Boeing HQ
Today’s key stories address the timeframe for a Boeing turnaround, which one industry veteran stated may take a decade. Kelly Ortberg needs a few key successes early on to set the tone for his tenure, and is doing many of the right things so far – speaking directly with employees, walking the shop floor, and meeting with key customers to restore confidence in the company’s plans.
In other stories, differing space suit designs for SpaceX and Boeing spacecraft may stall the astronauts’ return from the International Space Station. Boeing spacesuits are updated designs from the same company that built suits for Gemini and Apollo, while SpaceX suits were designed for fashion as well as function, with an innovative single plug with multifunctional capabilities. Unfortunately, the Boeing suits don’t fit in the SpaceX chairs on board. The rescue vehicle may need to bring additional spacesuits should the return utilize the SpaceX system.
In other stories impacting Boeing, Southwest Airlines battle with Elliott is turning into a proxy fight that could result in a strategy change for their single fleet type strategy. Given that they are the largest 737 customer, that could impact the future order books and deliveries if Elliott decides that a change is necessary. Southwest has long needed the smaller MAX 7, and has been waiting for the “right sized” airplane for more than half a decade.
FlyDubai has cancelled new routes planned for 2024 because deliveries of the MAX airplanes planned for those routes have been delayed. The economic impact of Boeing delivery delays is continuing to be felt across the industry, and the penalty costs for Boeing continue to grow as the company works to return its supply chain and manufacturing processes to normal rates while delivering high quality products. Not only is cash flow deferred with delayed deliveries, but margins also shrink from higher costs and penalty payments.
Finally, with the DOJ in their third review process of the Hawaiian-Alaska merger and a decision coming soon, there are concerns in some quarters that the merger could be denied. While we believe that to be unlikely, given the separate branding and increase in competitive routes, the carriers would dominate the Seattle-Honolulu route. Our expectation is that minor concessions will be required for the deal to be approved that will be a positive for both airlines.
Links to today’s key stories follow:
- Boeing’s new CEO may need a decade to truly turn things around, says one veteran leader – Yahoo
- Space suit designs could stall astronauts’ return from the International Space Station – Inc.
- Flydubai cancels new routes planned for 2024 due to Boeing jet delivery delays – The National
- Southwest digs in for boardroom battle with Elliott – Yahoo
- Hawaiian Holdings stock falls as DOJ set to rule on Alaska Air deal – Investopedia
