Boeing

[dspp]

....There are still arguments being held over the forum that is the internet saying the US Government cannot allow Boeing to fail. I've never argued and never will argue against that point. But protecting national interests is not the same as protecting shareholders. In any scenario where the US steps in to save Boeing the shareholders are, in my opinion, toast.

....

The share price is now down to $130. Painful and worrying for shareholders.

As a crude approximation, isn't Boeing two businesses? Armaments and Civil Aviation?

What is to stop a split, followed by a Chapter 11 for the Civil Aviation bit? Protecting the US national interests.

Just an idle thought.

1. The product split is not as hard and fast as that. For example the civil 737 is the basis of the military MPA and AWACS aircraft (up until now the NG version, though I am not sure whether next release of Wedgetail was going to be on the Max, as the NG line had shut). Similar for the tankers (which is a very big product line run), etc.
2. The production line split / synergy matters (both people & machinery).
3. The design skillbase is pooled.
4. The through-cycle financial viability of military without civil is questionable, and vice versa.

Therefore if they did what you proposed then I think they would subsequently need to recombine them in some way. I personally put Boeing in the "too big to fail" category for the USA, but as others have alluded to that does not mean that existing shareholders will be protected. If anything I think that CV19 and impending recession gives USA government the perfect cover to step in.

regards, dspp

[EmptyGlass]

https://www.cnbc.com/2020/03/17/boeing-seeking-tens-of-billions-in-us-government-loan-guarantees-sources-say.html?&amp&qsearchterm=boeing

Boeing is seeking “tens of billions of dollars” in U.S. government loan guarantees and other assistance, two people briefed on the matter told Reuters.

[AsleepInYorkshire]

https://www.cnbc.com/2020/03/17/boeing-seeking-tens-of-billions-in-us-government-loan-guarantees-sources-say.html?&amp&qsearchterm=boeing

Boeing is seeking “tens of billions of dollars” in U.S. government loan guarantees and other assistance, two people briefed on the matter told Reuters.

I suspect tomorrow Boeing's share price will plummet.

And I'll say it one more time. In all of this the lives of 346 people and those who survive them will be forgotten.

There's now got to be a serious doubt that the Max will return to service. Without reassurance that the Max will be commercially viable I cannot see the US Government wanting to "prop-up" that part of the business. If Boeing want 10's of billions to [I assume] return the max to service it may simply become more viable to develop a new aircraft. Highly speculative I know.

The great American bean counter has truly been found wanting today.

AiYn'U

[AsleepInYorkshire]

22nd March 2020
Boeing CEO gives up pay, suspends dividend as company seeks coronavirus bailout
The Boeing Company announced a series of moves Friday as it seeks $60 billion in federal assistance for the aerospace industry amid the widening economic crisis. CEO Dave Calhoun and Chairman Larry Kellner will give up their pay until the end of the year and the company will suspend its dividend, Boeing said in a press release.

I read this as "without $60bn Boeing is not going to survive". I also suspect that it's inevitable that Calhoun will leave quite soon. He was, after all, on the board of directors when Boeing's vehicles fell out of the sky.

The share price has fallen another 25% and sits around $95. I have to say it still beggars belief that this stock should be valued so highly.

No dividend payments should have been made after the crashes and the company should have adopted a much more defensive position. It didn't. It continued to stick its arrogant head up its own [proverbial] backside. From the outset this company has always been behind the curve. The result is they are now effectively bust.

There's a huge difference between what this company says about its finances and what they actually are. I suspect they may well have convinced themselves from the outset that they are just too important to fail. During which time they continued to spend money on dividends, work-in-progress and bonus agreements to overpaid directors.

I have no doubt that the US government will underpin Boeing. However, the terms will not see much, if any protection for current shareholders. I am beginning to sense that in the long term Boeing will be broken up.

AiYn'U

[EmptyGlass]

https://www.cnbc.com/2020/03/24/boeing-ceo-will-take-a-few-years-to-get-balance-sheet-back-to-state-before-coronavirus-and-737-max-issues.html

Interesting :-
"The company is a major defense contractor and said that the U.S. Department of Defense is working on accelerating payments, Calhoun said."

[AsleepInYorkshire]

24th march 2020
Trump says he will not let Boeing go out of business
"And they're going to pay interest and they're probably going to give stock in their company to the people of our country, to the taxpayers of our country, to the citizens of our country," Trump said.

