Boeing launches funding round to stave off credit downgrade Beleaguered Boeing is hoping millions of new shares and billions of dollars in convertible securities can stave off a credit downgrade as it leaks cash during an ongoing strike. The aerospace biz today announced plans to sell 90 million new shares and $5 billion in depositary shares that will mature into common stock in 2027. …
Boeing does nothing about their apparently inadequate Board, their incompetent management and, better yet, stonewalled their own shareholders at the last shareholder meeting including calls to move back to Seattle.
Playing musical deckchairs on the Titanic, McBoeing-Douglass Boeing keeps their C-suite bonus plan blinders on tightly.
They're not too big to fail. Arguably, they already have failed in that they're not a profitable, healthy company operating in a way that is useful to the US gov and beneficial to the US economy. They're dragging lots of other companies down with them whilst they fail too - suppliers, airlines, all over the world.
And the way things are going, there won't be anything left to save.
Boeing are too big to fail in the sense that the US government aren't going to let the business die. They could certainly let shareholders be rinsed, even allow a Chapter 11 if absolutely necessary, but the idea that the US are going to let go of their market position in civil aviation (and lose an important military supplier) is clearly never going to happen. If the markets really, truly lost faith then the US government would have to engineer some merger, buyout or even nationalisation.
It's not in the US Gov's gift to save Boeing, except by fully acquiring, owning and running the company for itself.
A "saved" Boeing to most people's way of thinking is the company restored to both engineering and financial health, operating as a business on the world market. However, unless they get a whole lot better very soon, the world market is going to have moved away from Boeing. Both suppliers and airlines are desperately trying to do so already, in effect pleading with Airbus to make more aircraft than they already are. The suppliers and airlines simply cannot afford to not to deliver parts or take delivery of completed aircraft. They have to seek alternative supply. Airbus is reportedly slowly caving in to demand, but if it sets up another A320 FAL that's it.
And in case one thinks that that is a far off distant possibility, think again. During this strike, Boeing's suppliers have already been asking Airbus for work. All it takes is for one of those - a critical one - to decide that they've had enough of working with Boeing and have decided to accept regular work and paid invoices from Airbus instead, and Boeing comes back from this strike finding that it can't complete aircraft any longer. Then what?
And, Embraer too has been joining in, talking to airlines about a 737 replacement of their own. They're more than capable of building it, and if they got a move on they could probably start delivery inside 5, 6 years. If Boeing isn't fixed well before then, Boeing could find that they're getting a lot of cancellations, orders going to Embraer instead.
And then there's the FAA. Boeing's order book is largely meaningless, unless the FAA's reputation abroad is trusted by its peer regulators. Boeing cannot sell aircraft outside of the USA unless the likes of EASA, CAA, CAAC, etc. are content with the FAA's oversight. But we have Elon Musk seemingly challenging the FAA's power to impose fines in the US Supreme Court. If he wins, the FAA could be seen to no longer be an effective regulator of US aerospace in the eyes of overseas regulators. If that happens, Boeing are toast.
In short, there are many reasons why there may not be a Boeing left for the US government to save. If they were going to intervene, the ideal time was 20 years ago, except they denuded the FAA of resources and made it hard for the regulator to control the company. Now, or any time in the next year or so, is probably their last chance to influence the company in a way that leaves the company as an commercial business.
There's also the geopolitics; the US Gov simply handing Boeing $60billion to clear their debt would amount to the largest ever subsidy. That's not going to look very good on the world stage, having spent years complaining about Airbus's loans from European governments.
One also has to look at it in other ways. Boeing is not popular in DoD - quality has impacted them badly too. Overall, the US gov is probably more interested in maintaining capability in the USA than in maintaining a specific company. That could be, Airbus grows in Alabama, becomes a bit more American.
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Other than switching the provisional first operational Starliner flight to SpaceX, NASA has yet to announce what work will be needed to get Starliner certified. They may well require another test flight, probably uncrewed, although it may be part funded as a cargo run. It's another looming hole in Boeing's finances.
... Noooooo, they're not *leaking* cash. That implies a dribble. They're pouring cash down the drain... they're hemorrhaging (American style) or haemorrhaging (UK style) cash.
It's not pretty, but they short changed their engineers, and now those engineers want their justice. It's not the current CEO's fault (he just started), but the likes of Calhoun and his predecessor Muilenburg's fault. Like someone else points out, the Boeing board seem to border on ineffective and incompetent!
