HOTR: Investors optimistic for Boeing. Are they too optimistic?

By the Leeham News Team

March 10, 2021, © Leeham News: Boeing’s recovery will be long, slow and painful.

But Boeing has been through long, slow and painful periods before.

Investors appear optimistic. The stock price has been rising since lows hit immediately after and throughout the pandemic.

The stock price is far off its high of $440 on March 1, 2019. March 1 was after the October 2018 Lion Air 737 MAX accident but nine days before the March 10, 2019, Ethiopian Airlines MAX crash. The price closed yesterday at $231, abut equal to where it was a year ago today.

Beating McNerney’s reign

Tuesday’s stock price close is also higher than at any time under the 10-year leadership of former CEO Jim McNerney. McNerney never came close to hitting the $200 target price Wall Street analysts say it was the goal set by the Board of Directors.

Click on image to enlarge.

Dennis Muilenburg succeeded McNerney in 2015. The price then was hovering around $150. The 737 MAX entered service in May 2017. By June 30, 2017, the price hit $198. From there, it was on a steady increase. Even the Lion Air crash of a new 737 MAX didn’t interrupt the ascendency, despite a sell-off that lasted a few months.

Through the MAX grounding, the stock continued to trade above $300, sometimes well above it. Only when the pandemic hit did the stock take a deep dive.

Stock on the rise

Since December, save for a short dip, the stock is trading above $200. With Boeing delivering new 737s again, albeit at a low rate, and progress in combatting the pandemic, Wall Street seems optimistic. Clearing an inventory of 450 737s may take until early 2023.

Whether this optimism is overdone is a matter of debate in some circles.

Boeing hasn’t delivered a 787 since October. Production and quality issues halted deliveries as inspections of new-build airplanes got underway. In-service 787s continue to fly.

Officials hope to resume delivery this month, although there is some indication resumption may not happen until next month.

But the pandemic crushed demand for widebody airplanes, the 787 included. Boeing consolidated production from two lines to one. The Everett line was closed. All production shifted to Charleston. Production was reduced from a high of 14/mo to 5/mo. A few Wall Street analysts believe this rate could come down to 4/mo. Boeing may have a 787 inventory of nearly 100 by the time deliveries resume. Boeing previously said it expects to clear this inventory by year-end, but skeptics forecast next year.

How significant and how widespread the fixes to the 787 are isn’t clear. Some suggest the entire in-service fleet must be inspected and fixed. The cost of doing so isn’t known.

Forward losses

Boeing took a $6.5bn forward loss in 2020 for the 777X program. The company warned in its federal filings with the Securities and Exchange Commission a forward loss on the 787 might be required due to lower production rates.

LNA’s Vincent Valery sees a multi-billion dollar forward loss is coming for the 787. The 2020 annual shareholders meeting is April 20. The first quarter earnings call typically is the last Wednesday of April or April 28 this year. If a forward loss is coming, it could be announced in connection with either event.

No stock repurchases, no dividends

Boeing suspended stock repurchases with the grounding of the MAX. Dividend payments were suspended in the first quarter of 2020, concurrent with the global pandemic.

Officials said the first financial priority is to repair the balance sheet and repay billions of dollars in debt incurred to get through the pandemic. Stock repurchases and dividend resumption appear to be years away.

Boeing and McDonnell Douglas merged in December 1997. With the McDonnell family and former MDC CEO Harry Stonecipher becoming the largest Boeing shareholders, shareholder value became the top priority at Boeing.

Since 1998, Boeing repurchased nearly 593 million shares at the cost of $63.5bn—the equivalent of 4-6 new commercial airplane programs, excluding dividends paid.

Boeing faces the need to develop a new airplane to replace the slow-selling 737-9 and 737-10 to compete with the Airbus A321XLR and fill the mid-market gap above. There is also a need for a new airplane in the 125-150 seat sector where Airbus has the modern A220 family. The 737-7 MAX sold worse than the MAX 9 and MAX 10.

Boeing’s cash flow will be low for the next two or three years. But by 2023 or 2024, Boeing needs a new airplane, or it faces falling further behind Airbus for the rest of this decade and beyond.

178 Comments on “HOTR: Investors optimistic for Boeing. Are they too optimistic?

  1. It’s very educational to watch commentators on CNBC (which is a superb business channel) talking about a number of continuing topics, which have been on the radar for months:
    (1) Because returns on deposit accounts and bonds are essentially zero, investors are being forced to turn to riskier assets in order to earn some yield. Stocks are the obvious example, though cryptocurrencies also fall into this category. So there are more anglers around the same pond — which pushes prices up.
    (2) Trading apps like RobinHood — which work without commissions — have attracted small retail investors (usually millennials), who engage in risky activity such as short selling, options trading and day trading. These people don’t read balance sheets.
    (3) Tech stocks did well during lockdowns because of the perception that tech was enabling “work from home”. That run is now petering out, and a rotation is occurring into so-called “re-opening stocks” — i.e. *anything* that has to do with travel, hospitality, catering, entertainment, etc., because it is felt that those sectors are going to boom in the coming months. Airlines and Boeing are included in this category.
    (4) There’s a difference between price and value. Price is determined by the ratio of buyers-to-sellers, whereas value is determined by what’s on the balance sheet. Rookie investors don’t get this. Oscar Wilde wrote that “A man can know the price of everything, and the value of nothing”.
    (5) There’s a difference between investing, trading and betting. At the moment, a lot of what’s happening is betting.

    Add all of this up: for months there has been a gross disconnect between stock price and underlying health for *many* assets.
    Where Boeing is concerned: regardless of what its stock price is doing, its balance sheet and outlook are in an appalling mess.

    • Boeing Back-down in Dividend:

      The Pandemic was not the cause of the dividend change, it was the Political exposure (blowtorch) that Boeing as asking for US Treasury back and borrowing 13 billion to pay the dividend despite both the MAX and Covd impact.

      If Harry and Megan had done their interview then Boeing could have gotten away with it slipping under the PR radar.

    • Bryce: Stock Market:

      You have a very distorted and non factual view of the stock market.

      I have had investments in it for 40 years. There are safe areas that return a reasonable investment and there are also risky areas.

      At worst through 3 major financial meltdown, we never lost the principle and it has been a steady gain. We are now are drawing out of the accounts and its still growing.

      No, its not 20% a year gain, but with the right financial adviser (I would suggest Edwards Jones) you can navigate the market outside the Robinhood BS.

    • Stock Market Assessment:

      The issue is that the stock market assess on a company gouging employees and its share buy back and dividends.

      None of the people doing the analysis are mechanics, engineers, scientists.

      they don’t understand the industry they are portending to advise on.

      I remember when they went after Costco for treating its employees too good and not ripping them off and drove the stock down.

      That does not mean their are not firms that do well for their customers, but its the ones that exhibit integrity and back the reforms that do so.

      We now pay our financial guy directly rather than them getting a cut from a mutual fund or stocks to sell them.

      Its all about integrity and companies like Boeing Management has none and the big shakers and mover love those kind.

  2. Further to above, here’s some interesting stock-related data for Boeing, from the Nasdaq site. Note that:

    (1) PE (Price/Earnings) ratios should generally be less than 25, though exceptions are often made for high-growth companies that invest heavily in R&D, which can have “healthy” PE ratios up to about 50. Boeing’s forward PE ratio for 2021 is more than 800, and for 2022 is over 50.

    (2) PEG (Price/Earnings Growth) ratios should be about 1 (one). Values above this indicate an over-valued stock. Boeing’s current PEG ratio is over 200.

    https://www.nasdaq.com/market-activity/stocks/ba/price-earnings-peg-ratios

    • PE are for good/reasonable times in a company’s life. Not during really bad times as Boeing is experiencing with the 737 & Covid. As Boeing’s crises is something temporary (hopeful) you should look more at earnings after the crises is over (like in 5 year). Boeing is than reasonable priced considering the fact that the whole of Wallstreet is massively overprice

  3. Years of financial engineering has left Boeing in a difficult position, too much debt, too few products. They have a whole series of challenges before they can look at getting back to the cash cow dividend machine they had become. As an investor i suppose it really depends on how you see the current position as to whether it is a good punt. The critical question being whether this is the end of the bad news, every time you think things couldn’t get any worse something else seems to pop up to damn the company further.

  4. This article raises important questions about realistic valuation of an unstable stock in an less than stable industry in an unstable economy

    BA -Burdened with debt, with very reduced income, yet obliged to persuade WS and /or the admin it is capable of developing a new plane under circumstances where the last three have turned out failures (not counting the frying DCK)

    US infrastructure, marked in hazardous disrepair by ASCE, aviation is a D

    Contrast –

    https://www.globaltimes.cn/page/202102/1216584.shtml

    Transport infrastructure rapidly to expand within China connecting into the surrounding region as far as Europe

    • @ Gerrard
      And, despite having a balance sheet that is already appalling, Boeing is again going around with its hat in its hand, looking for a further $4 billion loan:

      https://www.thestreet.com/investing/boeing-ba-credit-line-aircraft-slump

      But, even from such a dud stock, astute professional traders can make an attractive profit: they can buy low (despite the bad state of the company), wait for all the rookie investors to pile in and jack up the price, and then sell at a profit. As I said above, there’s a difference between investing and trading 😉

      • @Bryce

        It is possible that WS is playing with the company share price merely to profit from trading, but it is more likely that by loading up the company with debt better to profit from the coming failure and bankruptcy

        ‘Wall Street turned America’s corporate debt burden into its most attractive product. That would have profound consequences for how companies are run.”

        https://www.ft.com/content/c732fded-5252-4333-a3f8-80b767508bbc

        I would like to throw open this conversation and invite comments from a contrarian and dissenting viewpoint – @Rob please discuss

        • Sorry, I have to agree with you.

