just in the last week I had to explain to three other Portfolio Managers in my office why the Fixed Income they were holding was going down (it was riddled with BBB and Below bounds buried in Complex structures). I use only US Treasury and Canadian Federal Bonds for my fixed income as in general it has been a good hedge against equity loss - hence why I am up 10% this year.

I am actually surprised by some of the examples some are finding of economists who think like I do. Quite frankly I tune most of the financial media out as it is so useless other than to get contrarian signals. When they start salivating about something being up so much and everyone is in on it - I know it's time to exit. Also when something has climbed a lot in value and people have ignored it for a long time but think it's now a great idea when it has appreciated by 40-50% I know it's time to exit as well. When People in my office think Long Treasuries are finally a good idea or if it hear about them from uneducated investors at cocktail parties if we ever have them again - or from Cabbies/Ubber drivers - I know it will be time to sell. Right now none of them will buy them. The impending potential explosion in issuance may cause yields to spike - however if they do that is the end game for the Dollar as the economy can't afford higher rates and hence why Gold may skyrocket and hence why I use it to Hedge my long treasury positions. If Yields don't spike and people don't lose confidence in Governments then Long yields on treasuries may go negative in the next downturn meaning major upside even from these yields.

It's why I sold Boeing a few years ago when it became very evident of the games they were playing by overstating their earnings with Program cost accounting. Airline production is very cyclical - it should not trade at 20+X earnings. - 10-12 is more appropriate. When we get a good idea of what those future earnings are and if it is at a reasonable level I would probably buy it and Airbus.

Some take my defence of Boeing as I am in love with Boeing - Not really I like Airbus as well - I like Airplanes - I just don't like it when some have maniacal hatred of something and misconstrue the truth to suit there Agenda.

If Airbus was going through the same issues as Boeing has with the MAX I would have been defending them as well.

At heart I guess I'm a classic contrarian - when the crowd thinks one thing I have a knack for looking at something and saying - wait a second - maybe you aren't looking at it right. I am not always right but over time I tend to be a lot more right than wrong.

Hence this battle with the other M and the previous battles on pilot training issues.

As it stands Boeing was able to withstand the building of 400 white tails. That is pretty indicative to me they were prepared for a rainy day. they just didn't know about the Corvid Tornado that was following right behind.
 
Redsand187
Posts: 57
Joined: Sun Jan 26, 2014 10:47 pm

Re: Boeing Financial Discussion 2020

Sun Mar 22, 2020 11:26 pm

morrisond wrote:
Redsand187 wrote:
Polot wrote:
US [commercial] aerospace manufacturing includes GE, UTC and all their subsidiaries (PW, Rockwell Collins, etc), Spirit AeroSystems, and I’m sure several other heavy hitters that I’m missing. Boeing and Airbus don’t make their planes from scratch.

While it's true all $60B isn't to go into Boeing's coffers. It is solely for Boeing's own benefit. Not only do they need money to keep their business afloat, they need money to keep the entire supply chain from collapsing. The duopoly doesn't allow for sub-tier suppliers to insulate themselves from the failure of one of the market directors.

This situation is a complete national security risk. The failure of Boeing, or even a huge reduction in their size will result in the failure of sub-tier suppliers who also supply the defense industry.



A lot of those suppliers make parts for Airbus as well. Is there production not stopped right now?

That is why the duopoly is a bad thing. Neither Airbus or Boeing can support the entire supply chain. If one fails, the entire chain collapses. I am far from an Airbus fan. I'm born and raised in Boeing's backyard. I don't want to see them fail, but they have done everything possible to make it difficult to have their back.
 
Redsand187
Posts: 57
Joined: Sun Jan 26, 2014 10:47 pm

Re: Boeing Financial Discussion 2020

Sun Mar 22, 2020 11:40 pm

morrisond wrote:
They could also probably get a loan (Banks have basically unlimited lending power right now) secured by the MAX inventory.

What bank is going to want a worthless asset to secure debt? If Boeing failed to repay the loan and the bank took possession of a fleet of aircraft that cannot legally fly what kind of value does that leave for the bank. If Boeing loses the MAX inventory to the bank, what reason would they have to continue to work on a solution, and how would they be able to afford to do so even if they wanted to?

The MAX inventory would be a bigger liability to a bank than the loan. The only way they could see some of their money back is by pouring way more money into recertifying the plane. I doubt JP Morgan has an army of aerospace engineers ready to go to work.
 
morrisond
Posts: 2495
Joined: Thu Jan 07, 2010 12:22 am

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 1:39 am

Redsand187 wrote:
morrisond wrote:
They could also probably get a loan (Banks have basically unlimited lending power right now) secured by the MAX inventory.

What bank is going to want a worthless asset to secure debt? If Boeing failed to repay the loan and the bank took possession of a fleet of aircraft that cannot legally fly what kind of value does that leave for the bank. If Boeing loses the MAX inventory to the bank, what reason would they have to continue to work on a solution, and how would they be able to afford to do so even if they wanted to?

