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morrisond
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Speculation on CNBC that Boeing is going to Raise $30B in Equity

Tue Dec 15, 2020 2:18 pm

The anchors on CNBC are discussing the rumor that Boeing is about to raise $30B in Equity to repair the balance sheet.

The stock price is not reacting to this and is indicating a higher open which in general means that the market thinks this is a good thing and will not dilute the per share value that much. More shares - but much a lot better balance sheet. This would be a dilution of about 25%.

If it happens this definitely changes what Boeing's plans could be going forward. Combine this with the cash that will be generated from MAX deliveries and it makes new programs a lot more feasible and more likely to happen sooner rather than later.

Personally I think if it happens this would be a very good move. When the average earnings forecast for 2021 is about $2.60 per share and your stock is trading at a multiple about 87 times that selling stock is a good idea.
Last edited by morrisond on Tue Dec 15, 2020 2:24 pm, edited 1 time in total.
 
davidjohnson6
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Tue Dec 15, 2020 2:20 pm

Have there been estimates as to how much 737 Max cost Boeing so far ?
How much has Covid cost Boeing ?
 
morrisond
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Tue Dec 15, 2020 2:41 pm

davidjohnson6 wrote:
Have there been estimates as to how much 737 Max cost Boeing so far ?
How much has Covid cost Boeing ?


I think the MAX so far has cost Boeing somewhere in the range of $20-30 Billion. They have taken on a ton of debt ($40-50 billion) to finance MAX inventory and COVID but a lot of that will get paid back very quickly as MAX deliveries happen - however that is offset by about $20B of cash. Historically I think they have kept about $7-8 Billion cash on hand normally to finance operations.

With a $30B equity raise this could basically get them back to "Normal" Boeing debt levels of about $10B and then use cash flow to finance new investments.

All very rough numbers.
 
morrisond
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Tue Dec 15, 2020 3:09 pm

Another interesting tidbit is the Leeham delivery forecast for the next 5 years where it speculates that Boeing will deliver more units and significantly more in value due to its lead in Widebodies than Airbus.

https://leehamnews.com/2020/12/15/hotr- ... y-in-2025/

While its hard to forecast that far out given all the uncertainties and they may not win the units race - they should win the delivered value race.

Things could be turning at Boeing.
 
Exeiowa
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Tue Dec 15, 2020 3:13 pm

If ever there was a giant money evaporator it would be share buy backs at high stock prices and issue equity when shares are down. Did none of these people play Railroad Tycoon in their younger days?
 
NZ321
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Tue Dec 15, 2020 3:32 pm

morrisond wrote:
Another interesting tidbit is the Leeham delivery forecast for the next 5 years where it speculates that Boeing will deliver more units and significantly more in value due to its lead in Widebodies than Airbus.

https://leehamnews.com/2020/12/15/hotr- ... y-in-2025/

While its hard to forecast that far out given all the uncertainties and they may not win the units race - they should win the delivered value race.

Things could be turning at Boeing.


I wouldn't say that the Boeing lead in Widebodies was cemented. The 77X is hardly out of the gate and it's in trouble in terms of production and certification delays and airlines deferring or cancelling orders. That predates Covid by some margin. You could hardly call the 787a runaway success either in terms of reliability. Look at the RR debacle and the production quality problems via a certain assembly centre - sales are certainly not maintaining momentum. Meanwhile 747 is at sunset. So this is all an interesting take. Airbus A330 Neo also not a runaway success - for sure we all understand that - but A330 sales have sure been impressive over the last while and it's a wee bit early to predict what will happen once earlier frames come ready for replacement over the next 3-5 years. Meanwhile the A350 has had what I would call a relatively smooth introduction to service. No majors so far, correct? No groundings or significant engine issues. And the A380 - yes we all understand that it's days in production are more or less over and the hit on that is on Airbus. But to state that "Boeing will deliver more units and significantly more in value due to its lead in Widebodies than Airbus" going forward, while not impossible, is quite a bold statement at present - IMHO- and it will sure be interesting to see.
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morrisond
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Tue Dec 15, 2020 3:39 pm

Exeiowa wrote:
If ever there was a giant money evaporator it would be share buy backs at high stock prices and issue equity when shares are down. Did none of these people play Railroad Tycoon in their younger days?


Yes true - but historically the stock price was only higher than these levels for about 32 months. Per share if they issue new stock it will most likely be at a higher price than what they bought back over the last 10-11 years. It looks like the last major share issue was in 2009.
 
CRJockey
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Tue Dec 15, 2020 3:43 pm

Exeiowa wrote:
If ever there was a giant money evaporator it would be share buy backs at high stock prices and issue equity when shares are down. Did none of these people play Railroad Tycoon in their younger days?


Absolute Gold. The game as well as your comment! :-)
 
morrisond
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Tue Dec 15, 2020 3:50 pm

NZ321 wrote:
morrisond wrote:
Another interesting tidbit is the Leeham delivery forecast for the next 5 years where it speculates that Boeing will deliver more units and significantly more in value due to its lead in Widebodies than Airbus.

https://leehamnews.com/2020/12/15/hotr- ... y-in-2025/

While its hard to forecast that far out given all the uncertainties and they may not win the units race - they should win the delivered value race.

Things could be turning at Boeing.


I wouldn't say that the Boeing lead in Widebodies was cemented. The 77X is hardly out of the gate and it's in trouble in terms of production and certification delays and airlines deferring or cancelling orders. That predates Covid by some margin. You could hardly call the 787a runaway success either in terms of reliability. Look at the RR debacle and the production quality problems via a certain assembly centre - sales are certainly not maintaining momentum. Meanwhile 747 is at sunset. So this is all an interesting take. Airbus A330 Neo also not a runaway success - for sure we all understand that - but A330 sales have sure been impressive over the last while and it's a wee bit early to predict what will happen once earlier frames come ready for replacement over the next 3-5 years. Meanwhile the A350 has had what I would call a relatively smooth introduction to service. No majors so far, correct? No groundings or significant engine issues. And the A380 - yes we all understand that it's days in production are more or less over and the hit on that is on Airbus. But to state that "Boeing will deliver more units and significantly more in value due to its lead in Widebodies than Airbus" going forward, while not impossible, is quite a bold statement at present - IMHO- and it will sure be interesting to see.