Boeing - the same company that fitted AIRFORCE FUCKING ONE with inferior support struts mixing titanium with cheaper metals to save money.
The company that didn't give a shit if it killed the President of the United States, as long as the CEO got his performance bonus. Those underage rent boys aren't paying for themselves.
Boeing’s current problems, aren’t even the problem…..for either Boeing or Airbus.
The issue is that: Due to Green blah blah, there is no way to operate fossil fuel airliners past around 2045-ish. With 30yr airliner lifetime, it makes no sense to *build* them after 2030-ish, maybe 2035-ish max. Sure, you can build it….but if it’s only operating half its lifetime, it effectively costs twice as much to its customers. 2035 is not far away at all.
None of this is Final Doom in itself. Civil airliners will continue. The problem for Boeing/Airbus is that the next generation power plant, whatever it is, is basically a turboprop. Have you seen a CFM RISE, which is what a next-gen engine would look like even assuming it’s avgas-fuelled? It’s a turboprop. And turboprops come with a number of limitations in size and cruising altitude that are the precise opposite of what Boeing and Airbus specialise in.
Embraer build turboprops. Several other companies could build them, before they became unfashionable. Airbus built the A400M turboprop, and it nearly brought the company down financially. Airliners will continue…..but built by the companies that made turboprops. Turboprops are naturally much smaller, and do not require the enormous production facilities; they are a poor match for the companies Boeing and Airbus have become.
That’s why Airbus don’t want to expand production to fill the void, because their senior management sees the cliff edge too, and just doesn’t have an answer. It knows that, if it has a future at all, it’s doing the A400M again…..and that’s like telling a turkey it’s only chance of survival it better hop into the oven because there might be a power cut. It’s not very keen.
No, the mistake you are making, is that the 2045 airliner regulation does not actually control this.
The critical date is not when *airliners* are told to stop using avgas. The critical date is when *automotive* legacy vehicles are retired and stop actually using hydrocarbons…which is about 10-15 years after the automotive legislation will have been enacted. You can’t stop a car crash, when the crash happened 10-15 years previously. The point is that airliners are very much a minority user of hydrocarbon, most usage is driven by vehicular & power-stations. The trickle used by airliners, is a commercial byproduct of the main fossil fuel flows.
Nobody invests a billion dollars on a dice-roll to sink an oil well, just to fuel a few hundred airliners. Doesn’t matter how much they are prepared to pay per liter, they’re only buying a couple hundred tons per flight, there’s no market. Nobody drives half-million-tonne supertankers around the world, just to fuel twenty trans-Pacific flights per day. Even if residual oil supplies do exist globally, *Australia probably doesn’t have any, Thailand probably doesn’t have any, Singapore probably doesn’t have any*. So, those airports won’t be able to operate jets.
The CFM RISE is a fairly significant compromise. It "works", largely because of the weight reduction in not having a fan cowling, blade-off containment ring, etc. It doesn't work in the sense that the loses at the blade tip are notable.
Thing is, if you can get regulatory approval for an open fan, you could get regulatory approval for a conventional cowled fan that omits the heavy blade-off containment ring. Consequently, as a much lighter weight structure, a cowl can still provide the optmised tip aerodynamics of a closed fan, without much weight penalty. Likely that conventional architecture - much lightened - still wins. Throw in other advantages - like keeping delicate blades away from luggage trucks.
Which costs more: giving the workers what they want and simply folding in the cost as part of doing business, or destroying the company's little remaining credibility/creditworthiness/cash reserves in a class-based war between worker and executive?
I mean, aren't CFOs and CEOs expected to know how to operate a simple spreadsheet?
Come on, Boeing, you have orders backlogged for a decade or more. Doesn't your hardline capitalist principle say "if your orders far exceed your production capability, that means you can raise prices"? It's not like Airbus has excess capacity to take up lost orders, they're booked past 2035 too. Pay the workers, give them their pensions and medical, add another million or two in cost per plane and GET ON WITH IT.
Most of their planes are sold at pre-agreed prices (adjustable for inflation of course) so they can't just jack the price up now since it would invalidate their contracts.
Also, if you go to the US Government and try to strongarm them into paying more for their military kit just think of how much investigation and audits and tax assessment they can do on you to get their money back in fines etc.
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