          The big investors thrive on false highs and melt downs and selling off the parts.

          They want chaos.

  5. To quote Warren Buffett: “Price is what you pay, Value is what you get”. As Bryce has pointed out above, the price of a stock is more about the number of anglers around the pond and the Fed providing free bait, rods, coffee, sandwiches and armchairs with cushions to all the anglers.

    The Value of Boeing is about how much money it has left each month after it’s paid all its bills (known as Free Cash Flow). It doesn’t matter whether Boeing’s share price is $100, $200 or $400, its underlying Value is a multiple of its Free Cash Flow (or its P/E or PEG or PEGY if you prefer those metrics). In FY2020, Boeing’s revenues were $58Bn and it lost $19.7Bn. It has net debt of $38Bn, and $25Bn in cash. The picture is pretty clear – Boeing is losing money hand over fist, but it’s OK for the moment because it has cash in the bank (and probably agreed but unused further lines of credit). You can do the numbers for yourself – if Boeing doesn’t do something fast, it will run out of money or be forced to borrow so much that all its future cashflows will be used to pay interest on the money it borrowed and it will never be able to finance new airplanes. None of which has anything to do with its share price.

    • @ Sploddox
      Continuing on your astute analysis: when looking to the future, investors need to be wary of the difference between “revenue” and “earnings”. Boeing has developed a nasty habit of making sales with very meager margins — for example, we know that the MAXs sold to Alaska / Ryanair / United had little-to-no margin, and that the A330neo is putting margin pressure on 787 sales. Boeing may ultimately succeed in selling “normal” numbers of planes again (not at all certain)…but its balance sheet won’t benefit unless the margins are healthy. Meanwhile, interest payments continue their relentless erosion of cash.

      • Selling price is one part, but spares and support makes money year after year. So helping airlines flying more generates money on average. It is a bit like trucking as they “sell the truck 3 times” thanks to spares and services consumed when they run.

        • Well add in the variation that Mfgs don’t care if the customer goes broke ad long as they sell an Airplane or a Truck.

          Then it sits and some sucker comes along and wants to get it running again and you sell all the services to do that.

          You have your sustaining customers (Singapore, Alaska, Delta) that underlying it but you make the margins on the turn over.

          Right now there is a steel bar in the spokes for airplanes.

          Oh, and the 787 rims are all cracked so you have 80+ sitting while they get new rims shimmed up.

        • But is Boeing selling the parts? Engines are done by the engine makers and interior are AFAIK independent companies. Are those not the two big upkeep costs?

          • The Engine manuf. are the big spare parts sellers but Boeing Services have substantial commercial, military and space service revenue. The “best” is software services with little capital investment and steady revenue stream of revisions of certified interconnected software packages both of your own and suppliers induced revisions. You fix some bugs and introduce new ones while invoicing everything..

  6. I think it is important the system of short term cash flow management, dividends, buy backs and perceptions determining stock value and executive compensations is overhauled.

    This failed to support a safety culture and long term strategy. Safety became an assumption, regulators became a threat to competitiveness, long term investments a short term stock value (salary) risk.

    Pay the executives a good fixed salary, increased by performance indicators on long term competitiveness, integrity and added value for US aerospace. The generous US tax payer has a stake here.

    • You have that right but sans a miracle I don’t see it happening.

      The dollar is mightier than my vote. They got billions of votes and I have one.

    • The shareholders select the board of directors who should direct the CEO and his management team. If the shareholders are too greedy wanting too much money now and not invest in future products in an orderly way then the company starts a long slide downhill. In aerospace you can get massive goverment help now and then but shall not be totally dependent on it.

      • do they really “select” or only nod off some presented selection?

  7. When looking ath changes in price also need to look at the trading volume. Bumped along mostly 3-5m for years until Jan last year then soared to a high around 65m in June and is now spending its time sort of 10-20m.

  8. RR just about to report, same thing.
    It looks to me that FCF is all that counts.

  9. Slight typo in the 3rd paragraph:

    The stock price is far off its high of $440 on “March 1, 2020”. March 1 was after the October 2018 Lion Air 737 MAX accident but nine days before the March 10, 2019, Ethiopian Airlines MAX crash. The price closed yesterday at $231, abut equal to where it was a year ago today.

    Shouldn’t that be 2019?

  10. If basing purchase decisions on stock price dynamics is one’s thing, go nuts. To me, major product lines are either locked in by the competition, or have a ticking project accounting bomb. BA is heavily indebted (~$110 per share as of Q4). With Altman Z-Score of 1.22 and Piotroski F-Score of 1, indicators speak for themselves. And nearly all of this stems from a misplaced corporate culture (short term management by objectives is some of the worst forms) that also will take many years to redirect, if the supervisory board elects to even initiate necessary changes.

    Unless Boeing miraculously develops a new cash cow or moves back their HQ to their production facilities, I unfortunately don’t see much of an impetus to consider the company for investment.

    • Doesnt sound right , $110 per share debt? With 569 million shares on issue that comes to $62.5 bill.
      I understand its nett debt excluding ‘cash equivalents’ is around $20 bill ?

    • @ Frank
      Excellent comment.
      So, when someone buys a Boeing share ($245 at close yesterday), almost half his “investment” ($110) is effectively going straight into a creditor’s pocket. The remaining portion will be used to make interest payments, award fat remunerations to execs, pay huge fees to teams of lawyers defending BA against endless lawsuits, fund crippling revision/compensation costs for grounded/delayed airframes…and fund the odd bit of PR hot air regarding fantasized new airframes such as the NMA.
      Not a very sound investment 😉

  11. Defense, Space, land and other assets makes me think things are not totally hopeless. Also The Duopoly Syndrome… Airbus’s present CEO strikes me as a “money man,” you know like the long gone but not missed @#$&s that drove Boeing into the ground. We’ll, not just like the Boeing ones, I mean he has a soul and seems to be doing the right things. He also understands the NSA situation, and will do all the right moves to be real darn competitive.

      • @ Gerrard
        I was going to make a similar point, but you beat me to it.
        Regardless of whether or not COMAC ever sells a single plane in a “western” country, they’re (ultimately) still going to get a nice slice of the worldwide cake…particularly in Asia, on which Boeing/Airbus are increasingly reliant for sales (40%). The writing is on the wall for the old duopoly.

        • @Bryce

          Yes –

          China takes infrastructure very seriously, and that transport and logistics is a very important part…etc sure enough that they will invest enough time money and skill to make sure they are self sufficient, dominate home as well as region

          As per Belt and Road

          They’ll not offshore such an industry nor continue in dependence on import

          The contrary to the achievement of the US with various key industries

      • Defense is Boeing ace in the hole.

        Once committed to a product line the military is stuck with making it work.

        The F-35 is Lockheed 787 and Boeing is starting to leverage that abject failure into sales of F-15 and F/A-18 .

        DOD is discussion a massive redcui9on in F-35 buy down to 1000 (I think 2700 at one point).

        New Concept: Do not screw up a good old program and you can make money on that stuff! (AH-64, Chinook, V-22 ) (and the less said about the Bitter Lemon Tree KC-46 the better)

      • I agree, competition will be ferce in aerospace going forward. But I also tend to think two important variables play a big part in airline CEOs buying equipment. A. The absolute latest and greatest technology; and B. Safety and the perception of safety by the customers. Will there be a great market acceptance of COMAC products World-wide? I still think circumstances favor BA and AB.

        • Yep.

          COMAC is now portending a 939 (777/A350) , they barely have a DC-9 knock off in service, they 919 is not after all these years and the 929 is falling apart.

          China is still in copy cat category no matter what the cheerleaders say.

          Not sure why they cheer for dictators over Democracy but there it is.

          • I think to underestimate China’s abilities is unwise.

        • COMAC does not have enough capacity to sell* to the West for years. It will have shown its safety by not crashing when the time comes for sales in the West.

          *maybe a 100 to Ryanair to proof to the Chinese that they are safe enough for the West or something like that. But the first 1000 will be sold in East Asia & the countries that are lightly sanctioned by the West

          • @Char

            Oh? ‘enough capacity’?

            Just Like every other product China sells to the West, and to everyone else – your facemask included

            Capacity has never been an issue

          • @ char
            Conversely:
            BA does not have enough capacity to sell* to the non-West for years. It has shown its lack of safety by crashing archaic MAXs (longest grounding ever) and having to re-assemble 787s in months-long hangar visits (program has now been subject to two groundings).