I'm just reading the Leeham article. It sure helps when 60+ of your widebody deliveries per year going forward are Freighters or Government programs that are as certain as you can get in this world.

While a great airplane Airbus has a Major pricing issue with the A350 that they need to fix. The production cost is just too high. They need to invest more in it just like Boeing did on the 787 program which seems to be doing fine from an operating standpoint right now. They will fix the SC delivery issues/production problems. Consolidating production in one location will lower the price they will be able to offer them vs producing out of 2 locations.
 
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Tue Dec 15, 2020 4:06 pm

morrisond wrote:
Another interesting tidbit is the Leeham delivery forecast for the next 5 years where it speculates that Boeing will deliver more units and significantly more in value due to its lead in Widebodies than Airbus.

https://leehamnews.com/2020/12/15/hotr- ... y-in-2025/

While its hard to forecast that far out given all the uncertainties and they may not win the units race - they should win the delivered value race.

Things could be turning at Boeing.

That analysis is probably the best we have to discuss widebody demand as well as narrowbody demand.

It clearly shows the reduced MAX demand vs. A320NEO at very believable levels. It also shows plausible widebody production for A and B.

Boeing needs cash, but it has value.

Airbus will do better on narrowbodies. Short term, Boeing will feel the widebody pain, there is no denying that. But they also have, in my opinion, an incredibly competitive widebody lineup.

If that analysis is correct and I believe it is much more accurate than most (shows MAX deficit, but relative abilities of each company to ramp up). Yes, I'm more bearish than this analysis on the overall market, but as something is wrong if the engineer is the most optimistic person in the room... ;)

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lightsaber
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Tue Dec 15, 2020 4:08 pm

Folks, we mods are going overtime in this thread on A vs. B. If you have a strong opinion, discuss to a link.

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MIflyer12
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Tue Dec 15, 2020 6:14 pm

Exeiowa wrote:
If ever there was a giant money evaporator it would be share buy backs at high stock prices and issue equity when shares are down. Did none of these people play Railroad Tycoon in their younger days?


The stock is up 158% from the 52-week low.

morrisond wrote:
The stock price is not reacting to this and is indicating a higher open which in general means that the market thinks this is a good thing and will not dilute the per share value that much. More shares - but much a lot better balance sheet. This would be a dilution of about 25%.


Another interpretation is that the market didn't believe CNBC's report at the time you looked at share pricing. Dilution is dilution - this is 3rd grade math.
 
smartplane
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Tue Dec 15, 2020 6:38 pm

MAX compensation is largely in the form of 2nd and 3rd tier of conditional retrospective discounts when current orders are delivered. These represent a massive discount overhang on future purchases.

787 production costs are based on volumes which will not be achieved in the foreseeable future. The billion dollar question is how elastic are these volume costs, and whether the savings are a straight line or something else. Boeing has been undertaking a charm offensive with suppliers, to avoid 3rd party compensation and parts disruption (exercise put options requiring Boeing to acquire production, purchase equipment, pay goodwill and compensation, and in some cases purchase IP / pay royalties).

Boeing was planning a step change in the pricing of the X right around now, with the pricing cap imposed by the A380 removed. IAG order was the last, presumably on condition they didn't place an A380 top-up, model life extension order.

777 orders have been priced at little more than cost, to keep the production line warm for the X. 747 orders the same, to retain expertise for the next new model.

Probably the best margins on the 767, but military no saviour, with some 'delivered' aircraft still on BCC subsidiary books.

How much wriggle room would the proposed capital raising allow for a new model? If the first is successful, it will probably be followed quickly by a second (or an increase in the first), and that could fund a new model.
 
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Tue Dec 15, 2020 6:51 pm

MIflyer12 wrote:
Exeiowa wrote:
If ever there was a giant money evaporator it would be share buy backs at high stock prices and issue equity when shares are down. Did none of these people play Railroad Tycoon in their younger days?


The stock is up 158% from the 52-week low.

morrisond wrote:
The stock price is not reacting to this and is indicating a higher open which in general means that the market thinks this is a good thing and will not dilute the per share value that much. More shares - but much a lot better balance sheet. This would be a dilution of about 25%.


Another interpretation is that the market didn't believe CNBC's report at the time you looked at share pricing. Dilution is dilution - this is 3rd grade math.


No - it's current crazy market math. Sometimes this is how the market reacts and how stupid it is in general right now.

However that being said although the number of shares would increase by 25% this would really repair the balance sheet and ensure Boeings survival so they would be kind of crazy right now not to do it.

It's not as though the $30Billion would disappear - it does add value to Boeing - unless there are some further very large undisclosed MAX or Covid costs that it is needed to pay for.
 
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lightsaber
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Tue Dec 15, 2020 7:27 pm

morrisond wrote:
MIflyer12 wrote:
Exeiowa wrote:
If ever there was a giant money evaporator it would be share buy backs at high stock prices and issue equity when shares are down. Did none of these people play Railroad Tycoon in their younger days?


The stock is up 158% from the 52-week low.

morrisond wrote:
The stock price is not reacting to this and is indicating a higher open which in general means that the market thinks this is a good thing and will not dilute the per share value that much. More shares - but much a lot better balance sheet. This would be a dilution of about 25%.


Another interpretation is that the market didn't believe CNBC's report at the time you looked at share pricing. Dilution is dilution - this is 3rd grade math.


No - it's current crazy market math. Sometimes this is how the market reacts and how stupid it is in general right now.

However that being said although the number of shares would increase by 25% this would really repair the balance sheet and ensure Boeings survival so they would be kind of crazy right now not to do it.

It's not as though the $30Billion would disappear - it does add value to Boeing - unless there are some further very large undisclosed MAX or Covid costs that it is needed to pay for.

I agree on many points. Boeing would be crazy not to repair the balance sheet.

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iamlucky13
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Tue Dec 15, 2020 11:15 pm

morrisond wrote:
The anchors on CNBC are discussing the rumor that Boeing is about to raise $30B in Equity to repair the balance sheet.


