Today’s key stories focus on Boeing’s inability to hit year-end production targets, as well as Airbus inability to kick Boeing while it is down. Two rating agencies, Moody’s and Standard & Poor’s, project that Boeing will not hit its year-end production targets, falling short of its delivery projections and, importantly, cash flow. The agencies do not yet appear to be ready to downgrade the company’s securities to junk status quite yet, however.
Airbus CEO Christian Scherer spoke to the Wall St. Journal about the inability for Airbus to take full advantage of Boeing’s weakness given its own supply chain problems and GTF engine reliability issues. The fact that Airbus can’t deliver to customer demand, leaving the MAX as the more available narrow-body alternative, has helped Boeing more than many analysts realize.
In a report from Ron Epstein at Bank of America it appears that another “quality escape” has emerged with the 737 MAX, this one involving non-conforming electrical junction boxes. When we have more details, we will provide them, but it appears another “Whack-A-Mole” issues has arisen. This could potentially further slow production and will require retrofits to at least three existing aircraft, with likely inspections for others.
Boeing’s July deliveries were flat with last year, and indicate the slow recovery that Boeing faces in trying to reach its goal of 38 aircraft per month. The company is nowhere near that in new production, as a good portion of deliveries last month were from inventory rather than newly built aircraft. With China once again taking aircraft, we may see further reductions in inventory, which would be good for Boeing since it would reduce carrying costs while generating final delivery cash flow. Let’s hope that momentum can build.
Finally, in an assessment of the Starliner program, which has lost $1.6 billion and underperformed its competition, indicates that it is “hanging by a thread” and that any future Boeing contract extensions may not materialize from NASA. The agency has the option of going back to the drawing board to find another alternative for its manned transportation program to and from the International Space Station.
Links to today’s key stories follow:
- Moody’s and S&P doubt Boeing will hit year-end production targets – Reuters
- Boeing is in crisis. Airbus is struggling to power ahead – WSJ
- Airbus is having trouble kicking Boeing while it’s down – Quartz
- Problematic parts discovered in several Boeing passenger planes – KING 5 Seattle
- Boeing discovered a new set of problems in its 737s, further slowing deliveries – Fortune
- Boeing’s July deliveries show slow recovery to pre-crisis output – BNN Bloomberg
- Boeing’s ambitions of challenging SpaceX are handing by a thread – Business Insider
- Boeing’s Starliner could spin out of control and crash into space station, expert warns – Futurism