The MAX inventory would be a bigger liability to a bank than the loan. The only way they could see some of their money back is by pouring way more money into recertifying the plane. I doubt JP Morgan has an army of aerospace engineers ready to go to work.


It would have to be guaranteed and arranged by the Government - the bill winding it's way through the Senate looks like the bailouts will be more in the form of loan guarantees rather than outright grants which makes a lot of sense to me and probably a lot more palatable to the voters.
 
Sokes
Posts: 831
Joined: Sat Mar 09, 2019 4:48 pm

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 4:26 am

Redsand187 wrote:
morrisond wrote:
They could also probably get a loan (Banks have basically unlimited lending power right now) secured by the MAX inventory.

What bank is going to want a worthless asset to secure debt? If Boeing failed to repay the loan and the bank took possession of a fleet of aircraft that cannot legally fly what kind of value does that leave for the bank. If Boeing loses the MAX inventory to the bank, what reason would they have to continue to work on a solution, and how would they be able to afford to do so even if they wanted to?

The MAX inventory would be a bigger liability to a bank than the loan. The only way they could see some of their money back is by pouring way more money into recertifying the plane. I doubt JP Morgan has an army of aerospace engineers ready to go to work.


Boeing's liabilities are greater than it's assets. And assets already include the MAXs and deferred production cost, both is inventory.
Let's assume Boeing is still able to secure new loans. As a supplier, under which conditions would you continue to supply? Pay in advance? Pay within three working days?
What's the difference between loan guarantee and loan? There are reasons that banks don't want to give more loans.

After what happened to Bombardier I believe it's out of the question that Boeing shareholders deserve any government help.
I believe the management has proven beyond reasonable doubt that the means of production of Boeing, so critical for the US, have to be managed by somebody else.
Why can't the world be a little bit more autistic?
 
atomother
Posts: 390
Joined: Sat May 22, 1999 8:47 am

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 5:47 am

Good discussion... Does anyone know what kind of stipulations are being written into this bill that may give Boeing $60 Billion in tax payer money?

I know Trump wants to prevent stock buybacks which is great but I am more concerned about American employees. Any possibility they are requiring that foriegn workers are laid off before the first American worker?

If this is not a requirement, I say don't give them a dime. No sense in giving them tax payer money if it goes to saving foreign jobs.
 
mjoelnir
Posts: 9388
Joined: Sun Feb 03, 2013 11:06 pm

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 8:23 am

morrisond wrote:
mjoelnir wrote:
morrisond wrote:

Name me one Major Economist other than David Rosenberg (A Canadian) who has been warning of a recession pre-Covid. You will most likely not find many from the Major banks or Securities firms who were doing the same - it was not most. It was very few at best.

To quote myself from above "Airbus may have been the only one needing a bailout if this drags on too long." I said may and for too long. Please read before you attack.

What other Aerospace company would have been able to afford building 400(I can't find a number of actual undelivered 737 MAX) whitetail aircraft without a bailout?

They were fine without MAX happening - they had ample reserves. Both in the space of basically 12 months very difficult to get through - unless they do what I suggested above which is sell shares and sell the MAX's to the Government.

Boeing is in big trouble right now and Airbus will be as well.

Unfortunately for Boeing's workers it is a lot easier to get rid of a worker in the States than in Europe - and with 737 Production already shut down and a lot of those possibly not assuming they were ever going back to work - less of a psychological shock.


You seem to live in a fantasy world. Boeing is in deep trouble and not because of the coronavirus, but because everything what happened before.

At the end of 2019 Boeing had negative cash flow from operations.
Boeing owed 33 billion more than they owned. I know that you do not understand this as a problem. You have to go to some persons that understands bookkeeping to explain it to you.
Huge current (short term) liabilities have to be served.
Boeing can not deliver it's most sold frame the 737MAX. They have to reduce the production rate of the 787, because the backlog is disappearing and the 777X is late. The military side does not have the earnings to way up against the loss of revenue on the commercial airplane side.
Boeing has stacked a huge inventory of unsalable frames.

Boeing did not need the coronavirus pandemic to get into trouble, they managed to do that all by themselves, mainly because they were squandering their capital. What the the coronavirus crisis brought was a reevaluation of the stock market. Boeing went down more than the average, because instead of the gamblers frenzy, investors took a real good look ad Boeing' problems and realized their is not much substance there.


You really don't understand cash flow - with 737 Production stoppage they were cash flow positive on a go forward basis. That is what mattered. They would have been fine and if 737 never RTS then they would have permanently laid off those workers and have great cash flow from there other programs.

Please answer everyone's question - who do they owe there 787 and 737 MAX deferred production costs too? Do you believe they still haven't paid suppliers for parts used on 787 production 5 years ago?

Yes they are in trouble because of MAX and Corvid together - they had the strength to withstand one - but not two - and if it wasn't so easy to get a handouts from the US government - Boeing could solve it's financial issues right now by itself by issuing new stock and stopping paying it's 737 workers which is a lot easier to do for them than it would be if they were operating in Europe.


Next invention "cash flow positive on a go forward basis", do you now operate with imaginary or invented numbers? Regarding cash flow I go by real numbers, those that are stated in financial reports. I will leave the flights of fancy to you.