It's not really a rumor since it came from the CFO himself. However, how serious the possibility is at this point, and how large such an equity offering might be are not clear. Here's a transcript from the conference last week where Greg Smith talked about equity in response to a question from Credit Suisse:
https://s2.q4cdn.com/661678649/files/do ... script.pdf

morrisond wrote:
It's not as though the $30Billion would disappear - it does add value to Boeing - unless there are some further very large undisclosed MAX or Covid costs that it is needed to pay for.


It's value neutral. It spreads the company value over more shares, but raises cash that remains part of the valuation. In this case, the cash would likely go to reducing debt, which is also part of the valuation.

Exeiowa wrote:
If ever there was a giant money evaporator it would be share buy backs at high stock prices and issue equity when shares are down. Did none of these people play Railroad Tycoon in their younger days?


It looks like their current share price is equivalent to July 2017 levels. Prior to that, it never reached that level. If this site is accurate:
https://ycharts.com/companies/BA/stock_buyback

...then they purchased about $16 billion worth at higher prices than today, and $26 billion worth at lower prices than today, going back through 2013.

Of course, when they were performing those buybacks, they were not factoring in two accidents leading to one of the most expensive groundings in aviation history, and a once-in-a-century global disaster that hit their customers worse than most other industries.

Instead they had relatively low projected expenditures (segue from 777X development to NMA), high projected net income, and very low interest loans available if needed. The value of the buybacks looks a lot different in retrospect. It's a lot easier to become a tycoon if you know the future.
 
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Tue Dec 15, 2020 11:26 pm

smartplane wrote:
MAX compensation is largely in the form of 2nd and 3rd tier of conditional retrospective discounts when current orders are delivered. These represent a massive discount overhang on future purchases.

787 production costs are based on volumes which will not be achieved in the foreseeable future. The billion dollar question is how elastic are these volume costs, and whether the savings are a straight line or something else. Boeing has been undertaking a charm offensive with suppliers, to avoid 3rd party compensation and parts disruption (exercise put options requiring Boeing to acquire production, purchase equipment, pay goodwill and compensation, and in some cases purchase IP / pay royalties).

Boeing was planning a step change in the pricing of the X right around now, with the pricing cap imposed by the A380 removed. IAG order was the last, presumably on condition they didn't place an A380 top-up, model life extension order.

777 orders have been priced at little more than cost, to keep the production line warm for the X. 747 orders the same, to retain expertise for the next new model.
AA, WN and others got cash. So much so WN and AA distributed some of the settlement to the employees
Probably the best margins on the 767, but military no saviour, with some 'delivered' aircraft still on BCC subsidiary books.

How much wriggle room would the proposed capital raising allow for a new model? If the first is successful, it will probably be followed quickly by a second (or an increase in the first), and that could fund a new model.
 
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Tue Dec 15, 2020 11:31 pm

morrisond wrote:
With a $30B equity raise this could basically get them back to "Normal" Boeing debt levels of about $10B and then use cash flow to finance new investments.

All very rough numbers.

Very rough indeed.
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Sokes
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Tue Dec 15, 2020 11:40 pm

morrisond wrote:
While a great airplane Airbus has a Major pricing issue with the A350 that they need to fix. The production cost is just too high. They need to invest more in it just like Boeing did on the 787 program which seems to be doing fine from an operating standpoint right now. They will fix the SC delivery issues/production problems. Consolidating production in one location will lower the price they will be able to offer them vs producing out of 2 locations.

I disagree. Airbus didn't sell the A350 for cheap because they want to sell it profitable.

I also doubt B787 will be cheaper to produce in only one location.
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morrisond
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Tue Dec 15, 2020 11:45 pm

iamlucky13 wrote:
morrisond wrote:
The anchors on CNBC are discussing the rumor that Boeing is about to raise $30B in Equity to repair the balance sheet.


It's not really a rumor since it came from the CFO himself. However, how serious the possibility is at this point, and how large such an equity offering might be are not clear. Here's a transcript from the conference last week where Greg Smith talked about equity in response to a question from Credit Suisse:
https://s2.q4cdn.com/661678649/files/do ... script.pdf

morrisond wrote:
It's not as though the $30Billion would disappear - it does add value to Boeing - unless there are some further very large undisclosed MAX or Covid costs that it is needed to pay for.


It's value neutral. It spreads the company value over more shares, but raises cash that remains part of the valuation. In this case, the cash would likely go to reducing debt, which is also part of the valuation.

Exeiowa wrote:
If ever there was a giant money evaporator it would be share buy backs at high stock prices and issue equity when shares are down. Did none of these people play Railroad Tycoon in their younger days?


It looks like their current share price is equivalent to July 2017 levels. Prior to that, it never reached that level. If this site is accurate:
https://ycharts.com/companies/BA/stock_buyback

...then they purchased about $16 billion worth at higher prices than today, and $26 billion worth at lower prices than today, going back through 2013.

Of course, when they were performing those buybacks, they were not factoring in two accidents leading to one of the most expensive groundings in aviation history, and a once-in-a-century global disaster that hit their customers worse than most other industries.

Instead they had relatively low projected expenditures (segue from 777X development to NMA), high projected net income, and very low interest loans available if needed. The value of the buybacks looks a lot different in retrospect. It's a lot easier to become a tycoon if you know the future.


Thanks for that transcript. That helps.

On the valuation - yes I agree it's neutral - you said it better than I - but that is what I was trying to get at and why the stock may not be reacting that much to a large share issuance. More shares offset by the cash.

Reading that transcript though sure makes me believe that a very large equity deal is coming - he sure seems to want to fix the balance sheet - just a question of when and how much.
 
Sokes
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Tue Dec 15, 2020 11:48 pm

iamlucky13 wrote:
It looks like their current share price is equivalent to July 2017 levels.

So much about monetary easing doesn't cause inflation.

How did the aviation world look in 2017?
How does the demand situation look now?
It's just crazy that Boeing is still supposed to have same value as in 2017.

