Economics Corner: Where does Boeing go from here?

[El Presidente]

6000 planes on backorder. 

Duopoly in its space. Barriers to entry aplenty. No way a third party can enter.

Labour force connundrum. 

What would you do? Where do you see it ending up?

 

[VeguerosMAN]

I would cut down the cost of operations but in the end I think they are heading to:

[LizardGizmo]

They need to get out of the space business. It’s been a huge failure plus a cash drain and has seriously embarrassed them. Maybe Bezos will take it off their hands?

As far as the commercial airplane side, they need to hire a proper executive to focus on safety and changing the company’s culture - as opposed to the accountants running the place laser-focused on share price and market cap.

The US Gov’t will never let it fail, as the economic domino effect would be massive. There are millions of people employed by Boeing via its subcontractors.

It’s a mess and a real shame.

[Corylax18]

45 minutes ago, LizardGizmo said:

They need to get out of the space business. It’s been a huge failure plus a cash drain and has seriously embarrassed them. Maybe Bezos will take it off their hands?

As far as the commercial airplane side, they need to hire a proper executive to focus on safety and changing the company’s culture - as opposed to the accountants running the place laser-focused on share price and market cap.

The US Gov’t will never let it fail, as the economic domino effect would be massive. There are millions of people employed by Boeing via its subcontractors.

It’s a mess and a real shame.

Couldn't have said it better myself.

The only thing I'll add is that they are much further away from a turnaround then one executive. The company's culture has been rotting away for decades, from the inside out. I'm usually not a fan of "activist investors" but I think we need to see someone come in and shake up the board of directors, the group that's in there now is a part of the problem, not the solution. 

[VeguerosMAN]

8 hours ago, LizardGizmo said:

They need to get out of the space business. It’s been a huge failure plus a cash drain and has seriously embarrassed them. Maybe Bezos will take it off their hands?

As far as the commercial airplane side, they need to hire a proper executive to focus on safety and changing the company’s culture - as opposed to the accountants running the place laser-focused on share price and market cap.

The US Gov’t will never let it fail, as the economic domino effect would be massive. There are millions of people employed by Boeing via its subcontractors.

It’s a mess and a real shame.

Does it have to be Bezos? I think Musk's Space X is better suited to buy them out.

[ImTripN2]

And where do you guys get your infomation from, internet headlines? Like the door that flew off? You know, the one was removed and replaced by the Spirit Airlines mechanics prior to the incident? If it's Boeing, I ain't going!! What bullshit. For 20 years I lived a stones throw from the Everett WA production facility and have dozens of friends and aquaintences from Boeing, from mechanics to beancounters to flight test engineers. Their safety record is unmatched in the industry and you can check the link below to see results from the last few decades. Yes, the have labor troubles right now, what industry doesn't? But this BS about the 'corporate culture' is just that... BS.

statsum.pdf

[El Presidente]

5 hours ago, ImTripN2 said:

And where do you guys get your infomation from, internet headlines?

....yes 

 

A new report by federal safety experts found major issues with Boeing's safety culture — including a "disconnect" between senior management and other employees and a fear of retaliation when reporting safety concerns.

The report, released Monday, had been requested by Congress and was completed by a panel of experts that convened last March.

https://www.nbcnews.com/news/us-news/boeings-safety-culture-inadequate-confusing-new-faa-report-finds-rcna140647

 

[VeguerosMAN]

36 minutes ago, El Presidente said:

....yes 

 

A new report by federal safety experts found major issues with Boeing's safety culture — including a "disconnect" between senior management and other employees and a fear of retaliation when reporting safety concerns.

The report, released Monday, had been requested by Congress and was completed by a panel of experts that convened last March.

https://www.nbcnews.com/news/us-news/boeings-safety-culture-inadequate-confusing-new-faa-report-finds-rcna140647

 

I heard/read somewhere that Boeing is hiring newbies without any experience due to worker shortages, thus suffering from major quality issues. 

[El Presidente]

4 minutes ago, VeguerosMAN said:

I heard/read somewhere that Boeing is hiring newbies without any experience due to worker shortages, thus suffering from major quality issues. 

Then quote the reference.

[VeguerosMAN]

2 minutes ago, El Presidente said:

Then quote the reference

https://www.wsj.com/business/airlines/boeing-planes-safety-jobs-training-ef6873e6

[LizardGizmo]

9 hours ago, ImTripN2 said:

And where do you guys get your infomation from, internet headlines? Like the door that flew off? You know, the one was removed and replaced by the Spirit Airlines mechanics prior to the incident? If it's Boeing, I ain't going!! What bullshit. For 20 years I lived a stones throw from the Everett WA production facility and have dozens of friends and aquaintences from Boeing, from mechanics to beancounters to flight test engineers. Their safety record is unmatched in the industry and you can check the link below to see results from the last few decades. Yes, the have labor troubles right now, what industry doesn't? But this BS about the 'corporate culture' is just that... BS.

statsum.pdf

I don't think anyone would dispute the fact that Boeing has some of the brightest and most competent minds in the world on their payroll, but leadership issues are major problem for them right now.

