It's Been a Very Bad Week for Boeing

Summary

The 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

00:00

🛫 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.

Keywords

💡Tebowing

Tebowing is a reference to a popular internet meme where people mimic the pose of former NFL quarterback Tim Tebow, who would kneel and pray on one knee after scoring a touchdown. In the context of the video, it seems to be used humorously to refer to a series of unfortunate events related to Boeing, possibly as a way to lighten the mood when discussing serious issues.

💡Boeing

Boeing is an American multinational corporation that specializes in aerospace and is known for manufacturing commercial airplanes and defense products. In the video, Boeing is discussed in relation to manufacturing issues, safety concerns, and its relationship with the Federal Aviation Administration (FAA) and Spirit AeroSystems.

💡NTSB

The National Transportation Safety Board (NTSB) is an independent federal agency in the United States responsible for civil transportation safety. In the video, it is mentioned that the NTSB accused Boeing of not cooperating, which suggests issues with transparency and regulatory compliance.

💡FAA

The Federal Aviation Administration (FAA) is the national aviation authority of the United States. It regulates civil aviation to ensure safety. In the context of the video, the FAA is monitoring Boeing and has told them to stop production, indicating serious concerns about Boeing's manufacturing processes and safety standards.

💡Spirit AeroSystems

Spirit AeroSystems is an American aerospace manufacturer that produces structures, systems, and components for both commercial and military aircraft. The video discusses a potential deal between Boeing and Spirit, which could have implications for quality control and production efficiency.

💡Quality Control

Quality control refers to the process of ensuring that products or services meet certain standards of quality. In the video, quality control is a significant concern for Boeing, as manufacturing issues have led to safety concerns and regulatory scrutiny. The discussion of the Spirit deal touches on whether in-house management could improve quality control for Boeing.

💡Stock

A stock represents a share in the ownership of a company. The video mentions Boeing's stock price, which is an indicator of investor confidence in the company's financial health and future prospects. The stock's performance can be affected by news about the company, such as manufacturing issues and regulatory actions.

💡Orders and Deliveries

Orders and deliveries refer to the number of aircraft that Boeing is expected to sell and deliver. The video mentions that Boeing's expected deliveries are significantly lower than what they should be, which reflects the impact of the production issues and the grounding of the 737 MAX aircraft.

💡Production Line

A production line is a series of operations or processes through which a product passes to be manufactured. The video discusses Boeing's production line, specifically the potential for bringing the production of certain components in-house, which could affect efficiency and quality control.

💡Free Cash Flow

Free cash flow is the amount of cash a company generates after accounting for cash outflows to support operations and maintain capital assets. It is an important measure of a company's financial health. In the video, Spirit AeroSystems' negative free cash flow is mentioned, indicating financial challenges and the need for strategic changes.

💡Airbus

Airbus is a European multinational aerospace corporation that produces commercial, military, and space hardware. The video mentions that Spirit AeroSystems has diversified its business to include work for Airbus, which is significant because it shows the company's efforts to expand beyond its reliance on Boeing.

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.