Boeing HQ
Today’s key news for Boeing is their $21 billion capital raise to repair their balance sheet and provide adequate cash over the coming year. With significant scheduled debt repayment and funding of operating losses and cash deficits looming, the company needed relief from its cash constrained position after years of substantial losses. With the IAM currently on strike and no narrow-body aircraft revenue, the company will burn through approximately $1 billion per month while the strike continues.
The capital raise provides Boeing with the financial relief necessary to bring them through 2025 and hopefully in a position from which they can generate positive earnings. But a number of significant tasks remain, some of which, including FAA oversight upgrades, remain beyond the company’s control.
Boeing has continued to accept new LEAP-1B engine deliveries from GE, and has accumulated a “low three digit” inventory of excess engines. With supply chain constraints for high pressure turbine blades, this will enable Boeing to quickly re-ramp production of the 737 MAX once the strike ends.
With respect to the Space operations, discussions have apparently opened with Blue Origin, owned by Jeff Bezos, regarding acquisition of Boeing space. The United Launch Alliance JV position owned by Boeing is already known to be the subject of acquisition discussions with Sierra Space. The question now is whether recent setbacks, including Starliner’s failure to bring astronauts home and the recent explosion of a Boeing-built satellite into many more pieces than previously thought could become a drag on pricing, however.
This week two more major airline CEOs have issued sharp messages to Boeing regarding late deliveries. Southwest and American both want their aircraft on time, but will be forced to curtail planned schedule expansions due to a lack of new lift. But, given a full order book at Airbus and no deliveries available until 2031, they have no viable alternative that to stick with Boeing. Southwest, an all Boeing 737 customer, has been one of the hardest hit customers as the MAX 7, planned to be a large element in their fleet, remains to be certified by the FAA,
Finally, the Texas judge that needs to approve the Deferred Prosecution Agreement with the Department of Justice has brought Diversity, Equity, and Inclusion (DEI) into the equation with respect to selecting Boeing’s independent monitor. Unfortunately, we’re not yet at a day when racial considerations will no longer be relevant, and conservative judicial politics creep into legal settlements. The insertion of questions regarding DEI into the proceedings by the judge has been widely seen as inappropriate, yet there is little the two parties can do about it. The DOJ is maintaining its civil rights policies, which the judge apparently wants them to reject, and Boeing is not taking a position on DEI in this matter.
All the while, the victim families, who have been seeking some justice with teeth since the 2018 and 2019 MAX crashes, are waiting for a resolution that provides more than a slap on the risk and sweetheart deal for Boeing. The wheels of justice turn very slowly.
Links to today’s key stories follow:
- Boeing raises $21 billion in capital to repair balance sheet – Seattle Times
- Boeing’s stock sale went surprisingly well – Quartz
- Boeing continues to accept LEAP-1B deliveries despite machinists’ strike – Flight Global
- Boeing satellite exploded into at least 500 pieces of debris – Futurism
- Boeing could sell space business to Blue Origin – Manufacturing
- 2 major airline CEOs have issued a clear message to Boeing in the past week: Do better – Business Insider
- DOJ’s legal pact with Boeing has a new hurdle: DEI – Yahoo
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