The aircraft manufacturer Boeing is still deeply in crisis. The 737 Max, the Group’s best-selling aircraft, still has a worldwide flight ban after two crashes and uncovered breakdowns. The balance of the year 2019 is expected with worry lines.
From a flagship company to a crisis: The aircraft manufacturer Boeing is struck by the global flight bans for 737 aircraft that were imposed after two devastating plane crashes. After CEO Dennis Muilenburg was fired shortly before Christmas, his successor Dave Calhoun now presents the business figures for the first time. After the disaster year 2019, investors are preparing for a horror balance with immense burdens and special costs.
The biggest challenge, however, remains unsolved: getting the crisis pilot back into the air. Boeing assumes that the 737 Max will continue to be banned from flying for months. The US aviation group recently expected to re-register the “mid-2020” series. This means that Boeing’s best-selling model stays on the ground much longer than expected by the company. The schedule is entirely in the hands of the air traffic control authorities.
The $ 12 billion hole
A look at the order books shows how important the 737 Max is for Boeing. By the end of December 2019, 4932 copies of the MAX version had been ordered and 387 of them had been delivered. The failure has already created huge holes in the balance sheet. US media reported this week about $ 12 billion in finance loans that Boeing has agreed with banks given the precarious situation.
The figures for the fourth quarter should underline the misery once again. Analysts anticipate a further slump in profits and earnings. Since Boeing’s 737 Max has not been allowed to take off worldwide since the middle of March 2019 after the two crashes with a total of 346 deaths, the bestseller can no longer be delivered to customers since then. This puts enormous strain on the manufacturer, especially since Boeing initially continued to produce the 737 Max in stock, although the high costs did not offset the high costs. The emergency brake was only pulled in January and production stopped.
Given the adverse circumstances, it is almost a miracle that the stock price [ISIN US0970231058] hasn’t given in any more. Over the past year, the paper has only lost 13.25 percent in value
Boeing shares [ISIN US0970231058], 5-year development. For current price information please click on the chart.
–
© trend / bankkdirekt.at
The new boss should fix it
Experts hope, however, that the situation will improve after Muilenburg’s expulsion, which has long been criticized for its crisis management. “Under Calhoun, Boeing is now becoming increasingly realistic with regard to the schedule and is finally putting all scandalous facts on the table for the supervisory authorities,” says Wolfgang Donie from Landesbank NordLB. “But one thing is certain: Boeing will continue to face gigantic costs.” If the 737 Max is released in mid-2020, burdens of at least $ 30 billion can be expected. Missing deliveries, the stoppage of production, renewed certification and victim compensation as well as compensation from customers and suppliers are likely to cost Boeing a lot.
How critical the situation is can already be seen in the US Group’s order book. The bottom line is that Boeing lost 87 orders in the commercial aircraft division last year because there were more cancellations than new orders. The company could not immediately provide information as to whether and when there had previously been a negative annual balance sheet. “This has definitely not happened in the past 30 years,” a spokesman told CNBC. Archrival Airbus [ISIN NL0000235190] benefits from Boeing’s weakness. With 768 new orders and 863 commercial aircraft delivered, the Europeans took over the global market leadership from their US competitor in 2019.
Greed for profit and damage to image
In addition to the business losses, the crashes have also caused considerable damage to the company’s image and legal consequences. The decisive cause of the accidents is a faulty automatic control system for the Boeing aircraft. The group is suspected of rushing to fly the aircraft in the fierce competition with Airbus and out of greed for profit while neglecting safety. Boeing rejects these allegations, but has admitted a number of mistakes and glitches. In addition, the company is repeatedly caught up in explosive internals.
For example, employees in Chats exposed to the US Congress boasted that they fooled the US FAA in the original 737 Max approval. The news is extremely uncomfortable for Boeing. In April 2017 it said about the 737 Max: “This aircraft is designed by clowns, which in turn are supervised by monkeys”. Given the debacle, it is astonishing that Boeing’s shares survived the previous year with a slight plus. In the meantime, however, investors are also losing patience – the price has plummeted by ten percent in the past three months.
–