So maybe Bowing did the smart thing.
They knew monetary easing will inflate assets. Better to buy back shares and issue new shares later.
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Sokes
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Wed Dec 16, 2020 12:02 am

smartplane wrote:
Boeing was planning a step change in the pricing of the X right around now, with the pricing cap imposed by the A380 removed. IAG order was the last, presumably on condition they didn't place an A380 top-up, model life extension order.

You have a source?

One can argue that the B777X doesn't sell.
Or one can argue that Boeing doesn't want to repeat their B787 marketing.
I consider it normal that a plane doesn't sell in huge numbers until it proofs itself in service.

Since the share price has increased a lot:
Any rumours how the B777X performs?
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morrisond
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Wed Dec 16, 2020 12:47 am

Sokes wrote:
morrisond wrote:
While a great airplane Airbus has a Major pricing issue with the A350 that they need to fix. The production cost is just too high. They need to invest more in it just like Boeing did on the 787 program which seems to be doing fine from an operating standpoint right now. They will fix the SC delivery issues/production problems. Consolidating production in one location will lower the price they will be able to offer them vs producing out of 2 locations.

I disagree. Airbus didn't sell the A350 for cheap because they want to sell it profitable.

I also doubt B787 will be cheaper to produce in only one location.


At the same volume 787 will be cheaper in one location - one set of managers and cheaper labour rates in SC.

Yes Airbus has tried to maintain profit on A350 - however at lower Widebody volumes than expected I doubt it will be turning a profit.

Airbus themselves have stated they need to take cost out of it. Boeing did the same thing with 787 by replacing a lot of parts from expensive Ti to steel and aluminum.
 
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Wed Dec 16, 2020 1:16 am

I still believe there is a place for the MOM. Aircraft the size of the 777X and A35J are likely to never be needed with business traffic being permanently reduced. The 777 will still have a future as a freighter but I believe the future should be increasing performance/economics on the 787 and getting out a true 763 and 757 replacement.
 
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Wed Dec 16, 2020 1:26 am

TTailedTiger wrote:
I still believe there is a place for the MOM. Aircraft the size of the 777X and A35J are likely to never be needed with business traffic being permanently reduced. The 777 will still have a future as a freighter but I believe the future should be increasing performance/economics on the 787 and getting out a true 763 and 757 replacement.

So we will not see pre pandemic levels of travel? I don’t think reduction in business travel will mean end of big aircraft, reduction in frequency? Yes. But that market exist and will still be a big contributor. Business travel reduction. Depends by how much. Which no one knows really. People are going on about how businesses are doing business remotely and can do so much. Well they have to. What about when they don’t have to. Teleconferencing has its limits in a lot of ways and this idea it’s a silver bullet to business travel is a bit premature
 
Opus99
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Wed Dec 16, 2020 1:28 am

Sokes wrote:
smartplane wrote:
Boeing was planning a step change in the pricing of the X right around now, with the pricing cap imposed by the A380 removed. IAG order was the last, presumably on condition they didn't place an A380 top-up, model life extension order.

You have a source?

One can argue that the B777X doesn't sell.
Or one can argue that Boeing doesn't want to repeat their B787 marketing.
I consider it normal that a plane doesn't sell in huge numbers until it proofs itself in service.

Since the share price has increased a lot:
Any rumours how the B777X performs?

According to lightsaber in a seperate thread, he has seen 777X data. He seems convinced it is the cheapest way to transport passengers over 3000NM. Also believes the GE9X is a full generation from any widebody engine available but you can take that up in the aircraft production thread not here!
 
TTailedTiger
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Wed Dec 16, 2020 1:31 am

Opus99 wrote:
TTailedTiger wrote:
I still believe there is a place for the MOM. Aircraft the size of the 777X and A35J are likely to never be needed with business traffic being permanently reduced. The 777 will still have a future as a freighter but I believe the future should be increasing performance/economics on the 787 and getting out a true 763 and 757 replacement.

So we will not see pre pandemic levels of travel? I don’t think reduction in business travel will mean end of big aircraft, reduction in frequency? Yes. But that market exist and will still be a big contributor. Business travel reduction. Depends by how much. Which no one knows really. People are going on about how businesses are doing business remotely and can do so much. Well they have to. What about when they don’t have to. Teleconferencing has its limits in a lot of ways and this idea it’s a silver bullet to business travel is a bit premature


And what shareholder is going to allow frivolous travel expenses just for the heck of it now that they've seen the cost savings and seen proof that the company functions just fine without massive airline and hotel bills?
 
Opus99
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Wed Dec 16, 2020 1:57 am

TTailedTiger wrote:
Opus99 wrote:
TTailedTiger wrote:
I still believe there is a place for the MOM. Aircraft the size of the 777X and A35J are likely to never be needed with business traffic being permanently reduced. The 777 will still have a future as a freighter but I believe the future should be increasing performance/economics on the 787 and getting out a true 763 and 757 replacement.

So we will not see pre pandemic levels of travel? I don’t think reduction in business travel will mean end of big aircraft, reduction in frequency? Yes. But that market exist and will still be a big contributor. Business travel reduction. Depends by how much. Which no one knows really. People are going on about how businesses are doing business remotely and can do so much. Well they have to. What about when they don’t have to. Teleconferencing has its limits in a lot of ways and this idea it’s a silver bullet to business travel is a bit premature


And what shareholder is going to allow frivolous travel expenses just for the heck of it now that they've seen the cost savings and seen proof that the company functions just fine without massive airline and hotel bills?

Like I said. It will take time much longer than leisure but it will happen in phases. There are jobs that need that travel. Business domestic will come first then in person sales and client meetings etc. Because their business depends on it. McKinsey did a report on that and businesses like thin are eager to get that back to flying, how corporate services travel will return we don’t know. Then again, it worked well because everyone on the planet was stuck at home and that was what we had to do. we had already been making use of teleconferencing in the work place so we knew what it was capable of, there’s a reason for that. In all honesty, there’s a lot of things companies do that add zero shareholder value so this shareholders coming to make noise about corporate travel, if their value expectations are being met then? I get your point anyway. It’s the most obvious outcome of this pandemic, but I’m one of the few that believe business travel will EVENTUALLY come back. We have to move on from this pandemic
 
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Wed Dec 16, 2020 8:19 am

I wonder how much of the raised cash will be needed to compensate for negative cash flow. Chances are high, that the 737 line, 787 line and 77X line are cash flow negative for the next year or two.
This is luckily offset by 767 and 77W/Fs.

