Leeham News and Analysis
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Leeham News and Analysis
- Bjorn’s Corner: New engine development. Part 5. Turbofan design problems April 26, 2024
- Airbus 1Q2024 results: Airbus CEO: “A350 in-service experience drives positive reputation and orders” April 25, 2024
- A350-1000 or 777-9? Part 3 April 25, 2024
- Boeing CEO promises company is turning around…again April 24, 2024
- Solid start for stand-alone GE Aerospace despite cuts to LEAP output April 23, 2024
Boeing records loss in 2023, but better than expected results; no guidance for 2024
By Dan Catchpole
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Jan. 31, 2024 © Leeham News: Boeing posted a $5.8B loss in 2023, a substantial improvement over the previous year’s $11B loss. Boeing Commercial Airplanes even posted a $41M profit in the fourth quarter–the first profitable quarter since the beginning of 2019.
However, any progress made last year was erased on Jan. 5, when a door plug blew out on a two-month-old 737-9 MAX at 16,000 feet over Portland. An empty passenger seat was ripped, but nobody died and physical injuries were light on Alaska Airlines Flight 1282.
In an earnings report conference call with financial analysts, Boeing CEO David Calhoun said definitively that the accident was Boeing’s fault and that steps are being taken to ensure it never happens again.
Calhoun’s statements echoed similar declarations he made after taking over in 2019 as chief executive amid the MAX crisis following two fatal crashes.
Those crashes put the 737 program under global scrutiny.
“I’m still trying to get my head around how we got here,” Bank of America financial analyst Ron Epstein said during the call. After the two crashes, “wasn’t the 737 line, like the most scrutinized production line in the world? So, what happened to get to where we got today?”
Summary
- Boeing withdraws exemption request for 737-7
- Vague guidance for 2024
- More mea culpas
Many mea culpas
Starting with the 787’s problem-plagued development, Boeing executives have issued many mea culpas–development delays, battery fires, ill-fitting parts, misleading federal regulators, and not reinstalling bolts in a door plug panel. Unlike his predecessors, Calhoun is quicker to take responsibility.
Earlier in January, the company appointed former U.S. Navy Adm. Kirkland Donald to lead an independent comprehensive quality review reporting directly to Calhoun. (It is the second time in five years that Boeing has asked a retired admiral to help review safety on the MAX program.)
Hiring Donald “looks to me like rearranging the deckchairs on the Titanic,” Rob Stallard, an analyst with Vertical Research Partners, told Leeham News.
Boeing is somewhat insulated from the consequences of its actions given the reality that it and Airbus are the only OEMs able to feed the world’s demand for new jetliners, he noted.
“While I think there is frustration that Boeing seems to consistently shoot itself in the foot when it should be enjoying a robust aero OEM upcycle in a duopoly situation, I am amazed that there hasn’t been more agitation for change,” Stallard said.
Boeing pulls exemption request for
The company also pulled its request for a certification exemption for the smallest MAX variant, the 737-7. The exemption would have allowed the FAA to certify the airplane even though its engine inlet de-icing system does not meet current regulatory standards. Boeing had said it would soon have a fix for the issue.
The withdrawal came after U.S. Senator Tammy Duckworth (D-Illinois), chair of the Senate Subcommittee on Aviation Safety, said in a letter to the head of the FAA that she “strongly” opposed the request.
“Boeing forfeited the benefit of the doubt a long time ago when it comes to trusting its promises about the safety of the 737 MAX,” the senator said in her letter.
Calhoun said he decided to withdraw the request after talking last week with Duckworth, a decorated combat pilot.
The senator told him that the company should come up with the fix and then certify, rather than certify and then fix the problem, he said. “And in my view, it was a sound, principled position to take.”
After talking with the biggest customer for the MAX 7, Southwestern Airlines, Calhoun opted to pull the request on Monday.
Guidance for 2024
Calhoun and Brian West, Boeing’s CFO, were vague about the outlook for 2024. Given the ongoing FAA investigation, the company is not giving guidance for investors for the year yet.
Production for the 737 is steady at 38 airplanes per month, they said.
Accounting for holidays and resuming deliveries to China, that would put deliveries in 2024 at more than 500.
West said the company expects BCA production rates to stay as they are or go higher in total, and that the company will continue putting money into keeping the long-delayed 777X program moving.
I wonder when the MAX-7 will finally be certified and have its EIS- and I wonder how SW in particular is feeling these days.
I’m wondering about the 737-10. Does it have different nacelles? I haven’t heard about it.
My understanding is that the MAX-10 (and others) will require the same fix. See the Aviation Week / Jens Flottau article I linked in a recent thread.
Corrections welcome.
This one:
https://aviationweek.com/air-transport/aircraft-propulsion/boeing-pulls-737-7-exemption-request-further-delaying
Flottau: “..Before the latest decisions, certification of the -7 was expected for the beginning of 2024. If Boeing moves at its own expected speed, the aircraft can now be certified in the middle of 2025 at the earliest.
The modifications will also have to be put back into the already certified versions of the MAX: the -8, -8200 and -9. They also apply to the -10, which is also yet to be certified..”
Wonder how much BA accrued for such modifications?
A good question. I want to see if their timeline of 9-12 months for the modification proves to be reality-based.
Accrued?
Well, the DPB went up. Have a look below…
Accrual for modifications of those -8, -8200 and -9 delivered.
ALL MAX aircraft will require the fix including the -8 and -9 that are still being delivered as well as produces.
@Vincent
SWA feels great and will always stand behind Boeing. They along with Ryan and Alaska get smoking great deals and lots of free services. Even Delta CEO stands behind the mad max.
Pay no attention to the man behind the curtain.
So safety is in Boeing DNA?
…..Must be some major genetic defects.
Complacency and Brazenness seem like the defining
characteristics for the neo-Fastistic company- like Boing
Did any heads roll today? NO, OF COURSE THEY DIDN’T. Two more Boing aircraft could crash with all hands lost [that would be Five in a Row], and nothing would change. Some New Normalization
is going on..
“Fascistic” would be a better spelling.
Impossible to overstate the culpability of senior management in all this. For example, it has long regarded experience as just another expense to be minimized, both for employees and suppliers.
I started at Boeing 30 years ago but moved on after a few years. Of the 5 good friends I had there then, 4 have taken golden handshake early retirement. They were encouraged to leave to reduce labor rates.
Boeing motto: “Cheaper is Better!”
The main purpose of Boeing engineering in Seattle now is training young engineers for better jobs at Blue Origin.
So wait! Did Ron Epstein get an answer to his question on the call?
“I’m still trying to get my head around how we got here,” Bank of America financial analyst Ron Epstein said during the call. After the two crashes, “wasn’t the 737 line, like the most scrutinized production line in the world? So, what happened to get to where we got today?”
@Stan
Excellent question! Many of us in the aviation community continue to ask this. The answer is simply nothing has changed, if anything it’s worse.
Calhoun and Pope are buffoons. Quality stand downs mean nothing. Directors and senior managers all look at these fancy metric dashboards but no one pays attention to the core problem or to the employee morale.
“Calhoun and Pope are buffoons.”
Agreed- but they will do their *other jobs* well.
It’s all going pretty much per plan, IMO:
Boing is being dismantled.
No, Kids: there will be no, vaunted, New Boing Airplane. For how long that absurd notion can
be sustained in the various media is an object
of trivial interest.
Agreed. The only plane Calhoun and friends will ever lanch is folded out of paper.
When he says we might launch a new program in the next decade this just means he is committed to not launch anything before then. When we get to 2030 there will still be stockholders with their hands out and a new Welch clone in the CEO’s office eager to please and jack up his own stock options.
100% spot-on…, and I was there for all of it and fought for the fundamentals, but the Directors and VPs wouldn’t have it. They measure, watch, and reward themselves around what’s easy to measure and watch, not what’s meaningful or material to real quality, safety, or even productivity. It’s so farcical, but they’re addicted, and their bosses promote based on this garbage trivia. Been there!!
What did Pope do. She’s been COO for less than a month?
The Q4 earnings call should be up on Youtube in time. Then you can hear for yourself.
I remember the questions.
787 deferrred production costs are still very high! around 12B$
Actually they are higher than two years ago!!!!
Nobody take care.
Even if 787 rate goes back to 12/month (a big if) it will take a lot of time and very high profits to reduce them significantly.
A nasty shock will happen when they will eventually be depreciated….
For those wondering about the $41 million ‘profit’ in Q4:
https://s2.q4cdn.com/661678649/files/doc_financials/2023/q4/Commercial-Airplanes-Unit-Cost-vs-Program.pdf
Commercial Airplanes Unit Cost vs. Program
Segment Information – Earnings from Operations
Boeing Commercial Airplanes
2023 1Q23 2Q23 3Q23 4Q23
Commercial Airplanes – Program Accounting (615) (383) (678) 41
Commercial Airplanes – Unit Cost Accounting * (1,871) (919) (1,148) (521)
2023
(1,635)
(4,459)
———————————–
Under Program accounting, they recorded a loss for 2023 of ~$1.6 billion.
If they accounted for it on a unit cost basis, it would be ~$4.4 billion.
The Q4 profit was $41 million, but under Unit Cost it was a loss of $.5 billion for the quarter.
Can —–> Kicked
—————————
BCA accounting, magic! Now you see it, now you don’t.
I would love to know how much “should have been lost” under Unit Costs within the context of their learning curve. It is difficult to know whether that $4.4B was expected and if not then by how much did they blow past their plan.
