It's Been a Very Bad Week for Boeing
Summary
TLDRThe transcript discusses various challenges faced by Boeing, including a minor fire on a plane, manufacturing process issues, and the NTSB's claim of lack of cooperation. It also touches on Boeing's stock performance, upcoming order and delivery reports, and the potential acquisition of Spirit AeroSystems. The conversation highlights the complexities of the deal, Spirit's financial struggles, and the implications for Boeing's focus on its production line and quality control.
Takeaways
- 🛬 Tebowing incident occurred due to multiple issues, including a minor fire on a Boeing plane.
- 🚫 Boeing has faced criticism for potential manufacturing issues and lack of documentation.
- 🤝 The NTSB accused Boeing of not cooperating, but Boeing claims they are providing as much information as possible.
- 📉 Boeing's stock price is at 200, and they are expected to report low February orders and deliveries.
- ✈️ The FAA has instructed Boeing to halt production, impacting their delivery numbers.
- 📉 Spirit AeroSystems, a Boeing supplier, faced financial difficulties with a cash flow loss of about $350 million last year.
- 💼 Spirit AeroSystems has diversified 20% of their business to Airbus but still faces challenges with quality control and cash flow.
- 🤝 There is speculation about Boeing potentially acquiring Spirit AeroSystems, which could help with quality control issues.
- 🔄 The acquisition of Spirit AeroSystems by Boeing would be complex, especially considering their Airbus business and financial situation.
- 🏭 Boeing may not fully integrate Spirit AeroSystems into their operations, potentially keeping them under the Boeing umbrella in name only.
Q & A
What was the incident involving a Boeing plane mentioned in the transcript?
-There was a minor fire on the engine of a Boeing plane.
How does the speaker view the minor fire incident on the Boeing plane?
-The speaker acknowledges it as a normal issue that can happen with planes, but also emphasizes the importance of safety and the fact that no one was injured.
What has been a recent issue with Boeing's cooperation with the NTSB?
-The NTSB has criticized Boeing for not cooperating, but Boeing has claimed they are providing as much detail as they can.
What is the significance of the upcoming February orders and deliveries report for Boeing?
-The report is significant because it will show the number of deliveries on the Boeing Max, which is expected to be low, indicating potential problems in their production line.
Why is the FAA monitoring Boeing's production?
-The FAA is monitoring Boeing's production and has told them to stop production due to issues with the Boeing Max deliveries.
What is the potential deal between Boeing and Spirit AeroSystems?
-The potential deal involves Boeing taking Spirit AeroSystems in-house, which could help with quality control and other issues, but also adds complexity to Boeing's operations.
What has been Spirit AeroSystems' financial situation?
-Spirit AeroSystems has faced financial difficulties, including a loss of about 350 million in cash flow last year and a need to refinance their debt.
How has Spirit AeroSystems diversified its business?
-Spirit AeroSystems has diversified by doing 20% of their business with Airbus, in addition to their work with Boeing.
What are the challenges Spirit AeroSystems faces with its Airbus work?
-Spirit AeroSystems is still losing 200 million in annual free cash flow from their Airbus work, which they need to address.
What is the complexity of the potential deal between Boeing and Spirit AeroSystems?
-The deal is messy because Boeing would likely not buy the Airbus business from Spirit, and there are questions about the price at which they could sell it.
Outlines
🛫 Boeing's Challenges and the Spirit Deal
The paragraph discusses various issues related to Boeing, including a minor fire on an engine, the company's cooperation with the NTSB, and manufacturing process concerns. It also touches on Boeing's stock performance, upcoming order and delivery reports, and the FAA's directive to halt production. The conversation shifts to the potential acquisition of Spirit AeroSystems, the challenges Spirit faces, and the implications of such a deal for Boeing's focus on its production line and the messy nature of the potential transaction.