Retrospective credits + the shut down and low restart of the 737 line reduces margins by a lot. While already built 737s will be delivered cash flow positive (if they are delivered), currently built ones are probably cash flow negative as pricing will be down due to lower demand + retrospective credits on top. With production rate down 50%, pricing on parts will be up 10-20%. Plus additional costs to keep suppliers alive. So for the next year I predict 737 line at best cash flow neutral.

787 line I predict cash flow negative for 6-8 quarters. While the 787 brought in big bucks the last 4 years, it will go back to accumulate deferred production costs. Current build models were sold during the height of 787 production with thought of even increasing production more to 14 a month. Now we are realistically 66% down on production, with consolidation of locations coming. So while this will increase margins at lower production levels, this will not kick in for 2+ years. So we have cheap selling prices from years ago combined with massive increases in production costs due to reduced production levels. Also possible build up in inventory as Boeing will have to take parts if contracted even if they cant build the aircraft. This will pressure suppliers to reduce production and increase cost per part.

So we will see apart of the $30B (if raised) slowly evaporate over the next few months. Another big part will be used to reduce debt level, to make sure cash flow will not be depressed by servicing debt years down the road when new developments are needed 2027+.

Realistically the $30B will be used to heal the company long term. I do not see any new development coming for around 5 years. 737-10 is still 2+ years from certification, 77X 1+ years. The latter will probably not become cash flow positive before 2025. Then we will see freighter developments (767, 77XF). So the next new passenger aircraft announcement is 5+ years away. If we believe Calhoun, Boeing will first develop a new cockpit philosophy and then launch something new. Older designs will get an overhaul (787 re engine towards 2030). The 737 replacement will be announced around 2027-2028 with EIS 2035 (20 years after MAX).

MoM I do not see at all. There is no money, demand or will to try a moonshot development. The next new thing has to be a solid win and that is a 180-250 NB replacing the 737. I expect Boeing to pass for the market below 180 pax in the future, as EMB will keep Airbus in check there. The JV would have helped in this regard but from an objective view it is not needed to have a BXYZ offer in this market just for the sake of it.
 
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Wed Dec 16, 2020 1:41 pm

Sokes wrote:
I also doubt B787 will be cheaper to produce in only one location.

It's hard to substantiate that statement. CHS has lower labor rates, more flexible labor terms and conditions, and less Dreamlifter flights per airplane produced.
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Wed Dec 16, 2020 1:54 pm

Revelation wrote:
Sokes wrote:
I also doubt B787 will be cheaper to produce in only one location.

It's hard to substantiate that statement. CHS has lower labor rates, more flexible labor terms and conditions, and less Dreamlifter flights per airplane produced.

Cost of a plane:
Development cost + parts + labour assembly + transport cost + overhead

-overhead:
Interest, depreciation, marketing, lawyers...

I agree labour and transport cost may go down.
I expect the other factors to increase/ plane.
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Wed Dec 16, 2020 1:58 pm

Sokes wrote:
Revelation wrote:
Sokes wrote:
I also doubt B787 will be cheaper to produce in only one location.

It's hard to substantiate that statement. CHS has lower labor rates, more flexible labor terms and conditions, and less Dreamlifter flights per airplane produced.

Cost of a plane:
Development cost + parts + labour assembly + transport cost + overhead

-overhead:
Interest, depreciation, marketing, lawyers...

I agree labour and transport cost may go down.
I expect the other factors to increase/ plane.

But surely Boeing won’t move if it makes it more expensive to build the plane, thereby more expensive for them. If the net gain is negative. What is the benefit. Especially in the middle of a pandemic
 
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Wed Dec 16, 2020 2:02 pm

Sokes wrote:
Revelation wrote:
Sokes wrote:
I also doubt B787 will be cheaper to produce in only one location.

It's hard to substantiate that statement. CHS has lower labor rates, more flexible labor terms and conditions, and less Dreamlifter flights per airplane produced.

Cost of a plane:
Development cost + parts + labour assembly + transport cost + overhead

-overhead:
Interest, depreciation, marketing, lawyers...

I agree labour and transport cost may go down.
I expect the other factors to increase/ plane.

Ok, but having two sites rather than one doesn't make interest, depreciation, marketing, lawyers cost less.

Boeing is addressing the costs it can control and will have even more focus with one site rather than two and a strong motivation to make it work.
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Wed Dec 16, 2020 2:18 pm

Revelation wrote:
Sokes wrote:
Revelation wrote:
It's hard to substantiate that statement. CHS has lower labor rates, more flexible labor terms and conditions, and less Dreamlifter flights per airplane produced.

Cost of a plane:
Development cost + parts + labour assembly + transport cost + overhead

-overhead:
Interest, depreciation, marketing, lawyers...

I agree labour and transport cost may go down.
I expect the other factors to increase/ plane.

Ok, but having two sites rather than one doesn't make interest, depreciation, marketing, lawyers cost less.

Boeing is addressing the costs it can control and will have even more focus with one site rather than two and a strong motivation to make it work.


I think it is important to note, that running two sites at 33% each or one at 66% of maximal capacity does make a significant difference and sure the costs are lower if you only run one site. Still 787 production will be more costly per plane at one site running at 66% of normal production compared to two sites at 100% each with plans to expand.

So consolidation does safe money per aircraft from the state of production right now (12/2020) but it is definetely more expensive per airplane then it was in 2018 as volume is down and parts are more expensive to order in low volumes.
 
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Wed Dec 16, 2020 3:12 pm

FluidFlow wrote:
I think it is important to note, that running two sites at 33% each or one at 66% of maximal capacity does make a significant difference and sure the costs are lower if you only run one site. Still 787 production will be more costly per plane at one site running at 66% of normal production compared to two sites at 100% each with plans to expand.