I have never stated that Boeing owes the deferred cost to anybody. What I have stated is, that Boeing books the deferred cost to inventories and therefore overstates assets and earnings. Those numbers have to be booked out one day. If it is not possible to book them out the inventories have to be written off, lowering assets and it has to be declared a loss, lowering retained earnings.
Everybody who understands bookkeeping knows that overstated numbers have to be corrected one day.

In regards to borrowing from suppliers one has to understand how a company is run and be able to read financial reports. You borrow from suppliers by asking for longer term payment conditions. Normal would be 30 days. If you buy every month 1 billion of parts from suppliers, an extension to two month gives you 1 billion extra borrowing an extension to 6 month gives you 5 billion extra borrowing. Usually you pay more for your parts at extended payment conditions.
Borrowing from customers works with higher prepayments and earlier and higher progress payments. You usually have to lower prices or if you have an order frenzy you can pressure customers to accept those conditions for early slots.
When we look at Boeing financial accounts from 2019 and 2019 we can see how much Boeing increased borrowing from suppliers and customers. All numbers in million USD.
2013 Revenue 76,792, Accounts payable 9,498 and Advances and billings in excess of related costs 20,027, equity 14,997
in 2019 those numbers are respectively 76,559, 15,553, 51,551 and (8,617)

So borrowing from suppliers increased by 15,553 - 9,498 = 5,055 and
borrowing from Customers increased by 51.551 - 20,027 = 31,524
Borrowing from suppliers and customers is an effective way to increase your cash. Boeing increased its cash by 36 billion between 2013 and 2019 this way.
If somebody is able to read annual accounts, he should be able to recognize this borrowing and seeing this extra cash being used up, should produce serious warning signs regarding the health of a company.
The "excess" cash used by Boeing to go on the share buy back binge, 2013 to 2019 43 billion USD, was financed to a big part by borrowing. Not from the banks, but suppliers and customers.
The next red flag should be the equity going from 15 billion to near 9 billion negative. The increased borrowing was not matched by an increase in assets.

The troubles at Boeing have as it is nothing to do with the coronavirus, that has not hit yet. But Trump is prepared to loosen up the purse and it is time for Boeing to ask for the sky. A catastrophic even is the best time to hide your mistakes and ask for being saved.
 
User avatar
scbriml
Posts: 18522
Joined: Wed Jul 02, 2003 10:37 pm

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 8:47 am

morrisond wrote:
As it stands Boeing was able to withstand the building of 400 white tails. That is pretty indicative to me they were prepared for a rainy day. they just didn't know about the Corvid Tornado that was following right behind.


I think this is painting too rosy a picture. Had Boeing known MAX would be grounded for over a year, they would have stopped production a long time ago. They only continued to pump them out because they believed their own "it's an easy fix and RTS is just a few weeks away" mantra.
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.
 
Sokes
Posts: 831
Joined: Sat Mar 09, 2019 4:48 pm

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 9:32 am

mjoelnir wrote:
morrisond wrote:

You really don't understand cash flow - with 737 Production stoppage they were cash flow positive on a go forward basis.


Next invention "cash flow positive on a go forward basis", do you now operate with imaginary or invented numbers?


I wonder if Bernie Madoff is following our discussion. I don't suggest Boeing is cheating like Madoff. It's all in their books. I just mean to say Bernie Madoff handled quite well for quite long as long as he was cash flow positive.
Why can't the world be a little bit more autistic?
 
Sokes
Posts: 831
Joined: Sat Mar 09, 2019 4:48 pm

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 10:03 am

TObound wrote:
...
And they happily voted for nice dividends and buybacks over paying down debts and building up cash reserves.
...


Private households suffer from debt. However I believe it's business that is supposed to absorb most savings. I know in Germany most of the time after WW2 households as a group saved, government took a little debt. Most debt was taken from companies. If Boeing had this level of debt and a MOM and a new narrow-body about to enter service nobody would grumble. Boeing increasing liabilities is fine. Boeing increasing liabilities for share buybacks is not fine.
Of course you are right that this is a high risk industry which requires equity.
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

Mon Mar 23, 2020 10:57 am

morrisond wrote:
michael478 wrote:
morrisond wrote:

I don't disagree - I have said the same for years - it's just a question of how much of a cushion. Without MAX they should have been able to weather this crisis just fine.

That is a big hit. If MAX had not happened Airbus may have been the only one needing a bailout if this drags on too long. Boeing does make a lot of money from Defense which may increase in spending going forward given how countries have stopped cooperating and started hoarding so much you can see paranoia growing and defence spending increasing majorly.

I half expect to wake up one morning and read Trump has bombed the Saudi Oil fields to save the US Oil & Gas industry.


But max did happen. It was 100% boeings fault and it wasnt an accident. Sacrificing quality in order to increase profits and shorten time to market is a concious decision. Not to mention the faa coercing and tricking so they wouldnt pay attention, which further proves they knew what they were doing. Argueing that its impossible to know that would lead to accidents takes a lot of nerve imo.