Boeing CFO says aerospace industry needs credit urgently, markets closed to new debt
Boeing Co’s (BA.N) chief financial officer said on Tuesday the U.S. aerospace industry urgently needs credit to cope with the coronavirus pandemic but “markets essentially are closed” to new debt.

Boeing CEO says he’d resist aid if U.S. demands equity stake
“I want (the government) to support the credit markets, provide liquidity. Allow us to borrow against our future,” Dave Calhoun said in an interview.

AiYn'U

[EmptyGlass]

https://www.cnbc.com/2020/03/24/boeing-plans-737-max-production-restart-by-may-sources-say.html

Boeing plans to restart 737 Max production by May, sources say.

(I'll believe it when I see it.)

[AsleepInYorkshire]

https://www.cnbc.com/2020/03/24/boeing-ceo-will-take-a-few-years-to-get-balance-sheet-back-to-state-before-coronavirus-and-737-max-issues.html

Interesting :-
"The company is a major defense contractor and said that the U.S. Department of Defense is working on accelerating payments, Calhoun said."

I've been thinking about the US Government using Covid 19 as a means to throw a wad of cash at Boeing. If the US argue that it's only fair then they can't argue that Airbus couldn't and shouldn't do the same and acquire a huge chunk of European money. Could almost be a double edged sword.

AiYn'U

[AsleepInYorkshire]

https://www.cnbc.com/2020/03/24/boeing-plans-737-max-production-restart-by-may-sources-say.html

Boeing plans to restart 737 Max production by May, sources say.

(I'll believe it when I see it.)

It sounds like another roll of the dice for a desperate gambler. Literally Boeing have no other route to take. They are simply going where the gorilla takes them. If they aren't selling aircraft and they aren't why build more? With C19 threatening airlines balance sheets the risk to Boeing is some large cancellations of outstanding orders. They have to build more to keep their workforce and supply chain intact. Catch 22?

AiYn'U

[BobGe]

Literally Boeing have no other route to take.

Buzzzzzz... Deviation?

[dspp]

These P8 are 737-NG plus lots of modifications. They are not based on the 737-MAX.

"The US Department of Defense (DoD) has awarded Boeing USD1.5 billion to build P-8A Poseidon maritime multimission mission aircraft (MMA) for the US Navy (USN), South Korea and New Zealand."

https://www.janes.com/article/95210/boe ... n-contract

I am sure great care will be taken to channel the maximum military orders into Boeing over the coming years.

regards, dspp

[monabri]

How are Boeing going to build anything? Aren't they on lockdown?

Regarding support...there will be lots of research contracts with massive margins as well. All good value for tax dollars.... .... ..

[AsleepInYorkshire]

3rd April 2020
Boeing takes new blow with Avolon scrapping $3.8 billion order
As the covid-19 pandemic slams travel demand, Boeing’s beleaguered 737 Max program suffered a further blow as plane-leasing firm Avolon canceled a deal for 75 jets.

Boeing to Offer Early Retirement & Buyout Packages to Cut Costs

AiYn'U

[dspp]

"Boeing kills its $4.2 billion purchase of Embraer as coronavirus roils the aviation industry"
https://www.seattletimes.com/business/b ... f-embraer/

"By Dominic Gates
Seattle Times aerospace reporter

After more than two years of negotiations, Boeing on Friday abruptly terminated its proposed $4.2 billion deal to acquire the commercial jet business of Brazilian regional jetmaker Embraer.

Boeing let a midnight Friday deadline to extend negotiations over the closing terms of the deal, citing an inability to come to a final agreement. “Boeing exercised its rights to terminate after Embraer did not satisfy the necessary conditions,” the company said in a statement.

However, industry observers who had been expecting the decision believe the key reason for terminating the deal is the collapse in demand for airplanes due to the coronavirus pandemic and Boeing’s urgent need to conserve cash as revenue dries up.

The pandemic has so changed Boeing’s circumstances that killing the acquisition plan has looked inevitable.

Politically, going forward with a major foreign investment could have derailed Boeing’s negotiations with the U.S. government for a massive loan to survive the brutal business downturn."

etc

I am sure China can fill the gap.

- dspp

[AsleepInYorkshire]

27th April 2020
Boeing investors could wait ‘years’ for dividend to return
"It seems to be gradually dawning on investors that Boeing’s governance has been less than ideal,” said aerospace analyst Richard Aboulafia at Teal Group. “It's been two decades, but better late than never.”