So consolidation does safe money per aircraft from the state of production right now (12/2020) but it is definetely more expensive per airplane then it was in 2018 as volume is down and parts are more expensive to order in low volumes.

All true, yet we find ourselves in a world where the demand side of the equation is in control, costs must be lowered to adapt to reduced demand.

In 2018 we were already talking about the wide body bubble, now the bubble has totally burst and it's time to find a new way forward.
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Wed Dec 16, 2020 3:18 pm

Revelation wrote:
FluidFlow wrote:
I think it is important to note, that running two sites at 33% each or one at 66% of maximal capacity does make a significant difference and sure the costs are lower if you only run one site. Still 787 production will be more costly per plane at one site running at 66% of normal production compared to two sites at 100% each with plans to expand.

So consolidation does safe money per aircraft from the state of production right now (12/2020) but it is definetely more expensive per airplane then it was in 2018 as volume is down and parts are more expensive to order in low volumes.

All true, yet we find ourselves in a world where the demand side of the equation is in control, costs must be lowered to adapt to reduced demand.

In 2018 we were already talking about the wide body bubble, now the bubble has totally burst and it's time to find a new way forward.


Were the two sites at 100% though? I thought they had been built for 10+ per month each?
 
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Wed Dec 16, 2020 3:21 pm

Any news on if Boeing raised money?

Revelation wrote:
FluidFlow wrote:
I think it is important to note, that running two sites at 33% each or one at 66% of maximal capacity does make a significant difference and sure the costs are lower if you only run one site. Still 787 production will be more costly per plane at one site running at 66% of normal production compared to two sites at 100% each with plans to expand.

So consolidation does safe money per aircraft from the state of production right now (12/2020) but it is definetely more expensive per airplane then it was in 2018 as volume is down and parts are more expensive to order in low volumes.

All true, yet we find ourselves in a world where the demand side of the equation is in control, costs must be lowered to adapt to reduced demand.

In 2018 we were already talking about the wide body bubble, now the bubble has totally burst and it's time to find a new way forward.

Widebody demand isn expected to exceed the current one site demand until 2026 at the earliest. Even then, the one site should grow to 120/year with expansion.

Yes, cost per plane is currently higher and I expect a hit to sales pricing. Cest la vie. Control what you can.

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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Wed Dec 16, 2020 3:28 pm

FluidFlow wrote:
I wonder how much of the raised cash will be needed to compensate for negative cash flow. Chances are high, that the 737 line, 787 line and 77X line are cash flow negative for the next year or two.
This is luckily offset by 767 and 77W/Fs.

Retrospective credits + the shut down and low restart of the 737 line reduces margins by a lot. While already built 737s will be delivered cash flow positive (if they are delivered), currently built ones are probably cash flow negative as pricing will be down due to lower demand + retrospective credits on top. With production rate down 50%, pricing on parts will be up 10-20%. Plus additional costs to keep suppliers alive. So for the next year I predict 737 line at best cash flow neutral.

787 line I predict cash flow negative for 6-8 quarters. While the 787 brought in big bucks the last 4 years, it will go back to accumulate deferred production costs. Current build models were sold during the height of 787 production with thought of even increasing production more to 14 a month. Now we are realistically 66% down on production, with consolidation of locations coming. So while this will increase margins at lower production levels, this will not kick in for 2+ years. So we have cheap selling prices from years ago combined with massive increases in production costs due to reduced production levels. Also possible build up in inventory as Boeing will have to take parts if contracted even if they cant build the aircraft. This will pressure suppliers to reduce production and increase cost per part.

So we will see apart of the $30B (if raised) slowly evaporate over the next few months. Another big part will be used to reduce debt level, to make sure cash flow will not be depressed by servicing debt years down the road when new developments are needed 2027+.

Realistically the $30B will be used to heal the company long term. I do not see any new development coming for around 5 years. 737-10 is still 2+ years from certification, 77X 1+ years. The latter will probably not become cash flow positive before 2025. Then we will see freighter developments (767, 77XF). So the next new passenger aircraft announcement is 5+ years away. If we believe Calhoun, Boeing will first develop a new cockpit philosophy and then launch something new. Older designs will get an overhaul (787 re engine towards 2030). The 737 replacement will be announced around 2027-2028 with EIS 2035 (20 years after MAX).

MoM I do not see at all. There is no money, demand or will to try a moonshot development. The next new thing has to be a solid win and that is a 180-250 NB replacing the 737. I expect Boeing to pass for the market below 180 pax in the future, as EMB will keep Airbus in check there. The JV would have helped in this regard but from an objective view it is not needed to have a BXYZ offer in this market just for the sake of it.


The 737 line may be cash flow negative over the next year or two - however - and you can read the Boeing CFO's comments the undelivered MAX's and 787's and now 777X's will provide a lot of cash when finally delivered which should more than offset line losses for the period of time they are running at lower levels.

How else do you think they accumulated all that debt? Not that much of it was related to MAX cash compensation costs - maybe $10-15B. The bulk of the rest is tied up in pre-paid inventory. The cash flow from Boeing defense would have carried a lot of operating expenses at Commercial. Plus they are sitting on $20B of cash.

Do I think the 777X will deliver 50 frames in 2025 - No - but 36/3 per month sounds reasonable.

The resizing of the company will also allow them to be cash flow positive on new production at much lower rates than before. This is not the same Boeing with the same costs that existed pre-Max/Covid.
 
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Wed Dec 16, 2020 4:21 pm

At a time when the stock market has moved to an all times high, the substantial drop in Boeing stocks could be taken as the true cost of the MAX & misc debacles and Covid-19. By this 'what if' metric Boeing's cost from the two disasters is over $100 billion. While this is a real figure it is only one way of looking at it. Supporting it is this: Old time Boeing fans, including all of their defense divisions, upon seeing losing the entire NB sales for two years, rocketry gone awry, 767, 787 production snafus, the 777X (replacement for the 748 near disaster) delayed two years, then add covid: so how much of the company value might be lost. They might estimate 'half' of the valuation would be close.

