Boeing HQ
Let’s begin with good news for Boeing, an order for 50 737 MAX 8 models from China’s CBD Leasing. With book to bill ratios down this year, a major order bodes well for Boeing. Competitively, however, CBD recently placed an order for 80 Airbus narrow-bodies, with Airbus getting about 60% of their orders. That matches the recent market share and backlog differential between the two competitors, a 60-40 split in favor of Airbus.
But these orders make it clear that demand for efficient airplanes remains, as a McKinsey interview with Darren Hulst at Boeing emphasized. Darren is responsible for Boeing’s Current Market Outlook, and their projections for aircraft demand to double by 2043. This is an interesting read.
In other news, KIRO news radio in Seattle is blaming Boeing’s high debt levels, rather than the strike, for the non-union furloughs announced by the company. Had Boeing not invested $43 billion in share buybacks over the last few years that netted the company no benefit, it would have had adequate cash to withstand the strike.
While the strike doesn’t impact the Defense, Space, and Security facilities, it does impact military programs that are based on civil models and produced in the Puget Sound factories. The KC-46A tanker based on the 767-200 and the P-8 Wedgetail based on the 737-800NG will be impacted by the strike.
Federal mediation in the strike has begun, but Boeing was accused of being ‘unprepared’ for the mediation session, frustrating the union representatives. That doesn’t sound to us like ‘bargaining in good faith’ or changing the culture at the company.
Finally, the Economist wonders how much trouble Boeing is in. They conclude ‘Boeing may not be at risk of collapse, but the longer it takes to spin up its engines again, the further behind it will fall.’
Links to today’s key news items follow:
- Boeing’s nice MAX win with CBD Leasing – AirInsight
- Demand for efficient airplanes remains:Â An Interview with Darren Hulst – McKinsey
- Boeing blames strike for furloughs while numbers show past debt – KIRO
- Boeing workers strike will hit Pentagon programs – Defense and Security Monitor
- Boeing accused of being ‘unprepared’ for federal mediation as strike continues – Yahoo
- How much trouble is Boeing in? – The Economist
