Boeing’s Long Term Cash Flows

Subscription Required By Vincent Valery
Introduction
Aug. 19, 2019, © Leeham News:Boeing's long-time priorities, adopted after the 787 program finally was past its troubles, is shareholder value. Boeing has spent tens of billions of dollars over the years in stock buybacks. It has regularly increased dividend payments. In the context of a global aviation boom, the Commercial Airplanes division has generated the bulk of cash flow growth in recent years for the company. The creation of Boeing Global Services is a move toward achieving mid-teen margins for The Boeing Co. Just like any aircraft OEM, the ability to generate cash flows rests on having an up-to-date and desirable product line up for customers. Before the Ethiopian Airlines Boeing 737 MAX crash, things were looking good for Boeing. Assuming a successful resolution of the 737 MAX crisis, Boeing should return to generating strong operating cash flows afterward. However, how long is the current product line up expected to sustain those cash flows and what could Boeing do about it?
Summary
  • Dreamliner: from costly delays to cash flow machine
  • Boeing 777 provided strong cash flows at critical time and 737 rode global aviation boom until grounding
  • Significant production gaps on 737, 777 and 787 appear from mid 2020s, potentially threatening cash flow generation
  • New variants, derivatives and clean sheet design would sustain cash flows longer.
 

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