And most economist were warning of an upcoming recession so boeing should have been more prudent with their money. The economy does enter recessions every few years, that is predictable and a known fact even if the reason for the recession may not be easy to predict (e.g. coronavirus or sub prime morgage crisis). Of coarse boeing knew that but chose not to prepare so they dont deserve help even though they are gonna get it.

As for airbus, they said that IF situation persists for many more months they MAY need assistance

How do you read that and conclude that airbus is getting bailed out?


Name me one Major Economist other than David Rosenberg (A Canadian) who has been warning of a recession pre-Covid. You will most likely not find many from the Major banks or Securities firms who were doing the same - it was not most. It was very few at best.

To quote myself from above "Airbus may have been the only one needing a bailout if this drags on too long." I said may and for too long. Please read before you attack.

What other Aerospace company would have been able to afford building 400(I can't find a number of actual undelivered 737 MAX) whitetail aircraft without a bailout?

They were fine without MAX happening - they had ample reserves. Both in the space of basically 12 months very difficult to get through - unless they do what I suggested above which is sell shares and sell the MAX's to the Government.

Boeing is in big trouble right now and Airbus will be as well.

Unfortunately for Boeing's workers it is a lot easier to get rid of a worker in the States than in Europe - and with 737 Production already shut down and a lot of those possibly not assuming they were ever going back to work - less of a psychological shock.
Without the Max, Boeing would have lost even more ground to Airbus in the narrow body segment where most of the money is made. The Max problems themselves happened because Boeing knew that they had to have something fuel efficient to compete in minimal time.
 
morrisond
Posts: 2495
Joined: Thu Jan 07, 2010 12:22 am

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 11:15 am

Sokes wrote:
mjoelnir wrote:
morrisond wrote:

You really don't understand cash flow - with 737 Production stoppage they were cash flow positive on a go forward basis.


Next invention "cash flow positive on a go forward basis", do you now operate with imaginary or invented numbers?


I wonder if Bernie Madoff is following our discussion. I don't suggest Boeing is cheating like Madoff. It's all in their books. I just mean to say Bernie Madoff handled quite well for quite long as long as he was cash flow positive.


I suggest you both Google the phrase about cash flow - banks/ the markets don't lend on what your cash flow was yesterday - they lend on what it looks like going forward be that right or wrong. It was probably a condition that MAX production stop and cash flow return to positive for Boeing to get that new loan.

Advances from customers increasing and amounts owed to suppliers increased for very simple reasons. Production and backlog increased radically in those years.

You both also ignore the question of how was Boeing able to build 400 white tails and support there suppliers if they were in such crappy shape at the time when MAX deliveries stopped, advances on the program stopped being paid and at least in the latter months they were supporting there suppliers.

In the past if an airframes had 1/20th of that undelivered that would have been great a use for concern.
 
mjoelnir
Posts: 9388
Joined: Sun Feb 03, 2013 11:06 pm

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 12:23 pm

morrisond wrote:
Sokes wrote:
mjoelnir wrote:

Next invention "cash flow positive on a go forward basis", do you now operate with imaginary or invented numbers?


I wonder if Bernie Madoff is following our discussion. I don't suggest Boeing is cheating like Madoff. It's all in their books. I just mean to say Bernie Madoff handled quite well for quite long as long as he was cash flow positive.

I suggest you both Google the phrase about cash flow - banks/ the markets don't lend on what your cash flow was yesterday - they lend on what it looks like going forward be that right or wrong. It was probably a condition that MAX production stop and cash flow return to positive for Boeing to get that new loan.


Next flight of fancy by you. The cash flow went positive because Boeing received those loans. You should know that taking loans produces a positive cash flow.

morrisond wrote:
Advances from customers increasing and amounts owed to suppliers increased for very simple reasons. Production and backlog increased radically in those years.


Still not reading financial accounts and ignoring facts. In 2013 Boeing had a huge backlog of 787 that is mostly gone now.
Production and revenue did increase less than borrowing from suppliers and customers.

If you want to be taken seriously, put some numbers behind your statements.

morrisond wrote:
You both also ignore the question of how was Boeing able to build 400 white tails and support there suppliers if they were in such crappy shape at the time when MAX deliveries stopped, advances on the program stopped being paid and at least in the latter months they were supporting there suppliers.

In the past if an airframes had 1/20th of that undelivered that would have been great a use for concern.


All the current inventory, that is not deferred cost, is covered by Advances and progress billings borrowed by the customers. There is not a lot of cash left to be received by Boeing when those frames will be delivered. Especially in regards to the expected late delivery discounts/charges.
The biggest problem for Boeing will be to now find the cash for paying the suppliers, as because of the production stop, they will not be able to roll it over any longer. Progress billings will also have stopped, combined with hardly any new orders. So no more customer money coming in.

When customers start to cancel 737MAX because of late delivery, Boeing will have to find the cash to return advances and progress billings.

So believing that there is cash coming from operations at Boeing now, is believing in miracles.
 