I agree, mordantly, that raising $30 billion, and using it to good effect is appropriate. I would even be thrilled to see some sort of MOM arise from the ashes.
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Wed Dec 16, 2020 5:07 pm

morrisond wrote:
How else do you think they accumulated all that debt? Not that much of it was related to MAX cash compensation costs - maybe $10-15B. The bulk of the rest is tied up in pre-paid inventory.

Not to forget deferred production cost.
Though technically they also belong to inventory.

Agreed about defence being significant.
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Wed Dec 16, 2020 8:38 pm

TTailedTiger wrote:
And what shareholder is going to allow frivolous travel expenses just for the heck of it now that they've seen the cost savings and seen proof that the company functions just fine without massive airline and hotel bills?


It hasn't been seen long term that companies function just fine without business travel. Regardless of what the stock market says, things are still a huge mess right now.

I expect we'll see most businesses try to make do with significantly less travel even after the restrictions are up, but I don't know how it will play out. They might see no change in productivity. They might realize there are some things not getting accomplished as cost-effectively as before. I expect it will be several years before we can make any conclusions about the what the long term impact is.
 
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Wed Dec 16, 2020 8:52 pm

FluidFlow wrote:
I wonder how much of the raised cash will be needed to compensate for negative cash flow. Chances are high, that the 737 line, 787 line and 77X line are cash flow negative for the next year or two.
This is luckily offset by 767 and 77W/Fs.


That's what the debt they already took on is for. The suggestion in the CFO's comments seems to be that the stock issue would be replace that debt with the greater flexibility of shareholder equity.

Time will tell the reality, but they have previously hinted at the company having positive cash flow around late 2021 or early 2022, which means 5 or 6 x 787 and 31 x 737 per month. Even if they miss that, they certainly will be a lot closer to positive at those rates than they are right now.

So we will see apart of the $30B (if raised) slowly evaporate over the next few months. Another big part will be used to reduce debt level, to make sure cash flow will not be depressed by servicing debt years down the road when new developments are needed 2027+.


It's already raised (and already evaporating). As of the 2nd quarter end, they had $32.4 billion cash on hand. As of the 3rd quarter end, it was down to $27.1 billion, representing a mix of operating net cash flow and paying down older debt. It should be obvious from these numbers that they need to slow the burn rate quickly, and the 737 being back in operation will be a big part of that. I think cost reduction efforts will be showing their effect starting this quarter, too. Using stock to replace some of their debt will also free them up from some of their interest payments.
 
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Wed Dec 16, 2020 9:27 pm

iamlucky13 wrote:
TTailedTiger wrote:
And what shareholder is going to allow frivolous travel expenses just for the heck of it now that they've seen the cost savings and seen proof that the company functions just fine without massive airline and hotel bills?


It hasn't been seen long term that companies function just fine without business travel. Regardless of what the stock market says, things are still a huge mess right now.

I expect we'll see most businesses try to make do with significantly less travel even after the restrictions are up, but I don't know how it will play out. They might see no change in productivity. They might realize there are some things not getting accomplished as cost-effectively as before. I expect it will be several years before we can make any conclusions about the what the long term impact is.

After the 9/11 downturn, some businesses, including my employer, used business travel to recruit employees and solicit new business.

I think there will be reduced travel, perhaps 75% of prior with 3.5% per annum growth (exponential). But, as you note,it will be years until we know.

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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Thu Dec 17, 2020 12:45 am

Sokes wrote:
morrisond wrote:
How else do you think they accumulated all that debt? Not that much of it was related to MAX cash compensation costs - maybe $10-15B. The bulk of the rest is tied up in pre-paid inventory.

Not to forget deferred production cost.
Though technically they also belong to inventory.

Agreed about defence being significant.


Most of the Deferred production cost was paid for from Cash - Pre MAX disaster and Covid Debt was only around $10B I think without looking it up.
 
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Thu Dec 17, 2020 5:25 am

morrisond wrote:
Most of the Deferred production cost was paid for from Cash - Pre MAX disaster and Covid Debt was only around $10B I think without looking it up.

Max grounding March 19.

https://investors.boeing.com/investors/ ... fault.aspx
Annual report 2018:
p.50:
117, 4 billion $ assets are matched by
0,4 billion equity and 117 billion $ liabilities.
Of the 117 billion $ liabilities, 10,6 billion $ is long term debt. I assume that is what you refer to.

p.60:
inventories include deferred production costs

p. 77:
23 billion $ deferred production cost for B787.

European accounting would deduct that from assets.
Balance sheet would shrink to 94,4 billion $, 117 billion $ liabilities and -22, 6 billion $ equity.

We discussed this earlier. You have the last word.
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Thu Dec 17, 2020 9:34 am

morrisond wrote:
FluidFlow wrote:
I wonder how much of the raised cash will be needed to compensate for negative cash flow. Chances are high, that the 737 line, 787 line and 77X line are cash flow negative for the next year or two.
This is luckily offset by 767 and 77W/Fs.

Retrospective credits + the shut down and low restart of the 737 line reduces margins by a lot. While already built 737s will be delivered cash flow positive (if they are delivered), currently built ones are probably cash flow negative as pricing will be down due to lower demand + retrospective credits on top. With production rate down 50%, pricing on parts will be up 10-20%. Plus additional costs to keep suppliers alive. So for the next year I predict 737 line at best cash flow neutral.

787 line I predict cash flow negative for 6-8 quarters. While the 787 brought in big bucks the last 4 years, it will go back to accumulate deferred production costs. Current build models were sold during the height of 787 production with thought of even increasing production more to 14 a month. Now we are realistically 66% down on production, with consolidation of locations coming. So while this will increase margins at lower production levels, this will not kick in for 2+ years. So we have cheap selling prices from years ago combined with massive increases in production costs due to reduced production levels. Also possible build up in inventory as Boeing will have to take parts if contracted even if they cant build the aircraft. This will pressure suppliers to reduce production and increase cost per part.

So we will see apart of the $30B (if raised) slowly evaporate over the next few months. Another big part will be used to reduce debt level, to make sure cash flow will not be depressed by servicing debt years down the road when new developments are needed 2027+.

