Boeing HQ
The Daily Boeing: key stories for 6 May 2024. This week is bringing more speculation regarding Boeing in news stories, from the Isreali-Hamas conflict to revisiting whistleblower allegations and even speculation about Warren Buffett acquiring Boeing. Other stories spoke about airline compensation for the 737 MAX 9 incident for Alaska Airlines, the seizure of a 737-800 landing gear headed for Russia due to trade sanctions, and Lufthansa now anticipating another delay to the 777-9.
The speculation of further delays for the 777-9 cannot be good news for Emirates, who Airbus is wooing with the A350-1000. While there really is no large aircraft option for Emirates, the smaller A350-1000 will be available on a more timely basis, and Emirates, which has been patient so far, is now looking at a potential six year delay in receiving its first aircraft. The carrier does not have infinite patience.
Would Boeing be a potential acquisition for Warren Buffet’s Berkshire Hathaway? We don’t believe so, as Boeing stock appears currently overvalued with expectations of a ramp-up in deliveries that remains stuck at very low levels that will preclude the company from meeting financial objectives over the remainder of 2024. Buffet is a value investor, and if the stock falls to a value consistent with its performance, rather than its potential, interest could emerge. But paying a premium for a stock that should be trading much lower than its current value doesn’t make sense, in our view.
Links to today’s key stories follow:
- As opposition to Israel’s war in Gaza grows, Boeing arms sales draw scrutiny – Seattle Times
- Boeing gives Alaska Airlines $61 million in credit as compensation for 737 disaster that grounded fleet – Daily Mail
- Boeing terrorized employees into ignoring missing “non-conforming parts” on production floor – whistleblower – Jalopnik
- How crazy would it be if Buffett bought Boeing – Thomas Black- Bloomberg Law
- Boeing 737 landing gear destined for Russia seized after illegal trade exposed – AeroTime
- Lufthansa expects further delay in Boeing 777-9 delivery, anticipates arrival in 2026 – Aviation24
- Boeing replaces firefighters after union talks – NW Ark. Democrat Gazette
- Boeing duped the flying public before Alaska Air blowout, Flight 1282 passengers say: Seattle Times
- Boeing CEO David Calhoun’s 45% pay hike to $32.8 million should be rejected, shareholder advisory says – Fortune
- Boeing is about to face a big test after falling behind Elon Musk’s SpaceX – Fortune
The Bottom Line:
Passengers on the Alaska flight are suing, alleging that Boeing committed fraud in the wake of the two 737 MAX crashes, with Boeing management statements that safety issues were addressed, alleging that the blowout showed that was not true and that management committed fraud. This is on top of the Department of Justice review of the deferred prosecution agreement under which the US government entered into a settlement that did not bring criminal charges against Boeing for fraud in the wake of the 737 MAX crashes. That agreement was breached by Boeing with the Flight 1282 incident, and a decision of whether to prosecute is now under review. There is substantial legal risk for Boeing if one or both of these lawsuits are lost.
A shareholder advisory is now urging Boeing shareholders to reject executive pay in their proxy votes, being upset with his 45% pay hike while the company continues to deal with major self-inflicted problems, including “quality escapes.”
Boeing’s long-delayed Starliner passenger flight to the International Space Station is scheduled for launch tonight at 10:34pm Eastern time. The launch will be covered live on multiple networks and the Boeing website.
Finally, RIP and our condolences to the family of former CEO Frank Schronz, who passed away at age 92. He led the company during a period of innovation from 1986-1996, including the development of the Boeing 777 and the design of the 737NG family that entered service a year later.