First quarter results (iirc) to be announced on Wednesday.

AiYn'U

[AsleepInYorkshire]

April 27th 2020
Boeing CEO Offers Hard Truths On Jobs, Dividend, Buybacks Ahead Of Q1 Report
When asked when Boeing stock will pay dividends again, Calhoun replied, "It will be years."

Poor Defense Deliveries to Hit Boeing's (BA) Q1 Earnings
The Boeing Company’s BA Defense, Space & Security (BDS) segment is likely to have recorded marginal growth in first-quarter 2020, thanks to poor deliveries of the company’s varied defense products.

Boeing CEO sees long road to recovery from virus outbreak
Boeing's CEO said Monday that it will take years for the aircraft-building business to return to levels seen before the coronavirus pandemic, which has slowed air travel to a trickle and led airlines to park 2,800 jets.
“We know we are going to have to borrow more money in the next six months in order to get through this really difficult moment” and help suppliers, Calhoun said without detailing where or how much Boeing will borrow.

Boeing workers to return to Dreamliner factory in South Carolina next month after closure amid coronavirus
CEO Dave Calhoun earlier Monday told shareholders that he expects it to take two or three years before travel demand returns to its 2019 levels and that international travel would take longer to rebound. That’s bad news for demand for 787 Dreamliners that are used for those long trips and are made in South Carolina and in the Seattle area. Boeing is expected to make further cuts to its already-reduced 787 production target in the coming months.

1. More debt
2. Reduced orders
3. Dreamliner flatlining
4. Max return delayed
5. No dividend for years
6. Embraer filed for arbitration
7. Shareholders ignore advisory against 5 directors to be elected

All the buybacks and hefty dividends don't look as good now. For those who hold this is going to be a long term hold and suffer or an exit with a [potential] capital loss.

The Chicago-based company will report first-quarter results on Wednesday, and analysts surveyed by FactSet expect a loss of more than $500 million, or $1.57 per share.

Stock price at today approx $132 (USD)

AiYn'U

[AsleepInYorkshire]

29th April 2020
Exclusive: Boeing eyes major bond issue to raise funds - sources
Boeing Co is working with investment banks on a multibillion-dollar bond-fueled financing package, aiming to shore up its balance sheet amid a sharp travel downturn from the pandemic, three people familiar with the matter said on Tuesday.

Boeing tells workers terms of voluntary layoffs, says air travel recovery will take years
Speaking at the company’s annual meeting of shareholders, which was held virtually because of the pandemic, he added that when the commercial airline market stabilizes, it “will be smaller and our customers’ needs will be different.”

Boeing 737 MAX expected to remain grounded until at least August: sources
Boeing Co’s (BA.N) grounded 737 MAX jet is expected to remain grounded until at least August as the manufacturer continues to grapple with software issues, people briefed on the matter told Reuters.

Boeing probed for quality-control lapses on 737 Max assembly line
Boeing potentially faces far greater legal liability than previously known. Boeing faces criminal and civil scrutiny into years of widespread quality-control lapses on its 737 Max assembly line, according to people familiar with the details, potentially exposing the plane maker to greater legal liability than previously anticipated by industry and government officials.

Southwest cuts Boeing jet deliveries after first quarterly loss in nine years
Southwest Airlines Co (LUV.N) said on Tuesday it has agreed with Boeing Co (BA.N) to sharply cut its 737 MAX delivery schedule through 2021 and is reviewing its order book as the coronavirus pandemic caused its first quarterly loss in nine years.

1. Best seller remains grounded until August
2. Boeing eyes bond markets again
3. Redundancies and scale reductions ahead
4. Admission and understanding that "customers will have changed needs" - less new aircraft?
5. Significant downward pressure on Dreamliner

AiYn'U

[dspp]

I think a Comac/Embraer joint venture and/or full merger might be on the cards. That would turn Boeing's headache into a migraine.

regards, dspp

[AsleepInYorkshire]

RNS 29th April 2020 1st Quarter Results

(Loss)/Earnings From Operations ($1,353)

AiYn'U

[AsleepInYorkshire]

1st May 2020
Boeing borrows $25 billion instead of pursuing federal bailout amid coronavirus, 737 Max crises

The debt deal included seven tranches with maturities in the range of three to 40 years.

Err ... wow! A staggering amount.

AiYn'U