Scotron12
Posts: 430
Joined: Fri Mar 01, 2019 2:13 pm

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 12:27 pm

Meantime..Goldman Sachs deem Boeing shares as time to buy based on the belief travel will rebound after Wuhan virus has passed. Wonder what this guy has been smoking??

https://www.thestreet.com/investing/boe ... oronavirus
 
morrisond
Posts: 2495
Joined: Thu Jan 07, 2010 12:22 am

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 12:43 pm

mjoelnir wrote:
morrisond wrote:
Sokes wrote:

I wonder if Bernie Madoff is following our discussion. I don't suggest Boeing is cheating like Madoff. It's all in their books. I just mean to say Bernie Madoff handled quite well for quite long as long as he was cash flow positive.

I suggest you both Google the phrase about cash flow - banks/ the markets don't lend on what your cash flow was yesterday - they lend on what it looks like going forward be that right or wrong. It was probably a condition that MAX production stop and cash flow return to positive for Boeing to get that new loan.


Next flight of fancy by you. The cash flow went positive because Boeing received those loans. You should know that taking loans produces a positive cash flow.

morrisond wrote:
Advances from customers increasing and amounts owed to suppliers increased for very simple reasons. Production and backlog increased radically in those years.


Still not reading financial accounts and ignoring facts. In 2013 Boeing had a huge backlog of 787 that is mostly gone now.
Production and revenue did increase less than borrowing from suppliers and customers.

If you want to be taken seriously, put some numbers behind your statements.

morrisond wrote:
You both also ignore the question of how was Boeing able to build 400 white tails and support there suppliers if they were in such crappy shape at the time when MAX deliveries stopped, advances on the program stopped being paid and at least in the latter months they were supporting there suppliers.

In the past if an airframes had 1/20th of that undelivered that would have been great a use for concern.


All the current inventory, that is not deferred cost, is covered by Advances and progress billings borrowed by the customers. There is not a lot of cash left to be received by Boeing when those frames will be delivered. Especially in regards to the expected late delivery discounts/charges.
The biggest problem for Boeing will be to now find the cash for paying the suppliers, as because of the production stop, they will not be able to roll it over any longer. Progress billings will also have stopped, combined with hardly any new orders. So no more customer money coming in.

When customers start to cancel 737MAX because of late delivery, Boeing will have to find the cash to return advances and progress billings.

So believing that there is cash coming from operations at Boeing now, is believing in miracles.


You keep skewing what I am saying - I said at the beginning of the year cash flow was positive going forward. Things are different now with deliveries going forward at least for a while basically zero - they will only have have the 30-40% of there business cash flow from defense coming in. As MAX is shutdown - no more cash drain there as I would assume without a baliout they will stop paying employees/supporting suppliers directly.

They will lose the cashflow from 787/747 and 767/777 (Maybe not so much though as Freighters may be in great demand - however with the amount of empty Widebodies lying around and empty bellies on the ones flying maybe not so much).
 
morrisond
Posts: 2495
Joined: Thu Jan 07, 2010 12:22 am

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 12:50 pm

mjoelnir wrote:
morrisond wrote:
Sokes wrote:

I wonder if Bernie Madoff is following our discussion. I don't suggest Boeing is cheating like Madoff. It's all in their books. I just mean to say Bernie Madoff handled quite well for quite long as long as he was cash flow positive.

I suggest you both Google the phrase about cash flow - banks/ the markets don't lend on what your cash flow was yesterday - they lend on what it looks like going forward be that right or wrong. It was probably a condition that MAX production stop and cash flow return to positive for Boeing to get that new loan.


Next flight of fancy by you. The cash flow went positive because Boeing received those loans. You should know that taking loans produces a positive cash flow.

morrisond wrote:
Advances from customers increasing and amounts owed to suppliers increased for very simple reasons. Production and backlog increased radically in those years.


Still not reading financial accounts and ignoring facts. In 2013 Boeing had a huge backlog of 787 that is mostly gone now.
Production and revenue did increase less than borrowing from suppliers and customers.

If you want to be taken seriously, put some numbers behind your statements.

morrisond wrote:
You both also ignore the question of how was Boeing able to build 400 white tails and support there suppliers if they were in such crappy shape at the time when MAX deliveries stopped, advances on the program stopped being paid and at least in the latter months they were supporting there suppliers.

In the past if an airframes had 1/20th of that undelivered that would have been great a use for concern.


All the current inventory, that is not deferred cost, is covered by Advances and progress billings borrowed by the customers. There is not a lot of cash left to be received by Boeing when those frames will be delivered. Especially in regards to the expected late delivery discounts/charges.
The biggest problem for Boeing will be to now find the cash for paying the suppliers, as because of the production stop, they will not be able to roll it over any longer. Progress billings will also have stopped, combined with hardly any new orders. So no more customer money coming in.

When customers start to cancel 737MAX because of late delivery, Boeing will have to find the cash to return advances and progress billings.

So believing that there is cash coming from operations at Boeing now, is believing in miracles.


No one is arguing that Boeing isn't faced with really serious problems now. With a stoppage in deliveries of there other lines they will have serious issues unless they get a bailout. Too bad they aren't owned by the US Government (although they soon could be) and basically have an implicit guarantee.

