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By Scott Hamilton

Nov. 21, 2022, © Leeham News: When Boeing CEO David Calhoun told his audience at the Nov. 2 investors day (and all those watching on the web) that there will be no new airplane introduced until the middle of the next decade, it was a shocker to some.

Wall Street analysts and investors loved the news. There would be no spike in research and development spending. Free Cash Flow—which is seemingly all that matters to analysts—was forecast to be $10bn by 2025-2026. Returning money to shareholders seemed to be restored as Boeing’s No. 1 priority. The stock price went up 18% in the week after the news.

Calhoun said there would not be a new engine before the middle of the next decade that would support the development of a new airplane. Calhoun ignored advances in airplane/wing design as a contributor to reducing fuel burn, however.

But, as the late radio commentator Paul Harvey used to say, “now, for the rest of the story.”

Since the Nov. 2 investors day, the first since 2018, LNA quickly learned that there was more than expressed at the investors day event.

Summary

• While officials pointed to continuing production challenges, mostly fingering the supply chain, this is only part of the story.
• Quality control slipped not only at the Charleston 787 factory, as has been widely reported. It remains an issue even today.
• Quality control is also a problem at the 737 Renton and 767 Everett factories.
• Quality declined in part because there are so many new hires to replace retirements, early buyouts, and layoffs. These new hires have a learning curve required that slows production and makes quality control challenging.
• Product Development engineers diverted to 737 and 787 production to resolve issues.

In the meantime, Calhoun purchased 25,000 shares of stock on Nov. 8 for approximately $3.87m. Insider purchases like this typically send a message to Wall Street and stockholders that the CEO (or whomever) has confidence in the company's future.