Boeing's own 10K from 2023 is pretty self-aware as it relates to safety, trust and overall business operations: https://s2.q4cdn.com/661678649/files/doc_financials/2023/ar/Boeing-2023-Annual-Report.pdf

In the opening statement. The then-CEO states: "Beyond the inculcation of a strong safety and quality culture, we will use the time in 2024 to make meaningful progress on consequential aspects of our commercial, defense and services businesses and our broader recovery plan." He concludes with "Moments like these are difficult —but the moments that drive enduring, positive change always are. Boeing’s history has demonstrated this time and time again. Together, with transparency and demonstrated action, I am fully confident in our future."

In the Risk Factor section they note: "We have experienced and may continue to experience production quality issues, including in our supply chain. On January 10, 2024, the FAA notified us that it has initiated an investigation into our quality control system. This was followed by the FAA announcing actions to increase its oversight of us, including conducting (1) an audit involving the 737-9 production line and suppliers to evaluate compliance with approved quality procedures, (2) increased monitoring of 737-9 in-service events, and (3) an assessment of safety risks around delegated authority and quality oversight, and examination of options to move these functions under independent third parties. On January 24, 2024, the FAA stated that it will not approve production rate increases or additional production lines for the 737 MAX until it is satisfied that we are in full compliance with required quality control procedures. We are currently unable to reasonably estimate what impact the January 5, 2024 Alaska Airlines accident and the related FAA actions will have on our financial position, results of operations and cash flows."

By the way, both the CEO and the Board Chairman at the time of this 10K filing are being forced out effective December 31: https://www.cnn.com/2024/03/25/business/boeing-ceo-calhoun-leaving/index.html

The Netflix documentary "Downfall: The Case Against Boeing" was also pretty damning of their culture and leadership.

[Duxnutz]

Boeing (BA) might spin off the highly profitable defense business, sell the space business (a satellite just blew up on its own, not to mention the stuck astronauts debacle) and probably out the airplane company into bankruptcy or govt protections not unlike GM and Auto manufacturers years ago. 

Too big to fail but possibly in a graveyard spiral. 

[99call]

On 10/30/2024 at 1:12 AM, VeguerosMAN said:

Does it have to be Bezos? I think Musk's Space X is better suited to buy them out.

Or even better...why don't we dig up the cadaver of Howard Hughes, and let him work his magic? 

[Cigar Surgeon]

What's wrong with Boeing is the consequences of their own actions decades ago.  There's some really great articles out there such as: https://www.theatlantic.com/ideas/archive/2024/01/boeing-737-max-corporate-culture/677120/ that break down the shift from an 'engineering and safety' first company to one totally focused on finances.  

https://www.nytimes.com/2024/01/23/opinion/boeing-737max-alaska-airlines.html

That's fine as long as you're running a tech company, but when planes start falling out of the sky it's time to recognize that the culture is not what's best for the aviation industry.

[joeypots]

From the Associated Press, 2/6/24.

https://apnews.com/article/faa-administrator-boeing-safety-oversight-8b8433b3c6c9bcb31980f7a979ce3326

It’s no secret that the FAA, in order to save money, let Boeing inspect much of its own work. Gee, what could go wrong? 

My highlight.

For many years, the FAA has relied on employees of aircraft manufacturers to perform some safety-related work on planes being built by their companies. That saves money for the government, and in theory taps the expertise of industry employees, but it was criticized after two deadly crashes involving Boeing Max 8 planes in 2018 and 2019. 

 

“In order to have a truly safe system, it seems to me that we can’t rely on the manufacturers themselves to be their own watchdogs,” Rep. Colin Allred, D-Texas, said during Tuesday’s hearing.

Whitaker has said that the self-checking practice — in theory, overseen by FAA inspectors — should be reconsidered, but he again stopped short of saying it should be scrapped. But he said closer monitoring of Boeing is needed.

“The current system is not working because it is not delivering safe aircraft,” Whitaker said. “Maybe we need to look at the incentives to make sure safety is getting the appropriate first rung of consideration that it deserves.”

 

 

[Duxnutz]

6 hours ago, Cigar Surgeon said:

What's wrong with Boeing is the consequences of their own actions decades ago.  There's some really great articles out there such as: https://www.theatlantic.com/ideas/archive/2024/01/boeing-737-max-corporate-culture/677120/ that break down the shift from an 'engineering and safety' first company to one totally focused on finances.  

https://www.nytimes.com/2024/01/23/opinion/boeing-737max-alaska-airlines.html

That's fine as long as you're running a tech company, but when planes start falling out of the sky it's time to recognize that the culture is not what's best for the aviation industry.

The first 787 my company was due to receive sat in the desert for a while and then basically became a parts airplane for them due to needing so many fixes and modifications since build. Frankly I hope we cancel our orders and get more Airbus. 

[Dr Process]

On 10/30/2024 at 8:09 AM, LizardGizmo said:

The Netflix documentary "Downfall: The Case Against Boeing" was also pretty damning of their culture and leadership.

Agreed. This was alarming.