            *maybe a 100 to some Asian or African LCC in a margin-less attempt to score a PR coup.

            p.s. With the exception of Australia and Japan, no other country in Asia-Pacific has yet followed the FAA/EASA in un-grounding the MAX. It’s now 4 months since the FAA un-grounding…

        • @sam

          You are right – it will take a little while for COMAC planes to become widely accepted and sought after, in the ‘West’

          How long did it take for China pharma products to dominate?

          Lazy talk of second rate products, it will not happen, is quickly replaced by panicked demands to bring industries back before we all….whatever lazy talk replaces the last

          • Planes are not electronic gadgets that you sell cheap and they fail and you replace them.

          • @TW

            I wrote about pharma not the phones children like

            The pharma, all that’s keeping you alive right now, most of it originates in China

            Plus…the list is long

            Saying that Asians, first the J, then the SthK, now the C, can’t make the real thing is always proved wrong, it’s lazy talk designed to make sure no body has to worry, meanwhile everything is offshored

            Read

            https://www.americanmanufacturing.org/blog/president-biden-just-signed-an-executive-order-to-examine-supply-chain-weaknesses-heres-what-he-should-do-next/?

          • Yes, these trade deals are exceedingly misleading and cloaked in secrecy. The USITC is coming up with a TPP replacement that will be hailed as groundbreaking and ecomically needed. Be prepared for even more off shoring and technology give-aways.

          • @Sam

            ‘technology give aways’ are the inevitable result of the offshoring process, which is just giving or in fact selling production to a far away country instead of taking the trouble to actually build what you call your own product

            This is lazy when it is not dishonest – to complain that the guys who actually do your work for you then come eat your lunch is ridiculous

            Biden is talking up infra upgrades and on shoring…it is not easy to relearn how to do things the hard way when for a couple of generations at least the whole economy has been running on empty

      • Well with Boeing just about ready to announce an order from Southwest Airlines for 100s of 737MAX-7s, that’s going to reinvigorate them a fair amount. What I’m reading says they’re going toe-to-toe with Airbus’s A220-300, and Boeing’s winning… BA is still a strong force.

        • @ sam
          As discussed above, sales with little-to-no margin do nothing to help BA’s balance sheet. Meanwhile, all those debt servicing costs have to be paid. And debt rollovers are becoming unattractive, because interest rates are now starting to rise.
          If BA wins this order, all they will have proved is that they’re so desperate to avoid a PR coup by Airbus that they will pay any price to avoid it.
          The discount store of aviation.

          • @Bryce

            I think this is accurate – BA is now in a death spiral, to sell their products to one or two ‘key’ industry clients they are prepared to cut their prices to below cost

            AB has the cash to chase BA down on price – but can be clever at doing no more than forcing BA to cut to the bone

            BA can not service debt, let alone think of or plan a new plane, when sales are to be continued to be made at a loss

            @Rob – comments please on this BA Business Plan

          • Airbus knows SWA and the price to make them switch is too high presently as they cannot produce the A220 for the selling price yet. It will take a few block changes in the coming years, it would be different if SWA ordered just 50ea. Then Airbus can take the loss and motivate its suppliers to work even harder to produce components cheaper and better. If AA as an old MD80-PWA operator ordered 400ea with well spread out deliveries over decades Airbus might jump and have its suppliers commit to new prices as a function of volume per year.

        • @ sam
          Don’t forget to look at *net* orders before hanging out the bunting!
          February: Boeing had 39 MAX orders…but 32 MAX cancellations. And that was excluding the big Norwegian cancellation that has yet to kick in (after the legal wrangling stops).

        • If Boeing hadn’t put MCAS in and all its poorly thought out interface with flight control and sensors, we probably wouldn’t be having a discussion about their weak and dated product line. I cannot disagree with all the criticism of Boeing. But, I ascertain there could very well be a “Flight of the Phoenix” type recovery here with all the positives Boeing Aircraft has going for it – mainly tens if not hundreds of thousands of engineers motivated to get going on the new NSA and NMA programs. All they need is visionary leadership and money… I worked for McAir at the time of the merger. They did not have leadership. McDonnell felt forced to buy Douglas. Consequently, we know how that turned out. I think these are different circumstances.

          • @sam

            Re MCAS insertion -it’s not the crime it’s the cover up

            MCAS was not a mistake or an error: it was the cumulation of regulatory capture of spinning out a dead plane model via broken engineering towards eternity to deceiving the customer to paying attention only to accounting trickeries and short term shareholder comfort

            ‘visionary’ leadership ?

            What’s done BA down is not the exceptional stupidity of their dumb BoDs or CEO’s, but their commonplace conformity with the general drift of the US economy into loss of knowledge and respect for engineering and manufacture in the rush to succumb to craven worship of financialisation of every particle of the business

            I’m sure you’ll agree

        • @Sam: Remember the massive discount BA gave UAL to block sale of Bombardier C-series?

          OTOH what’s the timeline of MAX 7 certification?

  12. FG: Leonardo in talks for aerostructures role on CR929 widebody
    Leonardo is lining up a role as an aerostructures supplier for the CR929 widebody programme being developed by Russia and China under the CRAIC joint venture.

    • That isnt going to go down well…batting for both teams ?
      Leonardo does 787 fuselages , stabilizers as well. I dont see Leonardo doing major work for CR929 at all, and may just be speculation

      • China will only use Leonardo to steal or try to steal intellectual property, like so many others they will see the light.

        Boeing is not going to let them use any 787 derived process.

        • @TW

          Someone wants to copy the 787?

          Huh? And lose as much money as BA? And have their planes sitting in the shop? And …Laughingstock?

        • The chinese version of the DC-9/MD80 the ARJ21 had US manufacturers as direct suppliers, when it came to the C919 program ( which some claim to be a close copy of the A320) the deal had changed to the US suppliers set up joint venture business in China.
          In aviation parts can be copied or substituted by near or better equivalents ( and is a problem in the spares market) but reverse engineering the certification process is far far harder to do and cant fool real experts.

          • @DoU

            ‘reverse engineering the certification process is far far harder to do and cant fool real experts.’

            The FAA certification process is as dud as the 787

            Why should anyone wish to copy either –

            Both make you – the Company the Administration – dumb, make you look dumb, and cause you loss of money

            And, in the case of the Max, and the Max cert, other people lose their lives

            The certification process in the US certainly fooled a lot of people for a lot of the time, even real experts

          • “Certification framework in the US”

            A carefully and intentionally designed entry hurdle.

            One reason back then why FAA:ETOPS was created instead of following the ICAO expanded “90minutes” going forward:
            to hamper the leading in the field Airbus product.
            You see similar activities today with excruciating materials sourcing paperwork : was your product ever touched by smelly socks?
            Gaming any/the system is the most popular US corporeate sport.

      • @ DOU
        Spirit Aero does work for both Boeing and Airbus, so why shouldn’t Leonardo do work for COMAC?
        The same applies to engine manufacturers, who supply products to various different airframers.
        Boeing demands steep discounts from all its suppliers (in order to prop up its shaky balance sheet, and fill exec pockets); perhaps COMAC will be less stingy in that regard.

  13. “The wake up call of the Max was something that told them that all was not right.”

    “Why was this allowed to happen? Why didn’t you listen? Was this ‘Were we too arrogant? Too maverick? Did we know it all? Who can tell us, we are Boeing.’ No. All that has to change-a little bit of humility. Understand what you look like from the outside.

    In two separate pieces in recent weeks from
    @theaircurrent, Boeing’s biggest single-aisle (Southwest) and twin-aisle (Emirates) customers have delivered it the starkest of warnings.

    https://mobile.twitter.com/theaircurrent/status/1369702704100962304

    • Tim Clark of Emirates:

      “Culpability for the culture, strategy, direction, priority of that company rests with the Boeing board and nobody else. And that’s where the buck should stop. And that’s where they need to get themselves sorted out.”

    • This was (still is?) a Hammer in Hand process.

      When your only well exercised and first order successful tools are over the top lying PR and twiddling the FAA …

      Add in that most people look at problems as “focused applied tool use” and less as “domain for deeper analysis demanding different tools”.

  14. Let’s go back to something Scott said:
    “McNerney never came close to hitting the $200 target price Wall Street analysts say it was the goal set by the Board of Directors.”

    Alternatively the Board might have set this goal: “long-term success with our products in the marketplace and being the preferred supplier for our customers.” That was [more or less] Boeing’s vision in the mid-90’s.

    This is a key point. Investors are completely OK with harvesting Boeing’s legacy value to drive up stock price, then selling out and moving their money to some other investment vehicle. McDonnell Douglas investors did that, and don’t apologize for it.

    Boeing’s current leaders still see everything through the lens of diverting free cash flow to share buybacks and higher stock price. They will continue to sacrifice long-term competitiveness for that goal. I’m eager to hear them announce a new goal. Until then, …..

    • > Boeing’s current leaders still see everything through the lens of diverting free cash flow to share buybacks and higher stock price. They will continue to sacrifice long-term competitiveness for that goal. I’m eager to hear them announce a new goal. Until then, ..<

      Thirded, and verily; only I think "leaders" should be in scare quotes. Let's see real evidence of a new airplane, rather than
      press releases touting *vaporware*. Until then..

