Things would have been so different, if, after the Indonesian crash and preliminary indication of MCAS issues back in Oct 2018, Boeing management stopped the flights and implemented their fixes. It was a simple software fix, FAA and world-AA could have certified 737 in 2019 and Boeing would have lots of goodwill. BA did not read how JNJ dealt with the Tylenol crisis back in 2002: https://www.nytimes.com/2002/03/23/...-johnson-johnson-the-recall-that-started.html And management never learned. Instead of being humble and accepted US bailout, to stated they did not need bailout and would refuse bailout if US wanted some equity position is another mismanagement of the current CEO, who was Chairman of the Board during the old CEO's reign. The buck stops with him, then and now. A lesson too for our President on how he handles the coronavirus crisis. Instead of erring on the side of caution and safety, he keeps minimizing the risks and tries to rationalizing bad things away.
Airbus trouble Airbus is in deep trouble, CEO Guillaume Faury warned staff in an email. He said the European plane-building consortium is "bleeding cash" and may need to soon increase cuts in order to protect "the very existence of our company." Of course, the whole aviation industry is currently facing an existential crisis, and Airbus's customers are themselves fighting for survival. Airbus's share price nonetheless dove more than 3% on the report of Faury's email. Bloomberg
Airbus profits Still on the what-is-air-travel-again theme, Airbus's quarterly profits have plunged by 49% in what it rightly calls the "gravest crisis the aerospace industry has ever known." CFO Dominik Asam is hoping for signs of a recovery in Q3, and "basically to a neutral situation where we don’t use cash anymore" in Q4. Reuters
I see Boeing having liquidity issues. Some short covering today on some post earnings cheer leading but this stock concerns me. Boeing can still be a huge company but file for some kind of restructuring. The stock can still go under $50.
They just said they're selling $25 billion in bonds and I believe they already had 20-25 billion in cash before that. I see no liquidity issues.
Unless US starts a war and hence increases defense spending, the situation is going to be bad for BA in my view. As an AA Exec platinum and United 1K member I don't see myself flying till I see a vaccine or a cure (not reducing 15 days sickness to 11 days that remdesivir is offering). Too many immuno-compromised folks around me, from acute allergies, asthma to recovering cancer patients for me to risk their lives with my flying. If UA and AA has too many customers like me, it is a disaster for them and hence BA. Edit 1: I do hold puts on UAL and BA Edit 2: With due respect to Mr President, I am not sold on bleach either
Boeing Is Just Too Hard to Predict for Warren Buffett. What That Means for Aerospace Stocks. By Al Root May 3, 2020 11:51 am ET Order Reprints Print Article Text size A model of a Boeing 777X is displayed during the Farnborough Airshow, south west of London, on July 17, 2018. Photograph by Ben Stansall/AFP via Getty Images Warren Buffett knows commercial aerospace. His Berkshire Hathaway owned—until recently—large stakes in major U.S. airlines. His company also owns a large aerospace supplier: Precision Castparts. But it doesn’t look like he’s is going to add Boeingstock to his list of holdings any time soon. “We shut off air travel in this country. And what that does to people’s habits, how they behave in the future, it’s just hard to evaluate. I don’t know the answer,” said Warren Buffett at Saturday’s Berkshire Hathaway (ticker: BRK) annual meeting, answering a question about the downturn in commercial aerospace. “If you think about Boeing, it is one hell of a company...we hope for the best and we wish everybody the best, obviously, and we wish ourselves the best in [aerospace], but part of [our success] is out of our—certainly out of our control.” Buffett added it’s especially hard to forecast demand for new commercial jets in the future. That sentiment isn’t a surprise. The entire aerospace value chain has been hammered by the Covid-19 outbreak. Only a fraction of the global commercial jet fleet is flying and passengers passing through TSA checkpoints at U.S. airports is down more than 90% year over year. The outbreak has pummeled stocks. Boeing (BA) shares are down about 59% year to date, far worse than comparable double-digit drops of the S&P 500 and Dow Jones Industrial Average. Aerospace supplier stocks Barron’stracks are down about 46% year to date. Shares in U.S. airlines are down about 57% year to date on average. The fact that a legendary value investor like Buffett doesn’t want to put new money to work in the sector surely isn’t great news, but that doesn’t mean the sector is uninvestable. And there was a difference of opinion ever within Berkshire on view at Saturday’s meeting. “The defense contract business remains very sound and strong within Precision Castparts,” said Berkshire Vice Chairman Greg Abel on Saturday. “Precision Castparts is, literally as we speak, continuing to adjust their business relative to the demand that would come out of Boeing.” Precision Castparts is a highly engineered materials supplier Berkshire bought in 2016for more than $35 billion, including net debt. Berkshire paid almost 20 times estimated earnings for the company. Those valuation multiples are long gone. Precision peers Howmet Aerospace (HWM) and Allegheny Technologies(ATI) trade 12 and 10 times estimated 2021 earnings, respectively. Both multiples are a discount to Boeing, materials components in the S&P 500 as well as their own histories. Howmet shares are down 49% year to date. Allegheny stock has fallen 65%. Defense, as an industry, is at least at large as commercial aerospace. Exact comparisons are different and required making assumptions about how far to look up and down the supply chain. Historically, defense sales have grown more slowly than commercial aerospace sales, but the business is stable and not tied to the state of the overall economy.Lockheed Martin(LMT), for instance, generates more than 70% of sales from the U.S. Defense Department. The DoD buys products in good and bad economic times. Defense, right now, is in far better shape than commercial aerospace and stocks reflect that fact. Large U.S. prime defense contractor stocks are down about 13% year to date and trade for 13 times estimated 2021 earnings. Defense can be a lifeline for some aerospace stocks including Howmet and Allegheny. Wall Street isn’t ready to recommend either stock yet though, but there is a paradox investors should be aware of. Less than half of the analysts covering the pair rate share buy, below the average buy-rating ratio for stocks in the Dow. But the average analyst price target for Allegheny implies a gain of 90%. The average price target for Howmet implies a gain of 50%. Analysts are demanding a lot of upside for all the commercial aerospace uncertainty. As uncertainty falls, those stocks can go higher. As for Berkshire’s position in U.S. Airlines: The conglomerate held 9.2% of the stock outstanding in Delta Air Lines (DAL) as well as 10.1% of American Airlines(AAL), 7.6% of United Airlines (UAL) and 8.7% of Southwest Airlines.Buffett said Saturday he sold all his airline stocks. Howmet recently separated from Arconic(ARNC). Arconic was spun out of Alcoa(AA) in 2016. Write to Al Root at allen.root@dowjones.com https://www.barrons.com/articles/bo...e-hathaways-warren-buffett-to-buy-51588521087