Realistically the $30B will be used to heal the company long term. I do not see any new development coming for around 5 years. 737-10 is still 2+ years from certification, 77X 1+ years. The latter will probably not become cash flow positive before 2025. Then we will see freighter developments (767, 77XF). So the next new passenger aircraft announcement is 5+ years away. If we believe Calhoun, Boeing will first develop a new cockpit philosophy and then launch something new. Older designs will get an overhaul (787 re engine towards 2030). The 737 replacement will be announced around 2027-2028 with EIS 2035 (20 years after MAX).

MoM I do not see at all. There is no money, demand or will to try a moonshot development. The next new thing has to be a solid win and that is a 180-250 NB replacing the 737. I expect Boeing to pass for the market below 180 pax in the future, as EMB will keep Airbus in check there. The JV would have helped in this regard but from an objective view it is not needed to have a BXYZ offer in this market just for the sake of it.


The 737 line may be cash flow negative over the next year or two - however - and you can read the Boeing CFO's comments the undelivered MAX's and 787's and now 777X's will provide a lot of cash when finally delivered which should more than offset line losses for the period of time they are running at lower levels.

How else do you think they accumulated all that debt? Not that much of it was related to MAX cash compensation costs - maybe $10-15B. The bulk of the rest is tied up in pre-paid inventory. The cash flow from Boeing defense would have carried a lot of operating expenses at Commercial. Plus they are sitting on $20B of cash.

Do I think the 777X will deliver 50 frames in 2025 - No - but 36/3 per month sounds reasonable.

The resizing of the company will also allow them to be cash flow positive on new production at much lower rates than before. This is not the same Boeing with the same costs that existed pre-Max/Covid.


I am not so sure, that the stored aircraft will actually provide that much cash flow. What do we have, 450 stored MAX that can be delivered. Current rate for a MAX is around $40m. As we have seen with Virgin Australia (i think), airlines are negotiating hard and even cancel and re-order to get current pricing. Putting retrospective credits on top of that, Boeing will probably only get 30-35ish million for a stored max. As this aircraft were already far down the production line, a lot of down payments were already done. On top of that a relative big amount will also go to CFM for the engines. So on delivery, Boeing might get around 10m$ in cash. That is only $4.5b over 2 years.

Pricing will even be more pressed on wide bodies as demand is even worse there. We will see if the deferred production costs will increase again on the 787s and I am pretty sure they will for at least 5 quarters until the consolidated production is stable (mid to end of 2021) and WB delivers start to stabilize. I predict 77X cashflow to be 2 quarters positive in 2022 (when a large badge will delivered) and then be negative again until 2026ish until rate can go above 4 per month. Until then we will see either deferred production costs increasing (if Boeing can make a case for evening out the costs over a large backlog, that might never materialize) or take in losses every quarter on the line and actually book them.

The good thing is, as you stated, that BCA can be subsidised internally with military/government contracts. So Boeing is in a healthy shape but a new program will not be comming, even with the $30b in equity.

Debt will be paid off, currently they only service interest, their new loans do not mature for a while, but when they do Boeing better pay them down instead of renew them, otherwise debt load will depress cash flow and big investments will not materialize in the second half of the decade.

As stated from me and from the CFO, that it will take at least 4 more quarters to become cash flow positive, I predict around 6 quarters until everything is stable.
 
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Thu Dec 17, 2020 10:36 am

Exeiowa wrote:
If ever there was a giant money evaporator it would be share buy backs at high stock prices and issue equity when shares are down. Did none of these people play Railroad Tycoon in their younger days?


I'd go as far as to say that stock buy back should put some restrictions to all companies such as no bailout in the event of any financial disaster as well as automatically protecting the bottom half of the company from being laid off in the event of economic downturn for a period of time.
 
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Thu Dec 17, 2020 12:20 pm

Sokes wrote:
morrisond wrote:
Most of the Deferred production cost was paid for from Cash - Pre MAX disaster and Covid Debt was only around $10B I think without looking it up.

Max grounding March 19.

https://investors.boeing.com/investors/ ... fault.aspx
Annual report 2018:
p.50:
117, 4 billion $ assets are matched by
0,4 billion equity and 117 billion $ liabilities.
Of the 117 billion $ liabilities, 10,6 billion $ is long term debt. I assume that is what you refer to.

p.60:
inventories include deferred production costs

p. 77:
23 billion $ deferred production cost for B787.

European accounting would deduct that from assets.
Balance sheet would shrink to 94,4 billion $, 117 billion $ liabilities and -22, 6 billion $ equity.

Do investors factor in European accounting rules when doing analysis on whether to purchase stocks / bonds in a USA company?
 
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Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Thu Dec 17, 2020 12:25 pm

par13del wrote:
Do investors factor in European accounting rules when doing analysis on whether to purchase stocks / bonds in a USA company?

I don't know.
Why can't the world be a little bit more autistic?
 
morrisond
Topic Author
Posts: 3497
Joined: Thu Jan 07, 2010 12:22 am

Re: Speculation on CNBC that Boeing is going to Raise $30B in Equity

Thu Dec 17, 2020 2:03 pm

Sokes wrote:
morrisond wrote:
Most of the Deferred production cost was paid for from Cash - Pre MAX disaster and Covid Debt was only around $10B I think without looking it up.

Max grounding March 19.

https://investors.boeing.com/investors/ ... fault.aspx
Annual report 2018:
p.50:
117, 4 billion $ assets are matched by
0,4 billion equity and 117 billion $ liabilities.
Of the 117 billion $ liabilities, 10,6 billion $ is long term debt. I assume that is what you refer to.

p.60:
inventories include deferred production costs

p. 77:
23 billion $ deferred production cost for B787.

European accounting would deduct that from assets.
Balance sheet would shrink to 94,4 billion $, 117 billion $ liabilities and -22, 6 billion $ equity.

We discussed this earlier. You have the last word.


Yes deferred Production does include Inventory but that was paid for with cash. That is why Long term debt was so low. Total deferred production cost would have been over $30B including all programs. The increase in Long term debt since then has been used to fund new Inventory/Covid and MAX comp costs - and yes MAX deferred production cost did increase a few billion - but the program with the most deferred production cost (787) has been decreasing.

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