-> ‘ [Calhoun] conceded that the sale in 2005 of Boeing Wichita, which then became Spirit, “probably did” take Boeing’s divestment strategy too far, but said he has to deal with that reality now.
Calhoun said it “will require an enormous investment on our part in terms of people and engineers and interactions” with suppliers. […]
Despite the improved financial trajectory, analyst Stallard of Vertical Research told investors Boeing’s “immediate fate is arguably in the hands of the FAA.”
Likewise, Nick Cunningham, an aerospace analyst with Agency Partners in London told investors that “so much of even the near future is contingent on the actions of others.” “Boeing seems to have lost much of its agency in its current circumstance,” Cunningham wrote.
https://www.seattletimes.com/business/boeing-aerospace/boeing-leaders-address-airplane-quality-crisis-and-hit-to-reputation/
Abnormal Production Costs:
‘Abnormal production costs in 2023 were $1,527 million, including $1,014 million related to the 787 program and $513 million related to the 777X program.’
—————————–
This was from the Q3 Financials:
‘Abnormal production costs for the nine months ended September 30, 2023 were $1,379 million, including $937 million related to the 787 program and $442 million related to the 777X program.’
——————————————
During Q4 they had ~$150 million in APC’s. The widebody issues are still costing them money.
Certification & Deliveries
At December 31, 2023, we had approximately 35 737-7 and 737-10 aircraft in inventory. We are now planning to incorporate engineering solutions to the de-icing systems on the 737-7 and 737-10, which will delay certification and first deliveries.
We are currently unable to reasonably estimate what impact the accident, the related FAA actions and certification delays will have on our financial position, results of operations and cash flows.
We are following the lead of the FAA as we work through the certification process including obtaining approval from the FAA to begin certification flight testing. We expect the first delivery of the 777-9 to occur in 2025 and the 777-8 freighter to occur in 2027. First delivery of the 777-8 passenger aircraft is not expected to occur before 2030.
A stuck open nacelle deice hot air valve “often Honeywell” has happened on most jets since the 707. One would think it was a basic design requirement and on the top of ATA30 “Ice and Rain protection” FMECA (Failure mode effect and cause analysis) analysis.
While the article has some errors, overall it hits it on the head.
https://www.vox.com/money/24052245/boeing-corporate-culture-737-airplane-safety-door-plug
Quote” Unlike his predecessors, Calhoun is quicker to take responsibility.”
It puzzles me a bit: Given that it is now a four year term for him, the organizational tasks and responsibilities seem to be still improperly aligned when such “quality escapes” happen. Where is the Chief of Manufacturing who proudly signs off on every plane before delivery – and his team ?
I hope that the company will shake itself up … it is too sad for a manufacturer of great planes like the 777 and 787 to be in such a mess. I hope Boeing gets out of this self inflicted disaster soon with big actions and steps.
Yea you see headlines on NBC how he took responsibility (but not accountability) but the accurate ones is he wifeled it.
So some organization want to write the beautiful script but the hard question continue and they will shift back to critical.
Callahan is asses ed at no accoutnailtiy and spinning a hurricane of bull.
Taking responsibility is a crock, no accountability (yet) responsibility is meaningless without accountability.
Muilenburg took responsibility but his butt was not on the Indonesian or Ethiopian crashes and the loss of 347 people.
Japan has a fine tradition if your really want to take responsibility.
Thats is not how I heard it. Calhoun started the Earnings call talking about it. A couple of minutes went by before getting into the numbers.
williams:
You hear what you want to hear. I was a mechanic, one hard reality is you can’t convince a broken piece of equipment to miraculous work again because you want it to. I flips you off each and every time.
I never wanted to hear how well I did my job that day, I wanted to hear what I had done wrong so I could correct it.
Calhoun did exactly the opposite and the net result was, Its Not My Fault.
This is Muilenburg all over again.
With that kind of totally lame performance we might skip Stan and go right to Calhoun.
Hiring Donald “looks to me like rearranging the deckchairs on the Titanic,” Rob Stallard, an analyst with Vertical Research Partners, told Leeham News.
Stallard is prophetic.
I agree, like the Slow Equalization Vincent brought to this table, its the visual you need to really get it viscerally.
-> Following @AerCapNV CEO Gus Kelly’s warning at #AEdublin Growth Frontiers that Boeing could be heading to a 30% share of the single-aisle market, here are some quick thoughts and a @cirium data snapshot
https://twitter.com/MaxK_J/status/1752264650828169505
I think in the 10 year term it stabilizes at 35-40%
Where it goes after that?
Market share is slow to loose and slow to build.
Airbus simply cannot build enough aircraft to match 38 a month let lone the 50 Boeing probably will build to (that is pushed back a good year, maybe 1.5)
If Boeing stopped MAX tomorrow, Airbus would take at least 5 years to match that loss and more like 8-10.
Its an interesting question as to what Airlines do if they see Boeing going downhill so fast their fleets are completely imperiled .
Lets be real, they can get by with a MAX-9 instead of a -10 if they have to.
The sure are not getting any quantify of A321NEO in under 5 years.
65 – 70% AIB market share seems to be at the upper bounds of what is allowable without Boeing reacting with new product launch or whether regulators get nervous about market dominance.
The sad reality is that BCA should be able to sell its delivery slots in the next few years at commercially favorable terms. Airbus is sold out. Boeing is only competing against its reputation.
‘what is allowable without Boeing reacting with new product launch or whether regulators get nervous about market dominance.’
Allowable?
1) Boeing doesn’t have the cash to fund a new clean sheet. See: Buybacks & Dividends
2) What are regulators going to do? “Hey, you Airbus – yah you. Stop selling and producing so much. Give the other guys a chance…”
Market dominance is not necessarily something regulators will break-up. However, I have linked below where courts generally start to consider where a monopoly is beginning.
@Pedro alluded to the A220. Airbus purchased that program when the market was in relative balance. That program purchase does not pass competitive muster today. There is a threshold where the loss of market share loss becomes so great for Boeing that they will be compelled to respond with a new product.
https://www.concurrences.com/en/dictionary/Monopoly#:~:text=Courts%20generally%20accept%20market%20shares,barriers%20to%20entry%20or%20expansion.
I would say Boeing does not have the skills it takes to design a new airplane anymore, and that’s why they will not have the money to do it.
’65 – 70% AIB market share seems to be at the upper bounds of what is allowable’
Two point to this:
1) That is NB share. You’re missing something here, aren’t you?
2) You’ve forgotten Comac, Embraer and others….
———————————
But in the definition you’ve given is this:
‘The possession of a monopoly is not illegal in and of itself. How one obtained and how one allegedly uses monopoly power is crucial to whether a Section 2 claim exists. ‘
In court
“Your Honours, we gained market share by the competition being unable to build safe aircraft that didn’t either crash or have it’s door blown out. Aircraft certified, BTW – by YOUR gov’t agency….”
@TW
It’s already below 40% market share in NB (*not including the A220) as reported by FT (quoting Cirium) rn.
-> “There has been a shift in power: Airbus is outselling Boeing two to one in the narrow-body market,” says Bank of America analyst Ron Epstein.
“I think..”. Ever notice how that one finally dribbles toward mere opinionating after its unlikely assertions have been factually demolished?
When you come across post like this: “Airbus simply cannot build enough aircraft to match 38 a month …” 🙃
would have made real sense as:
“Airbus simply cannot build enough aircraft to match
an additional 38 a month demand”
Airbus has never tried to jump production.
Expansion is more via adding FAL lines than going faster.
Obviously a new line needs time to get up to speed.
The advantage is at least twofold:
No/few single issues can bring all lines to a screeching halt at once.
you don’t have to bring a huge number of professionals to a single place. Every day again.
Short commute from reasonably priced housing
and you have the foundation for a happy workforce.
From AW:
“Data compiled by consultants Aero Analysis Partners/AIR show Boeing averaged about 24 737 roll-outs per month in the fourth quarter and just more than 28 per month for the full year. It reached 38 back in June, rolling out 40, but quickly dropped amid production quality issues that slowed the lines and required re-work.”
Someone mentioned…
Deferred Production Balance
737:
‘At December 31, 2023 and 2022, commercial aircraft programs inventory included the following amounts related to the 737 program: deferred production costs of $6,011 and $2,955 and unamortized tooling and other non-recurring costs of $792 and $626.’
An increase of $3.056 billion in 2023
——————————————————
777X:
‘At December 31, 2023 and 2022, commercial aircraft programs inventory included the following amounts related to the 777X program: $4,638 and $4,059 of work in process, $1,792 and $1,330 of deferred production costs, and $4,063 and $3,774 of unamortized tooling and other nonrecurring costs.’
An increase of $462 million in 2023.
—————————————————
787:
‘At December 31, 2023 and 2022, commercial aircraft programs inventory included the following amounts related to the 787 program: deferred production costs of $12,384 and $12,689, $1,764 and $1,831 of supplier advances, and $1,480 and $1,722 of unamortized tooling and other non-recurring costs.’
A reduction of $305 million in 2023.
There were 73 deliveries in 2023, which works out to an average reduction of $4 million.
———————————————
3,056
462
(305)
———
$3.212 billion added to the DPB in 2023.
Which is why the unit cost accounting number is so much higher, than the program accounting cost.
——————————————————-
An interesting point:
Boeing forecasts how many orders are needed to cover the DPB for each program. This is the Q3 forecast for the 787 program:
‘At September 30, 2023, $13,024 of 787 deferred production costs, unamortized tooling and other nonrecurring costs are expected to be recovered from units included in the program accounting quantity that have firm orders and $695 is expected to be recovered from units included in the program accounting quantity that represent expected future orders.’