And yet you still can't answer how they managed to build 400 white tails if they were in such crappy shape. Name me one Aerospace company in history who could have done the same.
 
User avatar
Grizzly410
Posts: 354
Joined: Sun May 10, 2015 8:38 pm

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 12:51 pm

LJ wrote:
Grizzly410 wrote:
Btw, I love how this article I searched to source the credit rating explains the loan is related to coronavirus when it was discussed for well before the outbreak.
"Boeing recently fully drew down all of a $13.8 billion credit line from big banks to ensure it has enough liquidity during the market volatility and air-travel disruptions caused by the coronavirus."
https://www.barrons.com/articles/boeing ... 1584449478


Actually, the article is correct. A credit line becomes a loan when it's drawn. Boeing didn't draw most of the loan until the corona crisis and thus the article is correct. Credit lines are off balance and are only an issue for party which provides the credit line (as it may impact its liquidity). The receiver of credit lines only needs to disclose it due to compliance reasons and and it is positive news for a company (it shows confidence in your company). Credit agencies don't downgrade on getting a credit line as, as mentioned before, there is no liability attached to it.


Thanks for the explanation, I didn't know the difference.
However, if the loan is drawn to ensure liquidity in front of disruptions caused by the coronavirus, the credit line was taken due to 737MAX production halt and was planned to be drawn anyway. So coronavirus may have accelerated the cash need but nothing more, the reason behind the loan still lies in the stock buybacks + MAX debacle.
In order to be old and wise, one must first be young and dumb.
 
frmrCapCadet
Posts: 3703
Joined: Thu May 29, 2008 8:24 pm

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 1:02 pm

Just a note about the "old Boeing", 30 years ago I told my kids that Boeing went up and down from $30-65. Loyal Seattle-ites supported the local team by buying Boeing in bad times by buying at $30. When it was boom times it was OK to sell at $65. In this way you were supporting aviation and all of these great neighbors who worked at Boeing. And you made a bit of money at to boot.

Old times are gone.
Buffet: the airline business...has eaten up capital...like..no other (business)
 
User avatar
scbriml
Posts: 18522
Joined: Wed Jul 02, 2003 10:37 pm

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 1:22 pm

morrisond wrote:
No one is arguing that Boeing isn't faced with really serious problems now. With a stoppage in deliveries of there other lines they will have serious issues unless they get a bailout. Too bad they aren't owned by the US Government (although they soon could be) and basically have an implicit guarantee.

And yet you still can't answer how they managed to build 400 white tails if they were in such crappy shape. Name me one Aerospace company in history who could have done the same.


They're not 'white tails' in the classic sense - Boeing didn't build 400 MAX without customers. The vast majority were built for specific customers and are already painted and registered for those customers. Some lessor frames are not allocated to airlines.

You seem to be holding this up almost as a source of pride - it shouldn't be. They're facing really serious problems now precisely because they continued to build 400 planes after MAX was grounded, they were basically in denial as to how big a problem MAX was. They'de be in a much better position to ride out Covid-19 if they hadn't built those 400 MAX.
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

Mon Mar 23, 2020 1:30 pm

morrisond wrote:
mjoelnir wrote:
morrisond wrote:

Next flight of fancy by you. The cash flow went positive because Boeing received those loans. You should know that taking loans produces a positive cash flow.



Still not reading financial accounts and ignoring facts. In 2013 Boeing had a huge backlog of 787 that is mostly gone now.
Production and revenue did increase less than borrowing from suppliers and customers.

If you want to be taken seriously, put some numbers behind your statements.



All the current inventory, that is not deferred cost, is covered by Advances and progress billings borrowed by the customers. There is not a lot of cash left to be received by Boeing when those frames will be delivered. Especially in regards to the expected late delivery discounts/charges.
The biggest problem for Boeing will be to now find the cash for paying the suppliers, as because of the production stop, they will not be able to roll it over any longer. Progress billings will also have stopped, combined with hardly any new orders. So no more customer money coming in.

When customers start to cancel 737MAX because of late delivery, Boeing will have to find the cash to return advances and progress billings.

So believing that there is cash coming from operations at Boeing now, is believing in miracles.


No one is arguing that Boeing isn't faced with really serious problems now. With a stoppage in deliveries of there other lines they will have serious issues unless they get a bailout. Too bad they aren't owned by the US Government (although they soon could be) and basically have an implicit guarantee.

And yet you still can't answer how they managed to build 400 white tails if they were in such crappy shape. Name me one Aerospace company in history who could have done the same.


Progress billings to begin with, by declaring to customers it would be only a slight delay. Most of the cash for those 400 frames was supplied by customers.
 
morrisond
Posts: 2495
Joined: Thu Jan 07, 2010 12:22 am

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 1:39 pm

scbriml wrote:
morrisond wrote:
No one is arguing that Boeing isn't faced with really serious problems now. With a stoppage in deliveries of there other lines they will have serious issues unless they get a bailout. Too bad they aren't owned by the US Government (although they soon could be) and basically have an implicit guarantee.