Mindmap
Keywords
💡Tebowing
💡Boeing
💡NTSB
💡FAA
💡Spirit AeroSystems
💡Quality Control
💡Stock
💡Orders and Deliveries
💡Production Line
💡Free Cash Flow
💡Airbus
Highlights
Tebowing incident mentioned as a series of unfortunate events.
Minor fire on a united plane's engine discussed in a light-hearted manner.
Boeing's manufacturing process potentially lacking documentation, leading to issues.
Boeing's stock price at 200 and upcoming February orders and deliveries report.
FAA monitoring Boeing and instructing them to stop production.
Boeing's potential cooperation with the NTSB despite claims of non-cooperation.
Spirit AeroSystems deal with Boeing, possibly imminent.
Dave Calhoun's initial reluctance to bring Spirit in-house.
Boeing's focus on its own production line and potential impact of Spirit acquisition.
Spirit AeroSystems' financial struggles, including a cashflow loss of 350 million.
Spirit's diversification to Airbus and ongoing financial challenges.
The complexity of the potential Boeing-Spirit deal, including the Airbus business aspect.
Spirit's need for a strategic change due to financial difficulties.
The potential impact of Boeing taking Spirit in-house on their operations and quality control.
The messy nature of the deal between Boeing and Spirit AeroSystems.
Transcripts
So we get Tebowing then, because there was like how many things happened.
We all fell off on a united plane. There was a fire, a minor fire on the
engine, minor fire. And like, put that into perspective for
us because we can sit here and joke about it.
We're glad no one was injured. We can joke about it and then be like,
oh, Boeing. But like, these are issues that happen
with planes a lot. Right.
So where's the distinction between Boeing's got real problems with like,
yes, this is normal stuff that happens to planes.
Yeah. There's been a lot of Boeing news.
The NTSB came out said they weren't cooperating.
You know, Boeing has specifically said they did provide names and they're
cooperating as much as they can. I do believe that they are providing as
much detail as they can. Part of the issue is in their
manufacturing process, potentially, they don't have the documentation and that's
what results in some of these back and forth.
But, you know, the stock's at 200. They're going to report February orders
and deliveries on Tuesday at 11 a.m.. And we think they could come out with as
low as 17 deliveries on the max. Keep in mind, they should be at 38
today. We know they're not at 38 because the
FAA is monitoring them, telling them to stop production.
Yeah. So all this news flow doesn't help.
And of course, the Spirit news last week, there's a deal that's probably
imminent. Yeah, well, what do you make of that,
that spirit deal? I mean, do you think that that would
help them by having this back in-house, fully in-house, Does that help with
quality control and some of these other issues?
Or is this just maybe just add another burden, I guess, to what Calhoun's
trying to do over there? Yeah, I think, you know, clearly Dave
Calhoun 12 months ago or nine months ago was not so keen on in housing spirit.
You know, what they've done is put in a Boeing 30 year veteran to run spirit.
He's been there since October 3rd and potentially he could turn it around.
But clearly, there's other factors in here, like the FAA asking Boeing to take
it in-house, but it's probably not the best idea in our view, just because
Boeing has to focus on its own production line and whether it's not
going to bring the Wichita work to Renton, it's still going to stay in
Wichita and be separate. So it's going to just be under the
umbrella in name only, but not really. Exactly.
Gotcha. But one quick point on that.
Don't they have to kind of by spirit? Like I said, you better them focus on
production line. But don't they have to?
I mean, is there any other option? Spirit could be a standalone entity
still. Yeah, it's it's gone through the worst
of things. It lost about 350 million of cashflow
last year. It had a free cash flow outage.
They refinanced their debt. They're actually at a turning point.
They've diversified 20% of their business to Airbus.
Now, the problem with them, aside from the Boeing factory issues that they've
had, which is quality issues, is that their Airbus work is actually still
losing 200 million of annual free cash flow.
So they have to do something with that. So if Boeing does take them in-house,
first of all, they're not going to buy the Airbus business.
What price of they're going to be able to sell it at?
So the deal is messy, to say the least.
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