This is the forecast at the end of the year:
‘At December 31, 2023, $12,384 of 787 deferred production costs, unamortized tooling and other non-recurring costs are expected to be recovered from units included in the program accounting quantity that have firm orders, and $1,480 is expected to be recovered from units included in the program accounting quantity that represent expected future orders.’
————————————-
The ‘needed’ future orders to cover the DPB went up, during Q4 from $695 million, to $1.480 billion.
This indicates to me that the DPB is not being reduced fast enough ($4 million per aircraft) and those costs will have to be borne by more orders in the future.
If the rate of DPB recovery stays at 4 million per aircraft, 3000 787 are needed!
Existing orders are far from that figure which means that BOEING assumes that DPB recovery will be vastly improved on future planes.
It is true that when 787 production will go up to 12/months, production costs will go down significantly…
But a new engine will be needed sooner or later, with big additions to DPB!
My champagne to all Leeham readers the day where DPB is fully recovered ….
This is concerning, the DPB on the 787:
(Dollars in millions) 1Q23 2Q23 3Q23 4Q23
Deferred Production Cost 12,416 12,193 12,188 12,384
It’s headed in the wrong direction, again. Why?
Maybe because of the 20 month pause in deliveries and extremely low rate production? Still ~50 in inventory.
@Scott H
IIRC the 20 month stoppage was done and dusted in 2022.
‘Deliveries resumed on August 10, 2022, after the FAA granted clearance.’
————————————
Here’s my point;
From Q1 to Q2 to Q3, the DPB went down. Headed in the right direction.
Why, now that everything is resolved, are we back up in Q4?
(OK, it’s only some $200 million, but still…)
———————————–
On the 787 program, they said this at the end of Q3:
‘We expensed abnormal production costs of $937 and $925 during the nine months ended September 30, 2023 and 2022.’
End of Q4
‘We expensed abnormal production costs of $1,014, $1,240, and $468 during the years ended December 31, 2023, 2022 and 2021.’
————————————————
So during Q4, they expensed APC’s of $77 million on the 787 program AND stockpiled another $196 million into the DPB…
…when it had been going down nicely, the past 3 quarters.
——————————————–
All I’m saying is that I don’t recall hearing anything about any problems with the 787 in Q4 that would cause them to u-turn the direction there.
At the end of Q3 they had:
Deliveries
787 50
At the end of Q4 they had:
787 73
———————————
So 23 – 787 deliveries during Q4 (which is pretty good ~8 a month) when for the previous 9 months you had 50 deliveries (which is around 5.5 a month) – but you have to increase the DPB with those extra deliveries?
It should be the other way around;
The more you deliver, the more the balance should come down.
@Scott H
More confusion:
787 Program (end of Q3)
‘At September 30, 2023 and December 31, 2022, we had approximately 75 and 100 aircraft in inventory and expect to deliver most by the end of 2024.’
https://s2.q4cdn.com/661678649/files/doc_financials/2023/q3/fd2a8c99-afc6-4472-ae18-4f1ee024a274.pdf
Pg 41
————————————–
If they had 75 and now have 50, that means that during Q4 they delivered ~25 from the stock pile (23 reported during the quarter).
What about the 787’s that are supposed to be coming off the line at 5 a month? Those 15 should either;
a) Be part of the delivery mix (making it 38) or
b) Be part of the Inventory stockpile (making it 65)
Or they didn’t make any, preferring to move those sitting around?
(No…you would have heard of something…)
It doesn’t make sense to me. Unless they’re fudging those numbers
@Frank P.
According to AW:
“Boeing has about 60 787s in its undelivered inventory—50 of which need rework before delivery to correct production problems.”
@Pedro
Thanks. I guess at Boeing 60 is the new 50.
@Frank P
See my post below re: Spirit.
737 DPC
An increase of $3.056 billion in 2023
“It takes Boeing more time and effort to modify and repair the already-built planes than to assemble new models, Brian West, Boeing’s chief financial officer, told analysts on Wednesday’s earnings call.” ~ Bloomberg
We now have data on how many -7 and -10 are built (35)
Boeing can handle that, nothing in the immediate production Q means they can’t make -8 and -9 (those fuselages are sim,ply longer or shorted -8)
So that is not a crippling hit, hurt yes, not like 120 x 787s sitting there at one time.
All the short term snap shot finances mean nothing.
Its the long term and what is not assessed yet is all the fialure by 3 organization that lead to the -9 Door Blank blowout.
That is going to play out for months. Years with a NTSB report but congress is having hearings and those won’t quit either.
@TW if I were you I would keep quiet about @FrankP reviews and explanations of the Boeing financials since you clearly don’t appear to comprehend what he’s driving at.
He is presenting us, per Boeing’s own reporting, the company’s current predicament and what they face going forward into the future. It’s not a pretty picture unwelcome news for us Boeing ‘fans’, but these are the facts.
Things like missing plug bolts, engine control systems etc. ( the engineering stuff), are easier to fix. The millstone around Boeing’s neck hobbling it now and into the future is the financial mess @FrankP and others write about….bottom line a major resource constraint on the company’s operations.
I appreciate your contribution, but spending less time snipping at financial types in the forum will be more productive. These guys know accounting and finance and those of us of that persuasion appreciate the clarification they try to bring to the discussions. Many like me are less inclined to wade through the financials minutiae and thus appreciate the effort these guys make clear the financial “fog”.
Branaboy:
No issues with the view, but I also disagree with the current financial state being the issue.
Under normal circumstances, agreed, its a valuable metric for where you stand, where you are going etc.
There is nothing normal about the Boeing situation.
Essentially unless management changes, they are going down the toilet. Without that fix, there is no recovery and the financials are just an obituary.
So, we all know Boeing is in trouble. Big whoop.
This most recent failure makes it worse and even worse, its a failure of Boeing, Spirit and the FAA.
Each one of those is huge by itself and the financially are not reflection of that (they will be down the road). You can’t manage by looking in the rear view mirror.
Its where does this lead us?
And if there is no product, then it leads to Boeing collapse. And that is the issue, management failures that are in Boeing’s hands (the FAA is a separate unto itself). Spirits failure is also in Boeing hands as well as Spirits.
In this case the financials are the Dutch Boy poking his finger in the dike and you have 8 other holes. One hole does not address the failures and its the failures that drive the financials not the other way around.
Think I am wrong? Ok, what lead to this financial mess. It was the MAX, 787 and 777X failures. No failures and the financials are just an item of interest, oh, they did really well or not as good as forecast. All those failures were management (board and the CEO down to the Boeing Presidents).
I spent a lot of years seeing people focus on the immediate thing and refusing to look up and realize why that immediate thing was a failure (within that, people not wanting to look around to see what else was going to bite, looking busy while the bridge burns down behind you.
So, just like what I did, it was important and even critical to immediate operations. But it was not the whole operation. It was a small part of a many aspected business.
I could not do their job and they could not do mine.
The Job right now is to deal with those failures and the financial will fix themselves (or can be managed into a fix).
Frank P post long diatribes, but its not broken down to simple where it stands. Sure its a nice scratch an itch for a financial guy just like my talking about control theory and what and how to apply PID statement.
But the guy who froze up the pipes in the facility (true ) was a huge failure and my PID had nothing to assist with that, and that was the same thing, it was a company Management failure that let the clown keep his job no matter what he did or how many times he did stuff like that.
Right now its the big picture aspect that drives this bus, not the financials because those are no more than a reflection of the management failures.
Spot on. I totally agree with this.
Two thumbs up, Branaboy!!
Works for me. You guys have your view and I have mine.
I think that in normal circumstances, the financial would be very valuable.
Right now? Irrelevant, another hit comes in the next quarter and you can’t predict how much because there are moving parts and all of those are related to Boeing Management, Spirit Management and the FAA. None have any way to put a metric on them.
So, all we need are is broad snapshot to understand where Boeing currently stands and then use that as a measure of how bad the hit is going to be as the results come out.
Next to come is NTSB interim. I see no place set aside for that report!
Seconded, RK. That one seems *desperate for attention*, here. I see it recently learned the disparaging word “diatribe”, WRT Frank’s factual, good-faith posts.
Nice! 😉 Maybe it’ll learn some more new words in the coming days, with God’s Help.
Vincent:
Now you have done it, you brought religion into this. May the wrath of Scott be mercifull.
Shrug. No skin off my back if you guys don’t get the real issue.
nothing new in hiding in data and statistics – none of it solves the problem.
Full credit to Vincent for the Slow Liquidation. That is the issue which catches the Board and the CEO and his cronies in a nutshell.
the King Has No Cloths.
Ya’all have a good day.
‘Things like missing plug bolts, engine control systems etc. ( the engineering stuff), are easier to fix.’
This^^^^^^^^^
Production woes can get worked out (with costs).
Max 7 will eventually get certified (at a cost).
Max 10 will eventually get certified (at an additional cost).
The 777X’s will eventually get certified (with more costs)
The 787’s from inventory will eventually get fixed and delivered (costing still more)
There is no miracle jet walking in the door, shaking up the industry and vaulting them back to the top of the food chain. It just doesn’t happen.
Even so, the $15 to $20 billion needed isn’t there.
————————————–
The government wants BA to deliver jets.
The customers want their BA jets.
Suppliers want to sell BA parts to make their jets.
Employees want to get paid making BA jets.
These things aren’t against Boeing. The numbers are.
Frank P:
Well there was the 707. That was a hit out of the park.
And there was the 747, another game changer.
