Daily Insight: Wednesday 1 May 2019: Boeing: And the Hits just Keep on Coming!

News

There were a number of headlines yesterday related to the MAX.  With this being May 1st, perhaps Boeing should issue a mayday call, as the program seems to attract more bad news daily.  The thread that weaves through these stories is a loss of trust in the MAX aircraft and Boeing.

• Boeing

  sells 3.5B in bonds, gets 1.5B line of credit.  The MAX costs are clearly adding up, and Boeing needs to cover negative cash flows

• Virgin Australia defers MAX deliveries to 2021
• Fly Dubai now considering Airbus, Al-Maktoum critical of Boeing transparency
• Boeing never tested the failure of critical sensor – despite 216 incidents reported to the FAA since 2004
• Southwest loses top spot in customer satisfaction – a MAX impact?
• China’s news coverage of Boeing lawsuits is extensive, with a message implied

Analysis

It is amazing how many issues on the 737MAX can be raised in a 24 hour period since yesterday.  Clearly, Boeing’s addition of $5 billion to cash provides a cushion against the cash flow issues associated with a mounting level of both finished goods and parts inventories.