    • There are always dissenting opinions in any large organization. Similar to Jim Marko at TCCA, and no doubt others at EASA and elsewhere. Those opinions should be expressed, and the right to speak is supported by those organizations. But they remain outliers from the majority view as determined by the investigative science, which involved tens of thousands of hours of review, testing and certification, by hundreds of people spanning multiple international agencies.

      This person has stated in the article that he participated in the MAX recertification and saw that MCAS and the MAX were very thoroughly tested. But he disagrees about the need for MCAS, which is a subject covered in the findings and the summary report for the AD. That remains the minority view. As is the viewpoint on auto-throttle operation, which was not found to be a contributing factor in the accidents.

      • The story says some of the autothrottle actions during ET302 flight were ‘new’

        “Jacobsen’s letter adds something new about the inadequacy of those instructions: There was no mention of an issue with the autothrottle — the automated system controlling the thrust of the engines — that added to the jet’s excessive speed and made it impossible to manually bring the jet’s nose up.

        According to the interim investigation report released a year ago, the faulty Angle of Attack sensor on Flight ET302, even before it triggered MCAS to push the plane’s nose down, interfered with other sensor readings of altitude and airspeed.

        Registering the plane as still below 800 feet above the ground even after it passed that threshold, the jet’s computer had the autothrottle maintain full takeoff thrust for 16 seconds after it should have reduced the power for the climb phase……Again because of the faulty sensor on the left, the flight computer detected the discrepancy between the left and right airspeed values and flagged the data as invalid. Unable to validate the aircraft’s speed, the computer stopped sending thrust instructions to the autothrottle.
        As a result, the engines remained at maximum thrust for the rest of the fatal flight.”

        Adds some more information that isnt widely known and why the ET302 was at such high speeds when it didnt need to

        • Duke,

          I don’t think the article says that Jacobsen is claiming that the autothrottle action during the ET302 flight was ‘new’, as in, different from previous 737 versions. It’s just that Jacobsens’s letter fills out the role that the autothrottle played in the crash more than what was previously reported.

          • Thanks , that was what I was meaning to say. The high speed was often mentioned as part of the ‘blame the pilots’ approach, and its interesting to now see it explained was ’caused’ by the planes auto throttle response to the faulty AOA .
            In addition this part of the story intrigues me
            ‘Since the FAA acknowledges that the 737 MAX “is stable both with and without MCAS operating,” Jacobsen thinks it should grant an exemption to the certification requirements that make MCAS necessary.”
            But apparently the FAA has disagreed – unless its Boeing asking for an exemption…. /sarc….and another top level safety engineer struggles to find work after retirement even with minor companies who need help with certification paperwork for their product.

          • The behavior of the 737 auto-throttle, in the absence of valid air data, is to hold the last known good value. It also signals this action with a flashing red annunciator. This is the behavior that is trained to 737 pilots.

            The FAA and other regulators found that this behavior of the auto-throttle did not create an unsafe condition, therefore was not addressed in the AD.

            It was a focus of the ET302 interim report, and likely will be a focus of the final report as well. Thus is not new in any sense. As with the other points raised by Jacobsen, just a difference in opinion as to how meaningful it is.

          • The auto throttle action wasn’t the issue raised but instead Boeing’s advice to pilots on the actions to take to ensure no adverse results occur.
            And no the FAA technical advisory committee report from late last year said Boeing should change it’s action sequence for pilots. So it was ‘unsatisfactory’. But you are entitled to your opinion

          • The instructions were added to the checklist to disconnect auto-pilot and auto-throttle, as a clarification. But notably this does not alter the behavior, the auto-throttle still holds the last value on disconnect. Also the auto-throttle disconnects on manual movement of the throttle levers, by pilot intervention.

            In JT043 and JT610, the throttles were reduced by the crew, although belatedly as they too were distracted by the other problems. But neither flight reached an overspeed condition during their climb.

          • Back in the news again, as yesterday (March 10) was precisely two years since the Ethopian crash. Poor BA/FAA: the scabs get repeatedly picked off their wounds, as the torrent of bad PR continues to flow.

            “U.S. selects compensation Feinberg firm to oversee Boeing 737 MAX victim fund”

            https://www.reuters.com/article/us-boeing-737-max-fund-exclusive/exclusive-u-s-selects-compensation-feinberg-firm-to-oversee-boeing-737-max-victim-fund-idUSKBN2B22DO

            “While Boeing has mostly settled Lion Air lawsuits, it still face more than 100 lawsuits in Chicago federal court by families of the Ethiopian crash asking why the MAX continued flying after the first disaster.”

            “The Justice Department said in January, “Boeing’s employees chose the path of profit over candor by concealing material information from the FAA concerning the operation of its 737 Max airplane and engaging in an effort to cover up their deception.””

            “The DOJ settlement was pathetic,” said House Transportation Committee chairman Peter DeFazio in an interview Wednesday, who faulted the settlement’s focus on a couple employees and not the board or executive team. “I think they’re still way-too Wall Street dominated.”

          • @Bryce

            It is for sure that BA/FAA has a lot riding on this ET law suit

            The chance for Congress et al to step in with sweeping reform and for PE to take a debt burdened and disgraced company private, the better to play with it’s parts

            But very nearly all commentors here agree with the positions set out by Mr Hamilton in the article above

            And, with all due respect, I hope you will not mind if some adverse dissenting PR BA comments can be teased out of the woodwork in order to give the debate some bite

            Some might say BA should be taken private, offshored, even at the expense of leaving the DoD with the dead duck program

            Let’s hope someone puts up an argument for a radical solution and alternative to the sad parade of decline same old failures same old corruption same old greedy BoD faces

          • Rob , your summarisation of the autothrottle changes is misleading

            This is what The FAA Technical Final Report did say: pg 22
            “The proposed revision to the Stabilizer Trim Inoperative checklist in the QRH has a step to disengage the autopilot, but there is NOT a step to disengage the autothrottle”

            Its clear Boeing did NOT include the disengage autothrottle step in the QRH ( quick reference handbook).
            https://www.faa.gov/foia/electronic_reading_room/boeing_reading_room/media/737_Technical_Advisory_Board_Final_Report.pdf

            This wants the prime cause of the crash but the autothrottle over rode the pilots lower speed inputs as the plane climbed and accentuated the roller coaster actions as MCAS kicked in and added the confusion for the pilots as they tried to follow the QRH guides.

            Hardly a ‘clarification’ but another example of a sloppy introduction by missing a vital step of the Max and its pilot information ( or lack of information)

          • Duke, the pilots have ultimate responsibility for control of the aircraft, including speed. The auto-throttle did not “override” anything, it held the last value as it is designed to do, in a failure mode, while signaling the fault to the crew.

            The crew punched in the desired speed to the affected left-side flight director, expecting the malfunctioning left-side automation to control the airspeed for them. At no point did they switch to the functioning right-side, which is part of the checklist.

            The right-side also clearly alarmed the overspeed condition to the crew, who ignored the alarm in favor of the malfunctioning left-side instruments, and also ignored the third set of reference instruments, which were also correct.

            All that was required of the crew to avoid the overspeed condition, was to manually adjust the throttle, instead of continuing to use automation that was alarmed as non-functional.

            You can argue that Boeing did not specifically tell them to manually adjust the throttle in the checklist, therefore they could not be expected to do so. That is the world we live in today. But they also ignored overspeed warnings, and did not reduce throttle even when the aircraft was in a high-speed dive, and never used the functioning right side instruments, in accordance with the checklist.

            So they knew the aircraft was over-speeding, they knew the throttles were at 95%, they knew the auto-throttle was not working. Still they relied on the automation instead of a simple adjustment of the throttles, which occurred on JT043 and JT610.

            All of which are consistent with viewing the aircraft through the lens of automation, instead of the lens of hands-on pilot control. As is well documented in the recurring issue of over-reliance on automation. And why the upset recovery training is now mandatory.

          • @ DoU
            You’re wasting your time. It has always been Boeing policy to pin accidents on pilots — and that’s that.
            The fact that pilots are put in an un-flyable situation by bad Boeing design/implementation, is never of any relevance to a true Boeing acolyte.
            But, in the case of the MAX, the pilot-blaming has an upside: the plane now has the image of being un-flyable by normal, mortal pilots, so what sane airline would want to order that today (apart from a few dollar-hunting sharks in the US…and Ryanair)? After all, it’s an over-compromised 1950s-era “cable-and-pulley” dinosaur that requires cooked re-cert flights, 24/7 chaperoning flight monitoring (a world first), babysitting pilots (a world first), and constant drilling to “keep your finger on the pickle switch” in order to get back in the air. Apart from Australia and Japan, the whole of the Asia-Pacific region has it sitting firmly on the ground.
            Boeing acolytes can do all the pilot-blaming they want: none of it will help to improve the lot of this technical and PR fiasco.

          • “”The auto-throttle did not “override” anything, it held the last value as it is designed to do””

            If pilots set a speed into the autothrottle, the damned bastard autothrottle has to follow what pilots want.
            It’s the same as if pilots switch the autothrottle off but the bastard autothrottle is keeping the last speed value and can’t be switched off.
            Boeing’s bastard design is criminal without independent software audit.

        • FAA let the autothrottle problem slip pass without any modification??

      • @Rob

        This comment is off topic

        Please comment on the subject of the post – can BA find any money enough to build a new plane, or two

        Please address the issues not lose yourself in gossip about who said what to who, too much chitchat not enough fact

        • Not to horn in here, as we wait for Rob to reply, but Boeing Stock is up appreciatively lately. If the company doesn’t perform accordingly a hedge fund, an activist group, possibly Berkshire would come in and offer cash for a piece of the pie. For example Buffett and GE… There is a lot of money floating around at this time. Interestingly, half of this Stimulus Money ends up in investments…

          • @sam

            Where is @Rob when you need him –you’ll note not a word about BA’s debt or future plane financing as per Mr Hamilton’s post

            But-Lots of harmless chatter about who did what to an autothrottle in 204 or something – nothing ontopic

            That’s ungrateful dissent for you – you offshore Corporate Compliance to an accredited BA rep, and…niet

            Well we’ll just have to the work inhouse

            ‘BA stock is well positioned to regain previous heights and beyond with all the orders flooding in for our excellent and safe products from our appreciative clients thanks to our leader both merit focused and diversified, the money is available for not two but three superb new planes not to be built offshore but right here in heartland USA bring jobs to the our people and to defend our core values hearth and homes from the invasion….’

      • “”Similar to Jim Marko at TCCA, and no doubt others at EASA””

        TCCA and EASA made a deal, nothing about safety.

        “”investigative science, which involved tens of thousands of hours of review, testing and certification, by hundreds of people spanning multiple international agencies””

        And still the majority of cert documents are not checked, what a joke.

        “”the viewpoint on auto-throttle operation, which was not found to be a contributing factor in the accidents””

        When the R.o.B mentioned daily in the past that the speed was too high.
        An auto-throttle system which software was never indepentently audited.

        • I like to rely on logic, and the 737 is the safest airliner to ever fly, but I am beginning to wonder if I ever want to board a MAX. I hadn’t understood the overspeed problem until now.

          • @ Grubbie

            “the 737 is the safest airliner to ever fly”
            As it stands, the 737MAX is the second-most crash-prone aircraft in modern aviation history — second only to Concorde.

            http://www.airsafe.com/events/models/rate_mod.htm

            No wonder national icon Chesley Sullenberger described it as “not up to modern standards”.

          • The overspeed problem was a result of pilots not controlling airspeed, which as noted occurred in the other flights. Ethiopia will try to show it as an auto-throttle problem, but that theory has been rejected by the regulators.

            Reporting is that the delay in the ET302 final report is partly due to NTSB insistence that the report include the pilot errors that were made, as well as the MCAS analysis and criticism of Boeing and the FAA. The NTSB may take the unusual step of issuing its own report to make sure those details are known and explained.

            For both Indonesia and Ethiopia, the problem with not acknowledging those errors is that they are likely to recur.

          • The overspeed problem was a result of poor Boeing design/implementation, which as noted occurred in the other flights. Ethiopia will highlight the auto-throttle problem, though that theory is unpalatable to the FAA/Boeing.

            Reporting is that the delay in the ET302 final report is partly due to (totally inappropriate) NTSB interference that the report should pin blame on the pilots, so as to take some of the heat off MCAS and criticism of Boeing and the FAA. The NTSB may sulk and take the unusual step of issuing its own report if its attempts at manipulation are unsuccessful.

            For both Boeing and the FAA, the problem with not acknowledging those autothrottle errors is that they are likely to recur.

          • I’m poor and I have to go where my costomers want me to go. But there is now a significant ticket discount involved if you you want me to fly on the MAX 200.

          • Pilots of ET302 were making speed changes but the auto throttle was ignoring that because of it’s inbuilt checks. That’s why turning off the auto throttle was on the checklist….sorry had been omitted in error by Boeing. The best we can say that the omission wasn’t deliberate like the MCAS.
            Another quirk is Boeing is hedging on agreeing with the FAA report mentioned , merely putting under review, and waiting . I think it’s because of the ET302 final report and they don’t want to give away their legal defence

  15. Who needs the Max

    “For decades, the Achilles’ Heel of Chinese airpower has been Beijing’s perennial inability to design and build reliable military jet aeroengines.

    For most of those years that the PLA has been engaged in its current modernization drive, they have had to rely on aeroengine technology – as well as off-the-shelf engines themselves – imported from Mother Russia.

    The latter are cheap, rugged and fairly reliable, but have a shorter lifespan. And they sometimes blow up on takeoff.

    Lately, however, the PLA have been trying to break this cycle of dependence by taking over an aeroengine firm in Ukraine, the Motor Sich engine production association, according to a report by Reuben Johnson at Breaking Defense.

    Based in Zaparozhiye, Ukraine, Motor Sich is one of the largest aeroengine enterprises left over from the former USSR, and today they are probably the only one that could design and build a new, reliable and efficient engine front-to-back on their own. ”

    “If the sale goes through, it will let China obtain a key defence technology that has eluded them for decades, in one of the few remaining disciplines where the US and its allies retain a competitive advantage, Breaking Defense reported.

    Meanwhile, Washington and Kiev are trying to block the Chinese takeover – the US in an effort to keep Beijing from solving its aeroengine technology deficiency and Ukraine acting in order to not lose a strategically important enterprise.”

    https://asiatimes.com/2021/03/ukraine-firm-could-power-up-chinas-fighter-jets/

    https://topwar.ru/179696-problemy-s-poterej-tjagi-aviadvigatelja-ws-15-zastavljajut-kitaj-obratit-osoboe-vnimanie-na-dvigatel-2-go-jetapa-dlja-su-57.html?fbclid=IwAR37xsseytrKvvt4k_xSjZdXbkp2A0__iq9Yg1xARq0b7ztJthwcHeAqfRM

    • Eh, its overhyped – what Motor Sich can produce is less advanced than what Russia’s UEC can do, and is probably at the same level of what China itself can currently do.

      Plus, wasn’t this deal stopped already? I remember that the Ukrainian government stepped in a couple years ago to prevent China from raiding them.

    • “For decades, the Achilles’ Heel of Chinese airpower has been Beijing’s perennial inability to design and build reliable military jet aeroengines.”

      The problem for new entrants into engine designs and manufacture faces is that nobody wants yesterdays engine designs. To be viable you need to build something equivalent to todays western designs which is basically impossible out of the gate. It is also hard to get the rights to build parts for older designs because that is key revenue source for the original designers.

      Contrast this with electronic chips. Here there there is a tremendous demand for old designs build with decade old fabrication techniques. For example cars, and aircraft embedded CPUs are often still designs from the 1980’s. Thus new entrants to chip fabrication can start with these (often with designs under license because the original designers have lost interest in what is now a low margin business) and ratchet themselves forward.

  16. Aviation Infrastructure in Peril

    US continues to offshore key industries in order to rely on imports

    An alternative ending to the BA disaster is that the US moves BA offshore – What arguments and what incentives can me made to retain BA in the US ?

    Biden has promised a review, but…..

    ““Americans already rely on foreign imports for too many necessities, such as surgical masks and other personal protective equipment,” said USW District 12 Director Gaylan Prescott, “and we cannot risk our national security by depending on other countries to supply titanium for our military airplanes, helicopters and aerospace equipment.”

    Prescott said that if TIMET follows through on its plan to close Henderson, the U.S. would be forced to import sponge from the only six other countries with production capacity: China, Japan, Russia, Ukraine, Kazakhstan or India.

    https://www.timet.com/assets/local/documents/petition/Titanium-Sponge-232-Petition-Summary.pdf

    https://www.usw.org/news/media-center/releases/2020/usw-seeks-intervention-to-save-titanium-sponge-plant-citing-national-security-defense-concerns

    https://www.americanmanufacturing.org/blog/president-biden-just-signed-an-executive-order-to-examine-supply-chain-weaknesses-heres-what-he-should-do-next/?eType=EmailBlastContent&eId=92288128-344b-45b2-a7fa-d242e9cc3481

    https://www.nytimes.com/2021/02/24/business/biden-supply-chain-executive-order.html

  17. the ONLY Boeing program I have any confidence in right now is the T-7. And that is becuase SAAB is really leading it. There is no way this program would have been executed with such skill if it was not for SAAB. the 787 is a massive open ended liability. Are any Seattle plane affected? Do they have to repair every single 787, all the non-Seattle planes? Are they even fixable? Does the fleet need to be grounded (again?). How does Delta somehow manage to avoid the Boeing lemons?

  18. Regarding the Ethopian MAX crash, we have interesting times ahead!

    Reuters: “Ethiopian 737 MAX crash families set to obtain key Boeing documents”

    “The National Transportation Safety Board (NTSB), an independent U.S. government investigative agency, told Boeing Co in a letter on Monday it should turn over nearly 2,000 documents to lawyers representing families who want to determine what the company knew about its flight systems after the Indonesian crash on Lion Air.
    The agency said international rules mandate the release of the documents after two years from the crash date”

    ttps://www.reuters.com/article/us-boeing-737max-litigation/ethiopian-737-max-crash-families-set-to-obtain-key-boeing-documents-idUSKBN2B32ZC

    • To clarify, these documents have already been available to the NTSB and other investigators, FAA and other regulators, and DoJ. Any institution that has power of discovery with requisite confidentiality.

      They are normally kept confidential for the benefit of the investigation, until the release of the final accident report. Since that has not yet happened, international law permits their release two years after the accident.

      So Boeing always intended to release them, and has already begun. They just needed permission from the US investigative agency of record (NTSB).

      • To clarify, these documents may have already been available to the NTSB and FAA, but attempts to get them produced in the survivor family lawsuits have consistently been stonewalled.

        They have been kept under a lid for the benefit of Boeing, until they could be withheld no longer. Since Boeing has not yet been forthcoming, international law facilitates their release two years after the accident.

        So Boeing never intended to release them, and only begun after an order to do so. They just needed to be mandated to do so by the US investigative agency of record (NTSB).

        • Ethiopia might wait with the accident report till these 2000 documents are seen.
          But who can prove that these 2000 documents are ALL documents.

      • @Rob

        Incorrect – [Edited]

        BA had conceived no intention to do anything, but BA was obliged by law to release, all intention was in the hands of the Law

        If you say that BA had the intention to obey the law you get closer, even if this formulation is deceptive and misleading

        But then you have to explain why BA chose to obey this law and none of the many others they have broken

        Perhaps you’d be kind enough to list these for us, or perhaps we’ll wait for the upcoming lawsuit to do this

        BA needed ‘ to ask permission’ to obey the law? A curious and hypocritical formulation and one which is nonsensical, and which appears from reason and from Reuters to be the opposite of the truth

        You massacre the language like BA massacred the Max

        Corporate PR performs as badly as the rest of BA

        • @ Gerrard
          You’re not surprised, are you?
          Like a chameleon, the Boeing PR rep continually changes his skin to suit the narrative of the day.
          Just 2 weeks ago, he told us:

          “Neither Boeing nor the FAA has any obligation to provide the requested materials, and they have a legal basis for not providing them, Just as they did for the MAX. It’s not their role to educate others on their private affairs, or to deal with the endless and largely incorrect speculation that would result.”

          • @Bryce

            !! I missed that – and I am surprised

            – although used to every form of BA deception dissembling and distortion, I find this a surprising approach to Court case which should be taken a great deal more seriously than by a futile attempt to deny documentation

            The desperation of a foolish cover up

    • @ Bryce

      Great link : perhaps there will be genuine punishment for BA and reformation of the lazy FAA

      What will BA PR have to say?

      • @ Gerrard
        I’d say we’re in for some fascinating information in the next few days/weeks.
        2000 documents full of rot that Boeing would have preferred to keep under a lid.
        And only produced now because they were ordered to do so by the NTSB. No self-monitoring openness or transparency. It just goes to show you how empty Calhoun’s words were in January 2020 (you already are familiar with this link):

        https://news.yahoo.com/ceo-tells-staff-boeing-must-transparent-161654364.html

        • @Bryce

          Indeed the cookie will now crumble in public if that’s the correct vernacular – and this may well be the decisive turning point not only for the victims, but for BA

          I am familiar with the Chairman’s Message demanding transparency and diversity to one and all – nonetheless it is good to read those words once again

          Some staff still require re education

  19. Who needs the Max Update

    BA driven to desperate low prices

    « I expect that, like most of the times, the price point of the aircraft is going to make the deal fall one way or the other, and from my point of view, Airbus would need to be extremely willing to compromise its pricing power on the Airbus A220 if it wants to win this order. Boeing, on the other hand, as I detailed in a stand-alone report for investors, will be rendering part of its liabilities by granting additional discounts on future aircraft purchases. That is important for the jet maker as it tries to keep its near-term cash outflow limited. Loading orders at reduced prices would reduce cash outflows now but would also reduce cash inflows later on. It’s a deliberate choice Boeing is making there with cash management and debt maturity in mind. So, the need to compensate airlines, which can happen in various forms, is really one of the biggest drivers that should bring the pricing of the Boeing 737 MAX down to a level that Airbus might not want to compete on too eagerly. »

    « There is absolutely no doubt that the Airbus A220 is an exceptional aircraft, and Boeing really has nothing but its pricing power on the Boeing 737 MAX 7 to compete with the Airbus A220. Boeing does not provide a detailed overview of the Boeing 737 MAX orders by variant, but around 50 orders for the Boeing 737 MAX have been identified as orders for the Boeing 737 MAX 7. So, the order book is extremely slim for the MAX 7, and it can hardly be called a success at this stage. The result is that, in order for the Boeing 737 MAX 7 to have some continuity and future, Boeing does need this order, and that is something that is completely unrelated to the current reduced demand profile for air travel and new aircraft or the Boeing 737 MAX crisis. The Boeing 737 MAX 7 simply is not as competitive or attractive as Boeing would like it to be, so they really have to offer rock bottom pricing on those aircraft. »

    https://seekingalpha.com/article/4413420-boeing-can-not-lose-southwest-airlines-737-max-order?mail_subject=ba-boeing-can-not-lose-southwest-airlines-737-max-order&utm_campaign

    • @ Gerrard
      Thanks for that confirmation of what we already knew.
      Boeing has made a nasty habit of resorting to sales with inadequate margin. It seems to be the only way that it can offload its current product offering, and try to score some PR. But the financial experts can easily spot the effect that this has on the balance sheet.

      • @Bryce

        I think the worst run on effect that is here suggested by the report- is that margins are cut now to below cost it is hinted which sort of solves the current cash flow problem in the very short term at the expense of creating a much larger cash flow problem in the long

        What do you think of this reading of the report, which confused me

        • @ Gerrard
          It’s difficult to say: “rock bottom pricing” could mean meager margin, zero margin, or negative margin. I suppose the exact situation depends on the sale in question. One way or another, if the margin doesn’t cover costs per unit, then it ultimately represents a loss.
          I recall that the ever-well-informed @Frank presented some evidence a few weeks ago of an extremely meager / zero / negative margin on the planes sold to Alaska. So there seems to be precedent. When trying to out-compete Airbus on a potential A220 sale, and particularly where the slow-selling MAX-7 is concerned, I can imagine that any reticence to dilute margin would be removed altogether.
          Perhaps @Frank can delight us once again with some insider info?
          “Earth calling @Frank…come in @Frank!” 😉

          • @Bryce

            It is difficult to work out prices, and the LUV sale is hardly yet done – perhaps some precise price information will filter out (as you say Frank please)

            But it seems likely that BA has every incentive to cut prices below cost merely in order to get some cash in and simply to convey some market credibility by sales to key clients

            That both do future sales and cash flow long term harm is inevitable – WS will raise interest rates on such signs of desperation

            Is this not (somewhat) like an airline selling their planes to a lessor and leasing them back?

            Meanwhile from that document cache further bad news will trickle out leading up to the Court Case

            Predictable is desperate reaction from BA PR to minimise the crimes, false reasoning in broken english

            The scenario is daily pictures of flaming planes on tv – who will lend BA the cash for a settlement?

            It would be more profitable to starve the company and take it PE

        • Boeing will probably get the Southwest Airlines order for 737MAX-7 over Airbus’s A220 for two reasons: 1. Price – Airbus cannot and won’t sell the A220 too low. They’ve said as much. And 2. Southwest executives are not deep thinkers. They belong to a fraternity of group think. To break that frame of mind is impossible. Especially since the history of the MAX is well known. Ten years from now when the Max-7 is having trouble competing with Delta, JetBlue, CA, Breeze then they might understand…

  20. No, these statements by Bryce and Gerrard are blatantly false. The records are kept confidential for all involved parties, as a routine matter during the investigation, and as detailed in the NTSB letter. The NTSB has now given permission for the records to be released. All the records were and are available to the investigators, regulators, and DoJ. Now they are available to the ET302 lawsuit as well.

    Leon implied that Ethiopia may now wait on the final report, but they have always had access to these documents. The delay of the report is due to other reasons.

    It’s doubtful that the documents will contain anything of consequence that has not already been uncovered by the various investigations, since they have been available for some time. But the ET302 lawsuit has a right to them under discovery, either after the final report is issued, or after two years have elapsed.

    • “Neither Boeing nor the FAA has any obligation to provide the requested materials, and they have a legal basis for not providing them..”

      Who wrote that, BTW? Better, more seamless PR work is needed!

      • Who do you think wrote it? Who always write such things?
        It’s on the record here on LNA.

      • My statement is taken out of context here by Bill. It was made with respect to the Flyers Rights lawsuit, and other demands for the FAA’s internal evaluation of the MAX, as summarized in the AD. That lawsuit was rightly dismissed by the courts, who upheld the FAA’s dual mandate of discovery and confidentiality.

        This has nothing to do with plaintiff’s right of discovery in lawsuits against Boeing. That right is partially & temporarily suspended during the accident investigation, to avoid biasing that investigation by plaintiff’s publicly releasing critical information, or attempting to influence or alter the investigation.

        This is the same reason that police don’t release all investigative results initially, but do yield to discovery when the investigation is complete. It’s standard investigative law and procedure.

    • No, these statements by Rob are blatantly false. The records were kept under a lid as a stonewalling tactic during the investigation, despite repeated requests from lawyers. The NTSB has now ordered the records to be released, since it has no other choice under international law. All the records were withheld from the ET302 lawsuits, until now.

      Leon implied that Ethiopia may now wait on the final report; they may have had access to these documents, but they want them to be public before proceeding with their report.

      It’s likely that the documents will contain lots of details of consequence that have not already been revealed to the public, since they have been withheld for some time. Though the ET302 lawsuit has a right to them under discovery, they’ve only been released now after two years have elapsed.

    • @Rob

      It is worse than foolish to double down on your previous incorrect statements, saying the same over and over

      To make the same errors repeatedly, always to try to contradict reality, and to suppose that repetition will force others to agree is to behave as bad as BA – this has brought them to court numerously and created all those planes which either kill people or stay in the shop for endless repairs

      Just one example- among your many doublings

      Version 1
      « So Boeing always intended to release them, and has already begun. They just needed permission from the US investigative agency of record (NTSB). »

      Version 2
      « The NTSB has now given permission for the records to be released »

      You appear not to understand English – Leon suggested (con permiso) that the ET crash investigators might delay finalising their report until such time as these new documents had been ventilated in public : he did not suggest (nor suppose, one may assume) that the ET CIs were denied access

      All statements by Bryce are correct and follow the reporting of Reuters – your comments are merely a version of that other BA guy who talked about Jedi mind shaping or some such garble to fool the gullible

  21. @Rob, @Gerrard, @Bryce: Watch your rhetoric. Make your points without descending into personalities and personal attacks.

    Hamilton

    • Scott, I stand 100% behind my statement about their falsehoods. They make false statements all the time here about the MAX, Boeing, financials, etc. I’ve accepted that this practice is allowed here by you, so mostly limit myself to pointing out the facts.

      However an attack of the kind conducted here is a different animal. Like the attacks on Steve Dickson’s test flight, it’s an attempt to take good actions, in this case compliance with the law, and twist them into something evil or ill-intended. It’s basically character assassination, of a type they would not dare to carry out to the person’s face, but will do anonymously on the Internet. That is the lowest form of deceit, and is a cowardly act. It cannot go unchallenged, under any circumstances.

      You choose not to challenge them, or most of the propaganda they pitch here, which you have rightly described as nonsense. That is fine, as I’ve said before, it’s your site, your rules. But I will always speak up in response to this kind of thing. If you want to delete those posts, or me entirely, you have that power.

      • > Scott, I stand 100% behind my statement about their falsehoods. They make false statements all the time here about the MAX, Boeing, financials, etc. <

        Odd, then, that that commenter provides *no specifics here* that might be examined for their factuality, just "they're lying!; and that that commenter regularly makes assertions here without providing *any evidence* in their support (just a cultivated, quietly-for-now Authoritarian tone); and that last on a regular basis..

        Mmm.

        • Another typically false assertion. The evidence is as provided under the law, that investigative documents remain confidential during the course of the investigation, until ether the final report is released, or two years have elapsed. As detailed in the NTSB letter to Boeing, allowing the release.

          The falsehood is that Boeing stonewalled or intentionally withheld the documents, as was stated above. Utterly and completely false. Which might be easily ascribed to ignorance, given the character of the commentary here. But when the correction was given, it resulted in another attack. And so was an intentional misrepresentation.

          • That commenter apparently lacks focus, perhaps strategically so.

            Going “meta” again- there are discourse-policers like
            that one on most every site or blog now that allows
            comments.

            Said discourse-policers claim always
            to be selflessly™ devoted to stopping what they characterize as “misinformation”
            or “disinformation”- but do please notice exactly whose narrative they inevitably parrot, and diligently reinforce: it’s inevitably highly concentrated Power’s Narrative.

            Check the fit. A cursory bit of class analysis can be so telling..

          • While it’s correct that a lot of nonsense is written here about Boeing, I have noticed that your claims have a healthy does of spin to obscure many facts or minimise unpleasant truths, which has been Boeing’s position all along with the Max since the crashes. It was the longest grounding in US aviation history , all because Boeing spun the facts to avoid responsibility, which is crazy when the 737 is essentially safe with the changes made,. If fixing the plane was Job One they have the resources to have the plane ready for the certification in less than 6 months ( prolonged by the software rewrite) instead we saw it take a year to realise the CEO was at the heart of their culture issues and still working to blame shift as a corporate stategy. Billions and billions of shareholder value have been flushed away and now there is another issue with the 787 which again was unsorted for too long.

      • @Rob You believe they express falsehoods. They believe you do. I’m not going to arbitrate that. What I said, and repeat, is that all of you can make your points without getting personal.

        Hamilton

        • Scott, in this case the falsehood is not in question, or a matter of opinion. The law is unequivocal. Boeing followed the law. The NTSB followed the law. There is nothing nefarious or dishonest in their doing so. And no rational reason to imply that there is.

          I get that you don’t want to arbitrate disputes here, and don’t blame you for that at all. But I think you have to distinguish between a difference of opinion and an attempt to falsely discredit. They are two wholly different things.

          If you allow the latter, then ultimately that reflects on both you and Leeham, by association. Whether or not you share those views, the site will be viewed as a platform for them. As it surely already is, at this point.

          In this case, I correctly clarified the law and the meaning of the news report. The result was an amplification of the discrediting view, and an attack. Both of which have no basis in fact. There are only two responses in the face of that behavior. Either the moderator intervenes and stops the offending action, or the respondent defends.

          What bothers me is that you don’t seem to mind the offending behavior, or whether things posted here have any relation to the truth, but do mind the conflict that results. As any school principal knows, the result of that approach is for the biggest bully to win. Which is why principals intervene, or should. And is also why we see the responses that we do here. The fact that they can get away with this, is not lost on them, Scott.

          Other forums certainly manage this problem. You don’t see anything like the descent and devolution of commentary that appears here. Look at what has been posted in this thread alone, and tell me that it’s not wholly bent on bashing Boeing.

          It can be managed here too, it just depends on enforcement of posts being reasoned, rational and respectful. In the absence of that, there will be conflict, guaranteed.

          • Interesting to note that @Rob not only likes to lecture the other commenters here, but also has no reservations about lecturing the site owner ! This is the second such lecture to Scott in just 2 weeks.

            Also important to note that, as @Bill7 has pointed out, @Rob *offers no sources/links to back up these allegations of spreading falsehoods.*

            Two comments on this issue.
            (1) The Reuters article posted above uses verbs such as “told” and “mandate” — it doesn’t use the verb “permit”.
            (2) This Nasdaq article from Feb. 19 2020 (!), contains the following quote:
            “Boeing has argued that the National Transportation Safety Board (NTSB) – the independent U.S. government investigative agency responsible for civil transportation accident investigations – is restricting the release of certain materials.”
            “However, in a new letter to Boeing, the NTSB seemed to switch its stance on some documents, saying it has now determined that the planemaker may release “any and all documents in its possession” that it had not shared with the agency as part of investigations into the Lion Air and Ethiopian crashes.”

            https://www.nasdaq.com/articles/boeing-heads-to-court-to-oppose-release-of-737-max-documents-2020-02-19

            So, summarizing *and backed up by links from reputable news sites*:
            – The NTSB “permitted” release of the documents *more than one year ago*.
            – The NTSB “mandated” release of the documents this week, since provisions of international law meant that Boeing could no longer withhold them.

          • A good example of the R.o.B. doing PR.
            In the past it was always pointed to ET302 pilots, that the speed was too high, contributing to the crash.
            Then when it was known that the pilots set the speed in the autothrottle, but the autothrottle didn’t take it, suddenly speed was not a contributing factor.

            My question now. When did the lawyers of the victims get these 2000 documents, or is Boeing still hiding them?

  22. > As detailed in the NTSB letter to Boeing, allowing the release.

    “We’re Boing, and we’ve been just dying to release all this info,
    but haven’t been “allowed” to until now!

    Mmm.

    That’s what it says now; let’s see what it says here in a week or two. Stay tuned..

    Must be hard: being required to believe Six Impossible Things
    before breakfast; then spout them the rest of the day, “requiring”
    others to believe them, too..

    • This coud be more complex.

      Parties to an investigation cannot pass info from that investigation into the public without consent from the NTSB.

      How does that apply to information potentially conducive to the investigation but withheld from that same party?

      I suppose some lawyer could make some contrived argument ..

      On the other hand even the NTSB is not bothered by this limitation. They published data on the fuel oil heat exchanger case bypassing/leapfrogging the main investigator : the British AAIB.

      • @ Uwe
        Nobody is requiring the information in question to be passed “into the public”: the plaintiffs in the ET302 suit are only requiring the documents to be made available to the court.
        It’s quite customary for “confidential” or “restricted” information to be submitted in court filings “under seal”. The relevant parties to a suit (judge and counsel) are then allowed to see the submitted material, but are not allowed to disclose it to clients / third persons. Such a construct allows the counsel to pore through the material, and to prepare relevant motions. The seal can then be lifted at a later date.
        This happens every day, all over the world, in all sorts of situations.

        • “public” as in “not involved in the NTSB investigation”

          this includes confidentially submitting to some court. or other. This is about leaving the investigation domain.

  23. Airtravel Update

    https://wolfstreet.com/2021/03/12/long-way-to-normalcy-americans-return-to-flying-for-vacations-and-business/

    « Everyone is waiting for Americans to start flying again to get back to “Normalcy,” as it’s now called. So where are we now? On average over the past seven days, 1.09 million passengers per day passed TSA checkpoints at US airports, the highest since the collapse of air traffic a year ago, eking past the beaten-down holiday period at the end of 2020 and early 2021.
    It was still down by 53.2% from the same week in 2019, a tad worse than the year-over-year drop during the holiday period. One year after the collapse of air travel, the hoped-for V-shaped recovery still looks dismal. But the trends, if you squint just right, show slight improvements in recent months:
    «

    « The Department of Transportation released its preliminary data on air travel today, as reported monthly by the airlines to the Bureau of Transportation Statistics (BTS), which provides more detail, but lags a little behind: In January, domestic air travel, as measured by the number of airline passengers, was down 63% year-over-year; and international travel on US air carriers was down 68%. »

  24. More re-shuffling in the MAX house of cards:
    Reuters (after Bloomberg): “Boeing names new head of crucial 737 MAX program”

    “Boeing Co has named veteran engineer Ed Clark to be the head of its 737 MAX jetliner program, according to internal memo sent to employees on Friday.”

    “Clark is the fifth person in four years to take the helm of the program, which has over the years grappled with quality shortfalls, parts shortages and then the safety ban following the crashes.”

    https://www.reuters.com/article/us-boeing-737max-clark/boeing-names-new-head-of-crucial-737-max-program-memo-idUSKBN2B42OV

  25. OT, but of some relevance I think, given various comments and claims made here:

    Greenwald: ‘Criticizing Public Figures, Including Influential Journalists, is Not Harassment or Abuse-
    As social media empowers uncredentialed people to be heard, society’s most powerful actors seek to cast themselves as victims and delegitimize all critiques’:

    “..But this is now a commonplace tactic among the society’s richest, most powerful and most influential public figures. The advent of the internet has empowered the riff-raff, the peasants, the unlicensed and the uncredentialed — those who in the past were blissfully silent and invisible — to be heard, often with irreverence and even contempt for those who wield the greatest societal privileges, such as a star New York Times reporter. By recasting themselves as oppressed, abused and powerless rather than what they are (powerful oppressors who sometimes abuse their power), elite political and media luminaries seek to completely reverse the dynamic..”

    https://greenwald.substack.com/p/criticizing-public-figures-including

  26. While Corp BA’s PR machine continues to divert and misinform …

    https://mobile.twitter.com/dominicgates/status/1370939661841956870

    A KC-46 tanker problem:

    – The problem revolves around the Boeing-made tanker’s On-Board Inert Gas Generation System, which is used to convert oxygen in the aircraft’s fuel tanks to nitrogen, preventing the aircraft from exploding if the tanks are hit by lightning or enemy fire.

    During a walk-through of the KC-46 held last month at Joint Base Andrews in Maryland, two pilots told reporters that — under current regulations — pilots are prohibited from taking off in a KC-46 until the OBIGGS is fully booted up, with a countdown timer on the aircraft’s display reading “zero.”

    – The Air Force is still in search of a permanent solution to the OBIGGS deficiency, which was first documented in April 2019.

    “As we fielded the aircraft, we realized that the way in which we power up the aircraft with the boom checks and all of that is causing problems in that algorithm and causing it to reset,” Samuelson said. “Boeing is working on a fix for us.”

    • Hey, the KC-46 is suffering just a couple of trivial teething
      problems, and those will be sorted out very, very Soon.

      If you disagree with me you’re clearly an Online Bully™, and should be silenced, posthaste.

      [s/] 😉

    • @ Pedro
      So now we know what the much-touted “limited ops” are, namely:
      — Sitting beside the runway with engines running, waiting for a green inerting light to go on and hoping/praying in the meantime that the fuel tanks don’t blow up —

      Well, they certainly are “limited”…that much, at least, is painfully clear.

  27. A Message from @Corporate PR

    These comments are blatantly false and exaggerated

    The KC-46 is an exceptional airplane which has proved it’s value time and again in defense of our great country and has saved the lives of countless brave pilots and brave military personnel and has kept all our women and children safe from the invader

    It is repulsive that lazy commentors who depend on our brave pilots are allowed to post on this site

    The Secretary of Defense has repeatedly warned about the enemy within and the superb new Administration of Exceptional Joe Biden will soon pass Domestic Terrorism Legislation in order to prohibit such cowardice so called ‘free speech’ in fact the conspiracy of the traitor

    Chairman Cal will issue a global directive to make us safe and to make sure you are not again allowed to be so naughty

  28. US Defense Chief speaks out, demands action

    Competitive edge has eroded : this can only be a reference to the KC46

    “It’s also about enhancing capabilities,” he added, recalling that while the United States was focused on the anti-jihadist struggle in the Middle East, China was modernizing its army at high speed.

    “That competitive edge that we’ve had has eroded,” he said. “We still maintain that edge. We are going to increase that edge going forward.”

    https://asiatimes.com/2021/03/us-defense-chief-cements-anti-beijing-alliances/

    https://www.defenseone.com/threats/2021/03/the-d-brief-march-10-2021/172576/

    Plus this just in from @Bob in Corporate

    https://www.defense.gov/Newsroom/Advisories/Advisory/Article/2531379/secretary-austin-travels-to-hawaii-japan-republic-of-korea-india/

  29. @Bill7 and @Gerrard, while I am amused at the sarcasm, knock it off. It skirts the Reader Comment rules.

    Hamilton

  30. ‘Emirates’ Tim Clark says Boeing ‘not getting it’ on 737 Max, 787’:

    “In an exclusive interview with The Air Current Tuesday morning, the longtime President of Emirates airline offered a surgical dissection of the U.S. plane maker and its acute struggles with the 737 Max, 777X and 787, which he believes are existential, systemic and solvable.

    “Culpability for the culture, strategy, direction, priority of that company rests with the Boeing board and nobody else. And that’s where the buck should stop. And that’s where they need to get themselves sorted out,” he said. “So going forward, the relationships that airlines have with the likes of Boeing will be conditioned by what they see they are doing to sort out their internal problems.”

    The public rebuke is the sharpest Boeing has received from any customer in the wake of its rolling series of crises. Clark has been instrumental in steering the biggest jetliner programs at Boeing and Airbus over decades and is one of the industry’s most influential figures. He believes that Boeing has a way to go in rebuilding trust and confidence with regulators, customers and the traveling public.

    “I regret having to say all this, but I kind of, I think it needs to be said, otherwise, we’re just going to move on out of the Max era, as if nothing has happened.” said Clark. Boeing’s leadership “can take that whichever way they like it. If they don’t like what they hear, well, then that’s tough. That’s someone like me saying, you need to sort yourself out.”..”

    https://theaircurrent.com/industry-strategy/emirates-tim-clark-says-boeing-not-getting-it-on-737-max-787/

    • More from Tim Clark in that piece:

      “I’m sick and tired of receiving [Boeing] aircraft that didn’t work, and we kept on having to ground them. I’d be pointed to the contract and say ‘you have an obligation to take these airplanes, even though they don’t work.’ Well, those days are over. And that goes for propulsion as well. We will not take aircraft that do not fly at 99.9% dispatch reliability…”

      “The ’87 has got to be sorted out,” said Clark. “You cannot continue to manufacture aircraft that do not do the job for you. They have manufacturing issues. They’ve been called out on multiple occasions. They need to sort out their production, big time. Quality control, quality gate. Everything needs to be put under the microscope to make sure that they don’t get egg all over their face every six months about the way the 787 has been produced.”..”

      “There was a switch in emphasis and during the course of the build to the ’87, I could see that there was a huge pressure to strip out costs at pace. Many of the suppliers working with both Boeing and us on the same program would come to us and say ‘we’re absolutely on our knees.’ These people are demanding 15, 20% reduction in our costs..”

      Lots more meat in there, too.

      • @ Bill7
        You should move those comments up to today’s new HOTR article on jet delivery figures…they’d get more discussion there, and they’re somewhat on-topic (delivery malaise).

      • Thanks Bill,

        which suppliers are interested to produce for Boeing in the future. There must be a reason why Boeing asked suppliers about the NMA. It’s better to do no business than bad business.

        • You’re welcome. How Boeing now treats its workers and suppliers will tell much about about their prospects as a producer of commercial passenger aircraft, I think.

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