And yet you still can't answer how they managed to build 400 white tails if they were in such crappy shape. Name me one Aerospace company in history who could have done the same.


They're not 'white tails' in the classic sense - Boeing didn't build 400 MAX without customers. The vast majority were built for specific customers and are already painted and registered for those customers. Some lessor frames are not allocated to airlines.

You seem to be holding this up almost as a source of pride - it shouldn't be. They're facing really serious problems now precisely because they continued to build 400 planes after MAX was grounded, they were basically in denial as to how big a problem MAX was. They'de be in a much better position to ride out Covid-19 if they hadn't built those 400 MAX.


Yes they would definitely be in better shape - but the others are basically implying they were a basket case walking from a financial standpoint before MAX. That is simply untrue. Could they have been better Pre-Max - sure - but they were not a basket case.
 
morrisond
Posts: 2495
Joined: Thu Jan 07, 2010 12:22 am

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 1:54 pm

mjoelnir wrote:
morrisond wrote:
mjoelnir wrote:

All the current inventory, that is not deferred cost, is covered by Advances and progress billings borrowed by the customers. There is not a lot of cash left to be received by Boeing when those frames will be delivered. Especially in regards to the expected late delivery discounts/charges.
The biggest problem for Boeing will be to now find the cash for paying the suppliers, as because of the production stop, they will not be able to roll it over any longer. Progress billings will also have stopped, combined with hardly any new orders. So no more customer money coming in.

When customers start to cancel 737MAX because of late delivery, Boeing will have to find the cash to return advances and progress billings.

So believing that there is cash coming from operations at Boeing now, is believing in miracles.


No one is arguing that Boeing isn't faced with really serious problems now. With a stoppage in deliveries of there other lines they will have serious issues unless they get a bailout. Too bad they aren't owned by the US Government (although they soon could be) and basically have an implicit guarantee.

And yet you still can't answer how they managed to build 400 white tails if they were in such crappy shape. Name me one Aerospace company in history who could have done the same.


Progress billings to begin with, by declaring to customers it would be only a slight delay. Most of the cash for those 400 frames was supplied by customers.


No Progress biilings were stopped at the grounding.

This very good article seems to suggest Pre-delivery payments are only about 15-30%. https://www.clydeco.com/insight/article ... payments-1

That may be high

On January 20 Boeing Reported a backlog of $463 Billion.

https://boeing.mediaroom.com/2020-01-29 ... er-Results

Total pre-payment and advances by Boeing customers for all programs including defense was $51.5 Billion. That number one year before was $50.6B

Assume Defense is the same proportion of Revenue as sales - it could be higher - so remove 30% - then it's down to $35B - that's less than 10% of the Commercial Backlog.

And yes I quite aware that it would be more skewed to near term deliveries - but airlines aren't locking in $463 Billion of future deliveries for free.

Next.
Last edited by morrisond on Mon Mar 23, 2020 2:15 pm, edited 2 times in total.
 
FluidFlow
Posts: 567
Joined: Wed Apr 10, 2019 6:39 am

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 1:58 pm

morrisond wrote:
On January 20 Boeing Reported a backlog of $463 Billion.



I actually do not want to get into this discussion but this number got my interest. Is this before or after discounts?

Because we all know that there are between 40% - 60% discounts applied to the list price so is the real backlog around $900bn or $230bn?
 
Exeiowa
Posts: 253
Joined: Fri Jul 06, 2018 4:49 pm

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 2:00 pm

At a certain point company triage is going set in and who is worth saving with the limited resources. If you save a manufacturer but not the customers there is not going to be a demand. I suspect that this thing will rumble along a really long time. There will be no air travel demand for a long time. If we control it in one area it will still be present in others and that's why air travel will not come back quickly.
 
morrisond
Posts: 2495
Joined: Thu Jan 07, 2010 12:22 am

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 2:16 pm

FluidFlow wrote:
morrisond wrote:
On January 20 Boeing Reported a backlog of $463 Billion.



I actually do not want to get into this discussion but this number got my interest. Is this before or after discounts?

Because we all know that there are between 40% - 60% discounts applied to the list price so is the real backlog around $900bn or $230bn?


I don't know - the press release is not clear.
 
FluidFlow
Posts: 567
Joined: Wed Apr 10, 2019 6:39 am

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 2:31 pm

morrisond wrote:
FluidFlow wrote:
morrisond wrote:
On January 20 Boeing Reported a backlog of $463 Billion.



I actually do not want to get into this discussion but this number got my interest. Is this before or after discounts?

Because we all know that there are between 40% - 60% discounts applied to the list price so is the real backlog around $900bn or $230bn?


I don't know - the press release is not clear.


Hmm yeah I read through it and it is hard to tie the number down. It seems to be somekind of a slight overestimation.

