boeing and it's bad omen👎
Kevin's Newsletter #34
Boeing is an iconic American company. The aerospace and defence giant helped put the first astronauts on the moon and played a key role in the Allies’ victory in WWII. Boeing, however, posted its first annual loss in 22 years in 2019 and The aircraft manufacturer also reported that the company lost close to $12 billion in 2020, a record loss, as the pandemic depressed demand for new aircraft and the company continued to reel from its 737 Max debacle.
Boeing arrives at this crossroads in the wake of two crashes within five months, in late 2018 and early 2019, of its best-selling 737 MAX jetliner that took the lives of 346 passengers. Now, according to Boeing’s own research, 40% of travellers are unwilling to fly on the plane, which had been grounded worldwide, costing airlines over a billion dollars in losses and shaking the confidence of investors and government regulators.
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As airlines try to cope with their own huge financial losses, they are now deferring orders and delaying deliveries of new planes. And Calhoun doesn't expect demand to bounce back any time soon.
"We expect it will take around three years for travel to return to 2019 levels, and a few years beyond that to return to our long term growth trend," he said.
Demand for the biggest commercial jets, widebodies, including the 777 and 787 that fly long-haul international routes, is particularly down and expected to remain so.
But it's not just the pandemic that is dragging down Boeing. The company is facing a huge challenge with its new 777X, a longer variant of the widebody 777, taking a $6.5 billion write-off on the still unfinished aircraft.
Boeing has also had a slew of other design and production problems with the 787 Dreamliner and the KC-46 mid-air refuelling tanker for the Air Force.
And then there's the 737 Max, a plane that Boeing had staked its future on as it became the best-selling commercial jet in the company's history before two crashes, five months apart, that killed 346 people.
Boeing is the largest manufacturing exporter in the United States, and its fate can sway the national economy. It employs more than 130,000 people, in all 50 states, and supports a network of thousands of suppliers.
Problems have been mounting on, as Sara Nelson, the president of the Association of Flight Attendants union, said the messages revealed a “sick” culture at Boeing, noting that “the trust level was already in the toilet.”
The internal communications, which were provided to congressional investigators and cover a five-year period before the crashes in late 2018 and early 2019, show Boeing employees cavalierly dismissing the Federal Aviation Administration, which certified the Max as safe to fly. Ahead of a 2016 meeting to discuss training requirements for the plane, a Boeing employee described regulators as “dogs watching TV.” Another time, a Boeing employee wrote: “There is no confidence that the F.A.A. is understanding what they are accepting (or rejecting).”
This just brings bad faith on Boeing as a Customer and an employee too.
Boeing is absolutely in the worst shape it's ever been in, as is the broader commercial aero market. The company is facing serious market challenges with this terrible downturn, basically starting up the 737 Max program again, which is inherently costly, and of course, wrestling with developing this very expensive new derivative of the 777 that's entering a market that really doesn't want a plane in that class right about now.
At the end of the day, they've got a very strong position in a longtime growth market and they also have a very strong position in U.S. defence, which is still a very large market. They'll get out of this but in terms of where they find themselves at this moment in time, it's a pretty bad situation.
Boeing's road to recovery and eventual profitability is a very long one.
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Good information, it's seems fighter aircraft is more in use in today's world.