The 787, shook Airbus to the core (granted management failed to execute)
We have (pun intended) TTBW waiting to reveal its worth or not.
Iacoca brought Chrysler back from the grave with the Mini Van.
Fixing stuff is not easy, even when you throw money at it (787 mfg operation, close to 30 billion)
If stuff is done right, then the financials take care of themselves.
Boeing is not having a financial crisis, its having a management crisis aka the Slow Liquidation and if that does not stop the fanatical continue to fail.
If they do fix it the financial fall in line with success.
This is a case of seeing the tree but not realizing that many trees make up a forest.
There was a time before MD bought BA with BA’s money.
MacD merger is IMHO a bit of a red herring.
Boeing issues started earlier.
the initial 777 development was more or less on time
but needed to double its budget to get there.
( not MacD initiated)
July 1997 Merger complete
Early NG production was halted in 1997.
restart end of year.
( this overlaps.
did a month or two really suffice to trash the system so soundly? Usually such “poisons” are not instant!)
Be careful who to choose to believe taking you through the fog
Makes you wonder then…why is all the fog needed?
Nothing to see here. Only have to *believe* the future is bright!
Oh have you seen the chart on FT comparing the performance of AB vs. BA from 2018? Some wise guys are sitting there printing $$$.
Yes, we do need to always be on guard against “fialures”-
whatever they are.
they sound kinda sexy though
Boeing Once Known for Safety… Is the headline on a CNN article dated today (January 31). This article states correctly what the “Men” from McD and GE did as soon as they could, and what they still are doing, or not doing.
https://www.cnn.com/2024/01/30/business/boeing-history-of-problems/index.html
Yea NBC was a hoot on the headline (in a very sad way). Bought into the Purple Coolaide.
The good news is this story has legs and it has a chance (not a given) to finally shake up Boeing management. Its a slow moving story and all the financial just got thrown out the window. Calhoun has stopped the MAX in its tracks.
These were some of the better Vox Quotes:
“The big criticism is that they’re solely focused on finance, but they’re not even good at that,” says Aboulafia.”
“But saying “mea culpa” is one thing. “The only thing that matters is restoring the links between the people at the top and the people who build the planes,” says Aboulafia. “Those links have not been restored.”
Calhoun, Boeing’s CEO, admitted during a Fortune interview last summer that the company did have a culture problem — but it wasn’t putting profits over safety. The problem was that they had a “hard time being honest with one another.” Then he offered an example of a leader who had always been honest, giving “pure clarity every step of the way” — Jack Welch. ”
You need no more than that. He just stuck the Golden Goose again and it can only take so many hits.
National, or even international, attention and explanation in easy to understand but a well detailed story can put a spotlight onto what these men with essentially no engineering background did to one of The United States greatest manufacturing corporations. The CEO and his henchmen may not be able to hide from their possibly criminal decisions.
I don’t trust you. Who shall one trust, on this here opaque DarpaNet- and why so?
Over the year:
(2023/2022)
Liabilities and equity
Accounts payable $11,964 $10,200
Accrued liabilities 22,331 21,581
Advances and progress billings 56,328 53,081
Short-term debt and current portion of long-term debt 5,204 5,190
Total current liabilities 95,827 90,052
Current liabilities went up $5.775 billion.
A/P went up $1.764 billion.
————————————————
Just for sh!ts and giggles, I went back to the 2018 Financials, the bumper crop year before everything fell apart for a comparison:
(2018/2017)
Liabilities and equity
Accounts payable $12,916 $12,202
Accrued liabilities 14,808 13,069
Advances and progress billings 50,676 48,042
Short-term debt and current portion of long-term debt 3,190 1,335
Total current liabilities 81,590 74,648
Accrued Liabilities is way up, almost $7 billion.
(The term “accrued liability” refers to an expense incurred but not yet paid for by a business. These are costs for goods and services already delivered to a company for which it must pay in the future. )
——————————————
The Backlog in 2017:
Total backlog $474,640
Advances and progress billings 48,042
The backlog for Boeing in 2018:
Total backlog $490,481
Advances and progress billings 50,676
For ~a $15 billion increase in backlog, BA got about a $1.5 billion increase in deposits.
———————————————————
In 2023
Total backlog $520,195
Advances and progress billings 56,328
For ~a $30 billion increase in the backlog from 2018 to 2023, Boeing now get’s about a $6 billion increase in Unearned Revenue.
They’re asking the airlines to advance them more cash.
For those of us who know very well that the numbers *do matter*, I thank you.
Oh yes, they do matter.
Its just they don’t matter for Boeing these days.
As Frank P laid out, its been descending for 4 years and the numbers changed what?
As the Titanic slipped beneath the waves and the owners saying, its unsinkable, the data proves it!
Great analogy to compare BA with, oh wait, the Titanic.
Frank P:
As a progression, that begins to meet my idea of simply laying it out.
Nicely done.
My $64 question is does the 5 billion (rough) actualy mean it went up or is that one of the its in the wash.
I know Boeing has got advanced payments, but that is part of the aircraft not nearly all of it. A bigger chunk is when they start the spar (787?).
Then the final payment on turnover
Airlines have no reason to advance more money. In fact they have every reason to regret any advance money.
This is the start of the kind of nitty gritty that determines the future of Boeing
https://www.streetinsider.com/Reuters/FAA+says+comprehensive+Boeing+737+audit+will+review+Spirit+fuselage+production/22703447.html
While its obvious to happen, you never know until its official and they are looking into every aspect of it.
Ignored is why this occurred in the first place but baby steps.
Does anyone know whether the unsold inventory at Boeing counts against their monthly cap with the FAA?
From the FT
Letter: Withering assessment of the Boeing chief executive
From John Griffiths, Former Chief Economist, Boeing Commercial Airplanes, Seattle, WA, US
https://www.ft.com/content/ba770f07-026f-4f66-8870-5951462efa22
Your profile of Dave Calhoun, Boeing’s chief executive, described his chequered record as Boeing’s leader but did not dig sufficiently deeply into his longer-term relationship with Boeing to explain his underperformance (“Calhoun’s successor faces legacy test at Boeing”, Report, January 2).
Calhoun is the third ex-GE executive to lead Boeing — following Harry Stonecipher and Jim McNerney — which largely explains the company’s intense focus on financial metrics, especially Rona (return on net assets), which tends to prioritise short-term financial performance over long-term investment.
As a non-executive Boeing director since 2009, Calhoun witnessed the implosion of the 787 programme (partially under way before he joined the board), the failure of the 747-8 programme, the delayed entry into service of the 737 Max and its ongoing regulatory issues, and the incredible delays and cost overruns on the 777-X programme. The 787 programme was relocated to the union-busting South Carolina plant after Calhoun became chief executive, even after significant quality issues had been revealed there. These have continued to delay deliveries, costing the company hundreds of millions of dollars (at a minimum).
Calhoun’s claim that he has “added rigour” to the company’s quality processes has been shattered by the latest 737 Max 9 incident and the grounding of the US fleet. Nothing in Calhoun’s service on the Boeing board suggested that he would be an effective chief executive, capable of turning around the company. So it has proven.
Now, he has promoted a putative successor who has no experience in the commercial aviation business and failed to change the trajectory of the floundering global services business unit (just as all her predecessors did).
Calhoun seems to be positioning himself for a lucrative retirement in spite of leaving the company in no better shape than when he inherited it.
Solid stuff from solid sources, Pedro- thank you.
Spot on.
Was it Einstein that said doing the same thing over and over again and expecting a different result is insanity?
Under-performance though is not the way to describe the crash and burn. Worse than Japanese light weight fighters in WWII with no armor or self sealing fuel tanks (they did start adding both around 1944).
Who is Boeing giving this money to?
Boeing has given cash out to airlines and they hold that amount in Inventory. I’ve gone back and pulled the previous 4 reports:
Commercial aircraft programs inventory included amounts credited in cash or other consideration (early issue sales consideration) to airline
customers totaling $3,559 and $3,586 at March 31, 2023 and December 31, 2022.
Commercial aircraft programs inventory included amounts credited in cash or other consideration (early issue sales consideration) to airline
customers totaling $3,625 and $3,586 at June 30, 2023 and December 31, 2022.
Commercial aircraft programs inventory included amounts credited in cash or other consideration (early issue sales consideration) to airline
customers totaling $3,862 and $3,586 at September 30, 2023 and December 31, 2022.
Commercial aircraft programs inventory included amounts credited in cash or other consideration (early issue sales consideration) to airline
customers totaling $4,126 and $3,586 at December 31, 2023 and 2022.
——————————————
Q1 $3,559
Q2 $3,625
Q3 $3,862
Q4 $4,126
Anyone have any idea on who they heck they are giving over half a billion dollars to as compensation?
MOL is very supportive recently. WN also said they don’t mind to wait a bit.
I see Ryanair are getting their aircraft assembled, tested and delivered as a priority. At the moment most of their frames are being delivered two months ahead of others with similar line numbers.
I realise manufacturing doesn’t always go in strict numerical order but, if you look at it on a spreadsheet, it’s really quite stark.
Is this so Boeing don’t have to pay out as much in compensation for late delivery or is it just to keep O’Leary quiet so he can’t go blurting out to the press about how bad the delays are, which can’t be a good look for Boeing.
I guess it’s probably a mixture of both…
A favorite point of discussion – what discount is Boeing giving airlines?
For my good friends out there, this is FOR ALL AIRLINES in 2023 and represents the average discount given by Boeing, across all aircraft.
BOEING Max 8 $121.60 396 $48,153.60
BOEING 747 $418.40 1 $418.40
BOEING 767-300FR $220.30 32 $7,049.60
BOEING 777F $352.30 26 $9,159.80
BOEING 787-8 $248.30 10 $2,483.00
BOEING 787-9 $292.50 40 $11,700.00
BOEING 787-10 $338.40 23 $7,783.20
Total 528 $86,747.60 (if sold at 100% of list)
Actual Revenue $33,901.00
% of list 0.39
———————————
Therefore Boeing is discounting at 61% off of list price, in case anyone was wondering.
(maybe a touch more, as I didn’t calculate any Max 9’s and the higher price)
I doubt that. Then Airbus is offering discounts in the same vein, and I doubt that too.
How can you doubt that?
The delivery mix is there. The list price is there. The revenue they received is there.
What is wrong then, with the methodology?
I doubt that number includes down payment made years ago at the beginning of the order or payments during the wait phase. So you are not dealing with complete dollar figures.
If it was as easy as you lay out then there would be no need for NDAs when it comes to contracts.
There would be no need for negotiations really, because all the airlines could do what you did for Boeing prices but for some reason cannot do for Airbus prices? Airbus financial numbers are murky and harder to define so we can’t use the same methodology?………………….Hmm, you might be onto something.
‘I doubt that number includes down payment made years ago at the beginning of the order or payments during the wait phase. So you are not dealing with complete dollar figures.’
You’re way off base, here.
Down Payments (read: Unearned Revenue) is a Cash item. It is deposited in the banks and recorded in
Advances and progress billings 56,328
It sits there, until delivery, when it is backed out and added to the final payment received.
—————————————————–
As I have posted before – Program Accounting recognizes revenue when the aircraft is delivered. It’s literally right in their financials and part of the rules of the system.
But tell us – where, in your view, does the amount in Deposits come out? Does it just sit there and accumulate forever?
———————————–
‘If it was as easy as you lay out then there would be no need for NDAs when it comes to contracts.’
You must have missed this part above, so I’ll repost it again. Please read it CAREFULLY:
“this is FOR ALL AIRLINES in 2023 and represents the average discount given by Boeing, across all aircraft.”
You cannot discern who has paid what. I can’t. But I can tell you what the average was. It’s literally RIGHT THERE.
——————————————–
‘There would be no need for negotiations really, because all the airlines could do what you did for Boeing prices but for some reason cannot do for Airbus prices?’
We’ve been through this red herring before. Give me the list prices and I’ll do it for Airbus.
——————————–
You really don’t know what you are talking about.
Womp womp.
There are too many here who admit they know little about finance and, perhaps, never bothered to read the financial statements, insist they know better than other about the “big” picture!
Frank P:
I saw some of the Airbus pricing on the A380 back in the day. Probably can still find it, Thai Air.
I won’t try to remember the numbers but it was huge, more than 60%.
Discounts have been there for a long time and they have been big.
The numbers needed are the cost for labor, materials for the build and then what they get for the aircraft (yea I know, sewar, water, power would also apply for Renton and bldg maint).
Pretty simple, they need to make profits on the builds and they need to retire the 53 billion number you supplied.
Break it into simple terms and then lay out what percentage off is needed to deal with the financial mess.
The people I dealt did not want to know nuts and bolts, they wanted to know if I could fix it, patch it or what would the fix be?
Or as I told them the day the main conveyor gear reducer went.
Its going to fail and no, I don’t think you can wait until the end of the week to schedule it, its terminal.
It went that night.
You add revenues and progress billings and divide by planes delivered and you think that gives you average? More like a guess.
Scratch what I stated about Airbus, they gave up this charade years ago by not printing list prices. In the end it doesn’t matter.
@williams
No. Deposits and progress payments stay there, in the account, until delivery. They are a portion of revenue. The other being final payment.
C’mon, this is really basic stuff, here.
Frank P:
I don’t think its basic stuff that you put your money into Boeing’s hands and they get interest on it.
Is there security of any kind on those accounts or if Boeing should crater, you just are out of the money you have put there?
Calling Frank P
Did you stumble across information on
how inventory value ( in the form of complete but currently indeliverable stored airframes ) per item is booked/assayed in Boeing’s reporting?
( IMU and under IFRS you cannot book some item at anything higher than market value. )
@Williams
Straight from the horses mouth.
https://s2.q4cdn.com/661678649/files/doc_financials/2023/q4/BOEING-10Q-Q42023-013124.pdf
Revenue and Related Cost Recognition
Commercial aircraft contracts
‘Revenue is recognized for each commercial aircraft performance obligation at the point in time when the aircraft is completed and
accepted by the customer. We use program accounting to determine the amount reported as cost of sales.’
‘Payments for commercial aircraft sales are received in accordance with the customer agreement, which generally includes a deposit upon order
and additional payments in accordance with a payment schedule, with the balance being due immediately prior to or at aircraft delivery.’
—————————–
Can’t get anymore basic than that. Any complaints and please take it up with CFO West.
@Uwe
Re: NRV
I see there’s plenty of wiggle room. This is BA’s version per their most recent SEC 10-K filing:
“The determination of net realizable value of long-term contract costs is based upon quarterly reviews that estimate costs to be incurred to complete *all contract requirements*. When actual contract costs and the estimate to complete exceed total estimated contract revenues, a loss provision is recorded. The determination of net realizable value of commercial aircraft program costs is based upon quarterly program reviews that estimate revenue and cost to be incurred to complete the *program accounting quantity*. When estimated costs to complete exceed estimated program revenues to go, a program loss provision is recorded in the current period for the estimated loss on all undelivered units in the accounting quantity.”
The only way they need a charge-off is near the end of the program say the 747-800 when nobody cares.
But what if there is an event with the engine inlets of the already in service 737MAX8/9?
The you know what hits the Jet Engine
We won’t think about that.
Remember that RONA (return on net assets) in theory could have two meanings. In the standard accounting formula A = L + E the word “net” would just mean deleting one of the terms on the right and subtracting its value on the left. So liabilities minus equities would be one form of net assets, and equities minus liabilities would be another. So two things are going on here.
First, using the term RONA is just a way of avoiding talking about your real interest, which would be the equities. Debbie Hopkins introduced this sleight of hand to Boeing as a way of making it seem smart to start selling off the company’s assets and using the cash to buy back stock, all without talking about the equities. So RONA on it’s face is a con. Boeing was a stepping stone for her when she conveniently omits from her CV. I’ve long suspected that there was also a problem with Harry involved, but I could never get anyone who knew for sure to talk about it. But there’s more.
The second issue with RONA is more serious. What happens when A = L and there is no E? Well, as a ratio in terms of assets (A/E) that would be a mathematically undefined term since division by zero is undefined. OK, so what if E goes negative giving us A = L – E, or put another way L > A? Do the so-called equity holders owe the company money to the tune of the delta? In a non-corporate form of business that is exactly the case.
This gets us to the nature of the corporation and what exactly it is all about. It also gets us deep into Drucker and McGregor, and it shines a very harsh light onto that headnote of the 1886 SCOTUS case of Santa Clara County v. Southern Pacific Railroad Company, which has to be one of the biggest scams ever pulled off by a Chief Justice (Morrison Waite). This is where the evolving European approach to business law and accounting really is better than ours. They would at least allow a challenge to the status quo based on their principles, while Boeing is able to hide behind the AG of Delaware, who will do nothing unless Congress steps in.
When the Dutch invented the concept of the corporation (apologies to Drucker) the idea was to get more ships of exploration into the water and share the wealth throughout their country. But of course, they immediately ran into the same problems we face today with greedy principles (often the ship captains) taking way more than what they were supposed to, leaving little or nothing for the investors, and eventually bankrupting VOC. Unfettered greed eventually stopped everyone’s ships from coming in.
I also think that the 1886 Supreme Court decision that
essentially gave the rights of natural persons to Corporate
entities was a negative watershed that makes most all of our lives smaller. The significance of that decision is vast..
Recent Supreme Court rulings show that congress can’t do anything, they would over turn it based on Stare Decisis even through Corporation are not in the constitution at all.
Under their logic a rock can be ruled a person.
Under the current Supreme Ayatollahs, anything congress did would get over turned.
They will twist anything into pretzel shape, hid behind fig leaves to get their twisted view of the world kept intact.
I think I see a non-partisan way forward (except for the minority of corporate apologists on the right who dominate Republican’s in office, but who do not reflect their base on this topic).
Talking about values and ideas that are shared isn’t that hard. It’s one of the reasons that both criminal and tort law are largely nonpartisan issues. Right/Left politics disappears when the mundane is being discussed. Streets need to be repaired, garbage needs to be collected, parks need to have their grass cut. So what is needed is a forum where values can be discussed and agreed upon needed actions that result from those discussions can take on a momentum that is independent of divisive forums. Once the bases of both parties agree on something, it is much harder for politicians to fan a flame of partisanship over them.
Values need to be addressed in an independent, and thus apolitical way. One such value is the social contract that is implicit in corporate chartering. Corporations are good things. They enable the public to accomplish things that we have not found another way to do, or at least not nearly as effectively. But the chartering process is the creation of a social contract. When a corporation is created a deal is being struck. What should the nature of that deal be? On one side it is reduced tax rates and liability limitations. What does the other side get? That needs to be discussed.
President Kennedy said it well in his graduation talk at American University in 1963. “Our problems are man-made — therefore, they can be solved by man. And man can be as big as he wants. No problem of human destiny is beyond human beings. Man’s reason and spirit have often solved the seemingly unsolvable — and we believe they can do it again.”
We would probably need to adjust the gender of his sentence structure to be more in line with the times, but the idea is timeless.
Corporations doing “fix’es” to problems instead of “careful skilled engineering analysis, design and testing” of problems often have deep problems. P&W started the “fix” solutions to problems and now Boeing, (just waiting for United Airlines fixes then the whole United Aircraft is coordinated again…)
Can I ask a straightforward (I think) question of FrankP, since he seems to have a pretty good grasp of the financials? What is Boeing’s approximate annual turnover in recent years, what is it’s current real total level of debt, and assuming it is somehow able to return to say a 10% nett margin, how long will it take to pay that debt back to the sort of level it should be at (say 10bn?). c In other words, if they were to focus on that, how long would it be before they have scope to return cash to shareholders, and would it leave any scope to invest in a 737-replacement programme?
Now THERE’S a question…
So BA has already set out a debt repayment schedule in Note 15, along with a listing of it’s obligations.
Scheduled principal payments for debt and minimum finance lease obligations for the next five years are as follows:
……………………………….2024 2025 2026 2027 2028
Debt and other notes $5,128 $4,581 $7,983 $3,300 $1,800
Minimum finance lease obligations $84 $76 $55 $24 $3
Debt at December 31 consisted of the following:
Unsecured debt…………………………..2023 2022
1.17% – 2.50% due through 2026 $10,135 11,846
2.60% – 3.20% due through 2030 6,071 6,412
3.25% – 3.90% due through 2059 9,584 9,576
3.95% – 5.15% due through 2059 11,024 14,035
5.71% – 6.63% due through 2060 13,015 13,011
6.88% – 8.75% due through 2043 1,855 1,854
Other debt and notes
Finance lease obligations due through 2044 253 206
Other notes 370 61
Total debt $52,307 $57,001
————————————————-
Some takeaways:
– The debt they have retired in the past 12 months has mostly been in the (3.95% – 5.15% due through 2059 11,024 14,035) & (1.17% – 2.50% due through 2026 $10,135 11,846) range
– The cheap stuff (1.17% – 2.50% due through 2026 $10,135 11,846) all goes away by 2026.
– Over the next three years, they plan to spend $17.692 billion, with $10.135 billion of that on the 1.17-2.5% stuff. (we’ll ignore the ‘pocket change’ lease obligations, for now)
– That’ll leave $34.678 billion in 2027
– In 5 years, they’ll have $29.578 billion on the books
————————————————-
They have re-jigged their debt before. This was the schedule at the beginning of 2022:
………….2022 2023 2024 2025 2026
Debt $1,236 $5,101 $5,066 $4,302 $7,952
Minimum finance lease obligations $64 $43 $25 $14 $6
And 2021:
…………..2021 2022 2023 2024 2025
Debt $1,630 $14,976 $3,776 $2,001 $4,301
Minimum finance lease obligations $68 $53 $31 $14 $6
You can see how at the end of 2020, they thought they’d be able to make a huge ~$15 billion payment in 2022, but things went sideways.
————————————————-
Boeing also has access to this:
‘As of December 31, 2023, we had $10,000 currently available under credit line agreements. We continue to be in full compliance with all covenants contained in our debt or credit facility agreements.’
———————————————-
The Boeing Company and Subsidiaries
Consolidated Statements of Cash Flows
…………………………………………………………2023…..2022
Cash & cash equivalents at end of year $12,691 $14,614
Even with an increase here:
Advances and progress billings 3,365
Over the past year, Cash & Eqiv’s dropped $1.923 billion.
—————————————————
So what are the interest expense payments going to look like for the next 3 years?
‘Interest incurred, including amounts capitalized, was $2,560, $2,650 and $2,790 for the years ended December 31, 2023, 2022 and 2021,
respectively. ‘
Let’s call it ~$7.5 billion and they want to retire $~17.5 billion, so $25 billion needed over the next 3 years.
—————————————————-
SO back to your question:
‘assuming it is somehow able to return to say a 10% nett margin, how long will it take to pay that debt back to the sort of level it should be at (say 10bn?).’
Averaging the next three years, they’d need some $80 billion in sales at a 10% margin, to pay off principle and interest, which leaves them ~$35 billion in 2027.
In 2023
Total revenues 77,794
Net loss (2,242)
If this trend continues, they will use up:
Cash & cash equivalents at end of year $12,691
————————————–
They need to get this number, IMO
(4,459)
Above this number
(1,635)
2023 …………………………………………………..1Q23 2Q23 3Q23 4Q23
Commercial Airplanes – Program Accounting (615) (383) (678) 41
Commercial Airplanes – Unit Cost Accounting * (1,871) (919) (1,148) (521)
More on the 787 Deferred Production Balance
Boeing now has an online schedule of the DPB of the 787
https://s2.q4cdn.com/661678649/files/doc_financials/2023/q4/787-Deferred-Production-Cost-Unamortized-Tooling-Other.pdf
(Dollars in millions) 1Q23 2Q23 3Q23 4Q23
Deferred Production Cost 12,416 12,193 12,188 12,384
Unamortized Tooling and Other Non-Recurring 1,711 1,600 1,531 1,480
Costs are trending in the wrong direction on the program and going back up
Since Q3, all BCA programs are trending in the wrong direction, with more costs being jammed into the DPB’s. The 787 as detailed above.
737
At September 30, 2023 commercial aircraft programs inventory included the following amounts related to the 737 program: deferred production costs of $5,359
At December 31, 2023 commercial aircraft programs inventory included the following amounts related to the 737 program: deferred production costs of $6,011
777X
At September 30, 2023 commercial aircraft programs inventory included the following amounts related to the 777X program: $1,370 of deferred production costs
At December 31, 2023 commercial aircraft programs inventory included the following amounts related to the 777X program: $1,792 of deferred production costs
————————————-
Some totals:
787 $12,384 – 12,188 = $196 million
737 $6,011 – $5,359 = $652 million
777X $1,792 – $1,370 = $422 million
$1.270 billion increase in the DPB’s during the 4th quarter.
———————————————
They claimed a $41 million Earnings From Operations for BCA for Q4
Look’s to me like a $1.229 billion loss during the quarter, with the can kicked down the road again.
Frank P:
Serious question:
Can they write off some of that? All of it?
I know they have from time to time but is there a limitation.?
What apple cart does it upset?
Thanks for this.
This is fast … with a bit of motivation from the FAA.
https://www.bnnbloomberg.ca/boeing-sees-critical-fix-for-smallest-737-max-within-nine-months-1.2029058
“Calhoun said Wednesday that he decided to withdraw that request after meeting with Senator Tammy Duckworth, who has criticized Boeing’s pursuit of the exemption. The Illinois Democrat and former US Army helicopter pilot questioned *why the company wanted an exemption when a permanent fix was only months away*. Calhoun said he sounded out a key customer, spent the weekend thinking it over, and in the end was won over by Duckworth’s stance.”
That’d be by the end of this year, then.
We’ll see.
Agreed, too much in flux.
Calhoun thanked Dukworth or Cantrell for making him do the right thing, phew. Muilenburg repeat (which is a me repeat)
Reuters: Boeing Execs Stand by 2025-26 Financial Guidance; Near-Term Focus Is Safety
“We fully stand by our claims, though we virtually never meet them.”
Pathetically true.
Oh no. 😱
A 737 MAX 8 on delivery is “diverted to pae”.
https://twitter.com/bfi_watch_ca350/status/1753108866680967501
https://www.flightaware.com/live/flight/CCA80/history/20240201/1600Z/KBFI/PHNL
Oh, and apparently China-bound, too. Nice.
Keystone Kops
Just another most scrutinized (Boeing) aircraft.
‘I would absolutely not fly a MAX airplane’: Ex-Boeing manager raises alarm on jets returning to service’:
https://www.latimes.com/california/story/2024-01-30/boeing-max-9-flying-again-after-door-panel-blowout
Easy for him to say, once its in service issues usually become obvious.
The rudder loose bolts aside, but as that stuff is found its turned into a SB and gets taken care of.
Its not ideal, but in some cases a MAX or NG is your only choice.
You do the best you can in life. Getting to the Airport is far more hazardous though if you are the one to die in a crash that is no comfort.
-> […] This was the @nytimes a month after the DC-10 grounding ended in 1979. It’s the foundation for where Boeing finds itself today in 2024.
https://twitter.com/jonostrower/status/1746957437394129150
Have you flown recently??
-> “All the talk of loose or missing bolts has made any potential visible issue with an airplane top of mind for many fliers.”
https://twitter.com/ByERussell/status/1753511259071205632
https://theaircurrent.com/feed/dispatches/snl-alaska-airlines-boeing-skit/
-> Boeing isn’t mentioned by name at all in the Alaska Airlines parody ad that appeared on Saturday Night Live, the long-running U.S. variety show. The absence of serious physical injuries sustained by those aboard opens the door for these comedic takes that shape popular culture and brand perception. (SNL gave Southwest a similar skewering after its operational meltdown in December 2022) Yet, from an industry perspective it’s catastrophic for Boeing and its reputation with the groups it needs most. One key, and oft-repeated, reaction: “Ok. The regular person in me knows that this objectively funny,” said one U.S. airline staffer. “But the airline employee in me is full of rage at Boeing.” In short, Boeing’s customers are taking the brunt of a storm of its own creation.
All this talk about BCA – let’s have a look see at Defense
………………..Q4……..2023
Revenues $6,746 $24,933
(Loss)/earnings from operations ($101) ($1,764)
Operating margins (1.5) (7.1) %
———————————————-
VC-25B Presidential Aircraft
During 2023, we increased the reach-forward loss on the contract by $482
————————
KC-46A Tanker
During 2023, we increased the reach-forward loss on the KC-46A Tanker program by $309
—————————
MQ-25
During 2023, we increased the reach-forward loss by $231
————————
T-7A Red Hawk EMD Contract & Production Options
During 2023, we increased the reach-forward loss by $275
————————
Commercial Crew
During 2023, we also increased the reach-forward loss by $288
———————–
Well – it looks like business as usual at BDS.
Doing a little digging to find out some of the details on:
Accrued liabilities 22,331 21,581
Which went up again.
————————
What Is Accrued Liability?
(before bedtime light reading)
The term “accrued liability” refers to an expense incurred but not yet paid for by a business. These are costs for goods and services already delivered to a company for which it must pay in the future. A company can accrue liabilities for any number of obligations and are recorded on the company’s balance sheet. They are normally listed on the balance sheet as current liabilities and are adjusted at the end of an accounting period.
An accrued liability occurs when a business has incurred an expense but has not yet paid it out.
Accrued liabilities arise due to events that occur during the normal course of business.
These liabilities or expenses only exist when using an accrual method of accounting.
Accounting for accrued liabilities requires a debit to an expense account and a credit to the accrued liability account, which is then reversed upon payment with a credit to the cash or expense account and a debit to the accrued liability account.
———————————-
https://s2.q4cdn.com/661678649/files/doc_financials/2023/q4/BOEING-10Q-Q42023-013124.pdf
Accrued Liabilities
Accrued liabilities at December 31 consisted of the following:
…………………………………………………………………………2023 2022
Accrued compensation and employee benefit costs $6,721 $6,351
737 MAX customer concessions and other considerations 1,327 1,864
Other customer concessions and considerations 1,300 1,102
Environmental 844 752
Product warranties 2,448 2,275
Forward loss recognition 4,699 4,060
Accrued interest payable 652 599
Current portion of lease liabilities 296 276
Current portion of retiree healthcare and pension liabilities 473 494
Other 3,571 3,808
Total $22,331 $21,581
—————————————-
Forward loss of $4.7 billion that still has to be paid. $2.6 billion in Max & other concessions. ‘Other’ for $3.5 billion.
That’s ~$10 billion that needs to come out of Cash, right there….
Scary
Nah, should be fine. They can always make it up in valium.
Reuters: Analysis-Boeing 737 MAX Crisis Adds to High Demand for Older Planes
Wow, who knew. Town Crier strikes again.
Uhhh – that has been true regardless of the MAX crisis as everyone is flying again at pre Covid + levels (other than China) .
Sun Rises in the East tomorrow, be sure to put it on your calendar.
Boeing tops expectations, a substantial improvement over the previous year!
https://youtu.be/aKnX5wci404
-> Boeing hiring in 2023
6,553 net jobs added in WA state
14,334 companywide
Includes figures for IAM and SPEEA union jobs added
+ I describe the wild swings of Boeing employment in WA since the ’50s, with a chart depicting the last 25 years (since McDD)
https://twitter.com/dominicgates/status/1753418996320469258
@Uwe
‘Did you stumble across information on
how inventory value ( in the form of complete but currently indeliverable stored airframes ) per item is booked/assayed in Boeing’s reporting?’
Here it is:
https://s2.q4cdn.com/661678649/files/doc_financials/2023/q4/BOEING-10Q-Q42023-013124.pdf
pg 62. It’s quite wordy:
Inventories
Inventoried costs on commercial aircraft programs and long-term contracts include direct engineering, production and tooling and other nonrecurring costs, and applicable overhead, which includes fringe benefits, production related indirect and plant management salaries and plant
services, not in excess of estimated net realizable value. To the extent a material amount of such costs are related to an abnormal event or are
fixed costs not appropriately attributable to our programs or contracts, they are expensed in the current period rather than inventoried.
Inventoried costs include amounts relating to programs and contracts with long-term production cycles, a portion of which is not expected to be
realized within one year. Included in inventory for federal government contracts is an allocation of allowable costs related to manufacturing
process reengineering.
Commercial aircraft programs inventory includes deferred production costs and supplier advances. Deferred production costs represent actual
costs incurred for production of early units that exceed the estimated average cost of all units in the program accounting quantity. Higher
production costs are experienced at the beginning of a new or derivative aircraft program. Units produced early in a program require
substantially more effort (labor and other resources) than units produced later in a program because of volume efficiencies and the effects of
learning. We expect that these deferred costs will be fully recovered when all units included in the accounting quantity are delivered as the
expected unit cost for later deliveries is below the estimated average cost of all units in the program. Supplier advances represent payments for
parts we have contracted to receive from suppliers in the future. As parts are received, supplier advances are amortized to work in process.
The determination of net realizable value of long-term contract costs is based upon quarterly reviews that estimate costs to be incurred to
complete all contract requirements. When actual contract costs and the estimate to complete exceed total estimated contract revenues, a loss
provision is recorded. The determination of net realizable value of commercial aircraft program costs is based upon quarterly program reviews
that estimate revenue and cost to be incurred to complete the program accounting quantity. When estimated costs to complete exceed estimated
program revenues to go, a program loss provision is recorded in the current period for the estimated loss on all undelivered units in the
accounting quantity.
Used aircraft purchased by our BCA segment and general stock materials are stated at cost not in excess of net realizable value. Spare parts
inventory is stated at lower of average unit cost or net realizable value. We review our commercial spare parts and general stock materials
quarterly to identify impaired inventory, including excess or obsolete inventory, based on historical sales trends, expected production usage, and
the size and age of the aircraft fleet using the part. Impaired inventories are charged to Cost of products in the period the impairment occurs.
Included in inventory for commercial aircraft programs are amounts paid or credited in cash, or other consideration to certain airline customers,
that are referred to as early issue sales consideration. Early issue sales consideration is recognized as a reduction to revenue when the delivery
of the aircraft under contract occurs. If an airline customer does not perform and take delivery of the contracted aircraft, we believe that we would
have the ability to recover amounts paid. However, to the extent early issue sales consideration exceeds advances and is not considered to be
otherwise recoverable, it would be written off in the current period.
Thank you very much! 🙂
and it is so much mumbo jumbo.
What I’d like to fathom:
Take one 787/737 airframe that has accumulated a certain amount of materials and work : “$manufacturing_and_ancillary_cost”
this same airframe has a commerical value: “$customer_is_supposed_to_be billed_for”
It is stored and thus added to inventory.
by how does inventory value change with this act?
by “$manufacturing_and_ancillary_cost”
or by “$customer_is_supposed_to_be billed_for”
or some intermediate value?
For the regular run of things this should not be problematic.
But for the case where “$manufacturing_and_ancillary_cost”
by far exeeds “$customer_is_supposed_to_be billed_for”
booking frames valued at cost for cosmetic reasons
turns delivering such a frame into a reporting downer.
Here’s where it gets tricky. I’ll quote from the details:
‘Deferred production costs represent actual costs incurred for production of early units that exceed the estimated average cost of all units in the program accounting quantity. ‘
(At this point in time, I’d like RTF to jump in here and give me his opinion. The DPB is supposed to be for ‘early units’, but 1,100+ deliveries on, they are still jamming in expenses into the 787 DPB. How does this pass auditor muster?)
So Boeing has figured out an average cost per aircraft, over the lifetime of the program. Probably has some indexing for inflation.
If costs exceed that average figure, they are doing one of two things;
1) Expensing them as ‘abnormal production costs’ in the period which they are incurred
2) Adding them to the DPB, to be expensed later.
I’ve really no clue as to how they determine what is to be expensed now and what is to be expensed later.
————————–
I wonder if they use this:
‘Units produced early in a program require substantially more effort (labor and other resources) than units produced later in a program because of volume efficiencies and the effects of learning.’
Learning.
Let’s say they ‘learned’ that the 787 is not shimmed properly and required more expenses. Could it technically be added to the DPB?
I go back to the recent uptick of some $200 million added to the 787 DPB in Q4. Certainly not an early production model. Why is it added in?
The fog, indeed.
Hmm, sounds like inventory value is cost accumulated!?
Back when..
My assumption for the motivation to sell “borked” ( 787 prototypes, terrible teens) frames at all cost:
as long as it is a merchandizable item its cost go into the “deferred” basket. asset, looks good.
If it can not carry the amount of lipstick needed without collapse it has to be written off. big tears.
On success the lipstick bill would have gone to deferred too.
$.5 to 1 Billion for the first, second, .. prototype.
Initially I did not understand why they sunk endless money and endless worker time ( valuable! ) into refurbish instead
of removing valuable items and taking more or less fixed frames coming in to produce conforming frames.
There can be a lot of “workarounds”.
I recall ET ordered six 787-8 of the terrible teens which were, in substance, leased by BCC.
Bloomberg:
“The 787 is the world’s first airliner built mainly from composites instead of traditional aluminum. The jet ran more than three years late while Boeing worked out kinks with the carbon-fibre materials, onboard systems and a manufacturing process that relied more heavily on suppliers.
Eager to convert a record order backlog into cash, Boeing stepped up production before the Dreamliner was certified as airworthy. The plane maker wound up having to retrofit about 60 of the first jets to match design changes made during flight testing.
The teens required the most extensive work, including heavy structural reinforcements to bolster their composite shells, and were set aside while Boeing focused resources on later models that it could get more quickly to customers. Carriers, including ANA Holdings Inc.’s All Nippon Airways and Transaero Airlines, eventually opted to take other aircraft.
Boeing has never disclosed the weight difference for the teens. Once the modifications are done, their range will be about 1,000 nautical miles (1,850 kilometres) shorter than later 787s, Avitas has estimated. Boeing advertises a range of 7,850 nautical miles for the 787-8, which seats 242 passengers.
https://www.theglobeandmail.com/report-on-business/international-business/boeing-sells-overweight-terrible-teen-dreamliners/article23190304/
You have to amend that.
All Aircraft mfgs start to ramp up before all the issues are worked out.
Airbus had a major shift after Unit 17 on the A350 line. Quite a bit was changed.
It worked and early customers took them. You never hear what the conversations are on the Airbus end just like the failing paint, its kept between Airbus and the Airlines.
In Boeing case the whole Management end of the 787 failed on rainbows and lolly pops they sold it on, and it cost big time (not that changed Boeing approach to Slowly Liquidating)
Comparable with “[t]he plane maker wound up having to *retrofit about 60* of the first jets to match design changes made during flight testing”??
Cite your source(s).
Nope, I don’t log every article and I have better things to do that play fetch for you.
You can follow it or not like I did.
The 787 did not invent the phrase terrible teens as all mfgs are on a learning curve for the first group.
No question Boeing had severe failures and issues and it should be noted (per Scott/Leeham) that the 787-8 is barely the same aircraft with the nose and the tail being compatible and the rest not.
To follow what? There’s nothing for me to follow!
Did AB also have like $32 billion plus in DFC? 😂
Where can I find it?
https://www.bloomberg.com/gadfly/articles/2016-04-14/boeing-s-32-billion-accounting-question
@Uwe
The way I look at it is this;
It’s pretty obvious what Boeing is doing and one day, it’ll all come out in the wash.
The trick, is to determine when that day is approaching and to not get caught holding the bag.
Someone, in the other thread – mentioned how Boeing is a great deal, because they got in at the bottom and now it’s up.
How about the people who were buying in at $440 because they were told BA is a blue chip company, locked in a duopoly with a huge moat and barriers to entry? You think those people are singing the same tune, losing 50% of their money?
“Airbus had a major shift after Unit 17 on the A350 line.”
the usual distractions from your side.
( some gene defect you can’t think around? )
Airbus does not have a “deferred cost” basket
and the prototypes _that are not worth the effort_ still exist
_inside_ Airbus. used for further testing? whatever.
( ripping out test harnesses and stuff and converting to line produced properties is expensive.
Boeing had to handle massive (re)work on 787 frames to bring them to a “usable but unique sample” state. ( like the first frame delivered to some Japanese Airline.)
One other major issues was that the paper trail for such a frame did have gaps. Ouch!
The more interesting thing is that this was done
for being able to push cost into the deferred cost basket
_not having to write it off_.
Under the assumption that project accounting is acceptable when the user does know what he is doing ( known outlay up front, known revenue in the future )
pushing escalating up front cost into the deferred cost basket is moving massive looses into the future.
The balance projected initially is thus completely broken.
Even when allowing project accounting such operations should be “Verboten!”
It’d be an interesting subject for behavioral scientists: how a mental universe is constructed to sooth their distress; a tragedy of self-deception and blurring the fine line between overconfidence and delusion.
Re: Spirit
I recall BA made $180 m advance to Spirit in 2Q23, and made several changes subsequently because Spirit was in “financial distress”:
• Boeing’s agreement to release Spirit from claims over its supply of defective parts means Spirit won’t have to pay the $23 million it anticipated for the previous 737 defect on fittings in the vertical fin discovered in April;
• Boeing will increase what it pays Spirit for its 787 parts by a total of $455 million over the next two years;
• Those 787 pricing increases will give Spirit an extra $60 million in revenue for the remainder of this year [2023]
‘How Reagan’s Embrace of “Greed is Good” Brought Us Broken Airplane Doors & Being on Hold for Hours…
https://t.co/0jtLcR10ea
https://twitter.com/Thom_Hartmann/status/1751986313493123426
This where the worm starts to dig in and the headlines will continue as Calhoun and his puff go into the rear view mirror.
NTSB will weigh in and that will be headlines again.
As the barrels pour out the answers will be lame and then it give the story more legs.
FAA is on the spot and will be happy to throw Boeing under the plane.
The NTSB in the narrow part has no political calculus (they do want to get some of their recommendation from the past implemented). The interim is its first shoe to fall.
None of it is pretty for Boeing and the financials follow what is going on currently, they don’t lead nor do they predict in a situation like this. In a control statement I can put in a variable and play with it, but I have a good idea of what that variable will do. This is so wide open that the range of possible outcomes is a chasm and it becomes a mash of figures that are not anything other than a worst case best case framing.
I failed to post the article on that reference above.
Pedro took care of it, thank you Pedro.
Yup. Dave was just a bystander during the time he was sitting on the board of BA from 2009, and BA is an innocent victim “crushed” by federal agencies! 🙃
Reuters: US Lawmakers Ask if FAA Found Persistent Boeing Quality Control Lapses
-> A group of U.S. lawmakers want the Federal Aviation Administration to answer key questions about its oversight of Boeing in the wake of a 737 MAX 9 mid-air emergency, including whether it found serious quality issues at the planemaker.
Yea I failed to post the link on that, thanks for sharing the important part.
Its this kind of attention that is not going away.
https://twitter.com/davidshepardson/status/1753450021217804791
->This is a reminder of how long Boeing and the FAA have been at work on the MAX 7 certification
->Here’s the letter FAA sent to Boeing on MAX 7 (Reported earlier by Seattle Times)
https://www.reuters.com/business/aerospace-defense/faa-says-boeing-has-not-completed-work-needed-737-max-7-approval-letter-2022-09-30/
Max 737-7 roll out was 6 years ago, it is delayed ~ 5 years.
NYT: ‘What Should Boeing Do to Fix Its Longstanding Problems?’:
https://www.nytimes.com/2024/02/03/business/dealbook/boeing-culture.html
Good to see Stoller get a mention in an otherwise-shallow piece- if only to be dismissed.
The following was an example from the article of someone who its totally clueless
“Host tech-style product launch events. Ashley Fulmer, an assistant professor at Georgia State University’s Robinson College of Business who researches trust dynamics in organizations, said that Boeing should communicate more with all of its stakeholders, including the general public. She pointed to the types of big product launch events hosted by tech companies like Apple and Meta as one way it could do that. “I think at this point, gunning for no incidents is not enough,” she said. “What they need to have is regular demonstration of ability where, for example, they have innovated design to enhance safety and reliability.”
Wow, its all about PR and not exist blank blowing off. I have a Pinto with exploding gas tank and exploding radial tires for sale. I think she would be first up to buy it!
I think something like what the professor is suggesting is an essential part of rebuilding trust in Boeing products. Of course they need to actually deserve that trust, but as they improve their quality processes they need to show what was done and how its working. As you and everyone else here have pointed out the public is not going to simply accept Boeing or the FAA’s word that things have been ‘fixed’.
TB:
Its not that you are not wrong, but Boeing has not shown in iota of credibility.
They have nothing to build on, so anything they say is fake, false, alternative facts ………
Its going to be a long time and I believe a complete board replacement as well as Calhoun and his gang going down the road.
Calhoun has shown he is incapable to reforming anything and the boards has been complicit.
If I was running things Calhoun would have been given the heave ho when the 787 shim debacle was revealed (realistically I would not have had him as a member of the board let alone CEO)
Time for TC to speak.
“Last chance saloon”?? OMG.
https://twitter.com/jonostrower/status/1754306205332435207
-> BREAKING: Boeing in an internal memo said it has been notified of a new “non-conformance” on two rivets on 50 737 Max fuselages that require inspection and rework.
-> “Boeing on Sunday said it had asked Spirit AeroSystems to halt 737 Max fuselage deliveries to the plane maker’s Renton, Washington final assembly line to catch up on unfinished aircraft moving through its factory, as well as to address a new quality issue that needs to be resolved on roughly 50 aircraft before delivery.
https://theaircurrent.com/feed/dispatches/boeing-halts-deliveries-from-spirit-to-catch-up-on-unfinished-manufacturing-work/
Pedro, great info, thank you.
And I suspect Ismelda (err Boeing) has a lot more shoes that will be dropping.
-> Update: Boeing is holding some fuselage shipments from Spirit — only those that do not meet Boeing’s completed specifications. There are 737 fuselages from Spirit that currently meet the company’s specs and are still being delivered to Renton.
https://twitter.com/jonostrower/status/1754380738664022448
It just keeps getting better at that outfit, no?
Here is routers report and the detail that is behind Jons paywall (he has to make a living, I just miss reading his work) .
https://www.reuters.com/business/aerospace-defense/boeing-delays-some-737-max-deliveries-after-new-quality-defect-2024-02-05/
Note that it does not say inspector caught this, 360 degree team?
Now an employee report that is really nice and gives me a great warm fuzzy feeling, but QC did not flag or catch it any more than they did the Exit Blank rivets (and if the door is from the same Malaysian supplier are any of those installed any better?)
And not this is not a hit at an Asian country. If they can not mfg the part, they have no business in the business be they US or any where else.
It should be well noted that Spirit is quintessential US and they have failed miserably.
Yes it should have been caught in Malaysia but also it should have been caught by Spirit and correction process started immediately.
And if the Exit Blank had bad rivets then the Door will as well and they need to inspect all of them.
Not that Boeing would miss anything of course.
Repeat, the edit function showed up per the above which I was not seeing
Geez who said this has anything to do with work outside the U.S.?? You?