What is the current rate for a new MAX? If we assume $50 million and a backlog of around 4500, we get $225bn. With the freighters + other wide bodies it is a bit harder but around 900 WBs at a value of around $120 million (787 and 767 a bit lower, 777X most probably way more), we have another $108bn. Then we are at around $333bn. Maybe it is a bit more, with MAX discounts due to delay maybe a bit less. Seems healthy if Boeing can keep the current orderbook.
 
mjoelnir
Posts: 9388
Joined: Sun Feb 03, 2013 11:06 pm

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 2:36 pm

morrisond wrote:

No Progress billings were stopped at the grounding.



I heard something else from the airline I do know about.
 
mjoelnir
Posts: 9388
Joined: Sun Feb 03, 2013 11:06 pm

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 2:42 pm

morrisond wrote:

This very good article seems to suggest Pre-delivery payments are only about 15-30%. https://www.clydeco.com/insight/article ... payments-1



That may be low. That article talks about pre delivery payments compared to cross prices not real prices.

quote: i.e.: the price before discounts, credits, et cetera, which always serve in effect to reduce the aircraft’s list/base/gross price to varying degrees.

If we talk about 30% of gross price and the contract price is 50 % of gross price, the bigger part of the airplane is paid before delivery.
 
morrisond
Posts: 2495
Joined: Thu Jan 07, 2010 12:22 am

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 2:44 pm

FluidFlow wrote:
morrisond wrote:
FluidFlow wrote:

I actually do not want to get into this discussion but this number got my interest. Is this before or after discounts?

Because we all know that there are between 40% - 60% discounts applied to the list price so is the real backlog around $900bn or $230bn?


I don't know - the press release is not clear.


Hmm yeah I read through it and it is hard to tie the number down. It seems to be somekind of a slight overestimation.

What is the current rate for a new MAX? If we assume $50 million and a backlog of around 4500, we get $225bn. With the freighters + other wide bodies it is a bit harder but around 900 WBs at a value of around $120 million (787 and 767 a bit lower, 777X most probably way more), we have another $108bn. Then we are at around $333bn. Maybe it is a bit more, with MAX discounts due to delay maybe a bit less. Seems healthy if Boeing can keep the current orderbook.


Reading more I think the backlog includes Defense which might account for the difference.
 
FluidFlow
Posts: 567
Joined: Wed Apr 10, 2019 6:39 am

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 2:47 pm

morrisond wrote:
FluidFlow wrote:
morrisond wrote:

I don't know - the press release is not clear.


Hmm yeah I read through it and it is hard to tie the number down. It seems to be somekind of a slight overestimation.

What is the current rate for a new MAX? If we assume $50 million and a backlog of around 4500, we get $225bn. With the freighters + other wide bodies it is a bit harder but around 900 WBs at a value of around $120 million (787 and 767 a bit lower, 777X most probably way more), we have another $108bn. Then we are at around $333bn. Maybe it is a bit more, with MAX discounts due to delay maybe a bit less. Seems healthy if Boeing can keep the current orderbook.


Reading more I think the backlog includes Defense which might account for the difference.


Or some sort of guaranteed after sale support. Or both. At the end Boeing is "not allowed" to give wrong numbers or if they do and it will be proven there will be a massive law suit incomming. So the number has definetely some substance, we just do not really know what it contains.
 
morrisond
Posts: 2495
Joined: Thu Jan 07, 2010 12:22 am

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 2:48 pm

mjoelnir wrote:
morrisond wrote:

This very good article seems to suggest Pre-delivery payments are only about 15-30%. https://www.clydeco.com/insight/article ... payments-1



That may be low. That article talks about pre delivery payments compared to cross prices not real prices.

quote: i.e.: the price before discounts, credits, et cetera, which always serve in effect to reduce the aircraft’s list/base/gross price to varying degrees.

If we talk about 30% of gross price and the contract price is 50 % of gross price, the bigger part of the airplane is paid before delivery.


It may be - but it's not all as you suggest above and one airline might have kept paying but I would have to guess that that didn't continue on forever.

This article from 2016 suggests it takes Boeing just 9 days to build a 737 - I can see Airlines going above 50% at the point it enters Final assembly - but not before.

https://www.wired.com/2016/09/boeing-bu ... nine-days/
 
morrisond
Posts: 2495
Joined: Thu Jan 07, 2010 12:22 am

Re: Boeing Financial Discussion 2020

Mon Mar 23, 2020 2:51 pm

morrisond wrote:
FluidFlow wrote:
morrisond wrote:

I don't know - the press release is not clear.


Hmm yeah I read through it and it is hard to tie the number down. It seems to be somekind of a slight overestimation.

What is the current rate for a new MAX? If we assume $50 million and a backlog of around 4500, we get $225bn. With the freighters + other wide bodies it is a bit harder but around 900 WBs at a value of around $120 million (787 and 767 a bit lower, 777X most probably way more), we have another $108bn. Then we are at around $333bn. Maybe it is a bit more, with MAX discounts due to delay maybe a bit less. Seems healthy if Boeing can keep the current orderbook.


Reading more I think the backlog includes Defense which might account for the difference.


Boeing defense Backlog $67 B last year plus whatever they signed since.

https://www.flightglobal.com/fixed-wing ... 20.article
  • 1
  • 5
  • 6
  • 7
  • 8
  • 9

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos