I've sold all my Boeing shares

[stephenson]

Are you talking about the USG buying (in effect) GM during the automobile crash?

Not thinking that is a similar scenario.

 

[W2R]

I don't buy or sell any individual stocks on the basis of their QC, engineering, or the like. From my point of view, there are too many factors to consider. This is yet another reason why I stick to index mutual funds almost entirely.

Boeing is a huge corporation with eons of experience as one of our major aerospace companies. I can't balance that against this one incident, or even several incidents, and come to a sensible conclusion (visualize huge clouds of smoke emanating from the top of my head as I try to figure this one out!). But I don't have to; I just balance my mutual funds and move on.

 

[38Chevy454]

Now, recall not long ago, Lockheed built commercial aircraft. LMC could certainly do this, again, but given the market - it probably doesn't make sense - but, it's possible.

Recall that Boeing bought out McDonnell Douglas corp, which had Douglas Aircraft Co (DAC) as a major part under the M-D corp umbrella. DAC made the DC-9, DC-10, MD-80 series, and MD-11 on the passenger side in somewhat recent history. Far more airplanes than the Lockheed commercial production. Boeing even continued making the DAC MD-8X as the Boeing 717 for a while; until the old DAC Long Beach facility was completely shut down and sold off; the land just became too valuable and moving production to longer term Boeing facilities. DAC was my first job out of college, working at the Long Beach facility. Approx 30,000 people worked there when it was going strong in late 80s. Beside all of the passenger MD-8X and MD-11 production, they were also developing and producing the military cargo C-17 at that time.

Kind of sad that M-D corp is no longer and Boeing has had so many troubles with quality and design issues. It's been a long time since I worked there at DAC, but we used to joke when the weight of the paper equaled the weight of the part you could ship it. Meaning all of the inspection reports and various testing and inspection stamps.

 

[Route246]

I have no skin in this game other than occasionally flying in their planes.

There are approximately 100K commercial flights per day in the world. That is a lot of take-offs and landings and a good percentage of those are Boeing airplanes. With 15K-20K planes in the air during peak times it simply amazes me that more planes don't fall out of the sky or have incidents during take-offs and landings.

With this many flights I'm just astounded that some type of entropy doesn't enter into all of the mechanical stress that engines, airframes, hydraulics, landing gear and most importantly human error introduces into these systems and there are so few fatalities resulting.

I've always felt that once the finance people get involved in decision making that the fatality rate would escalate but that doesn't seemed to have happened. It is really easy to cut corners here or there to save a few pennies and it is amazing that the skies are as safe as they have proven to be. I fear that some cost-cutting finance VP will somehow get his or her wish and be responsible for hundreds of deaths due to maintenance practices changing in order to save money.

Any of us who fly should be supporting all phases of the airline industry, allowing it to prosper and be healthy. That's just my opinion.

 

[JackJester]

Did you sell your S&P 500 Index funds? If you own them then 0.29% of a share of that Index fund is BA stock. Weighted #68 on the S&P ... at least according to this link: https://www.slickcharts.com/sp500

 

[Ian S]

If you were an airline CEO would you for a moment consider a Boeing only fleet

Southwest used fly only 737's and I assume they still do. Wonder if that will change?

 

[tominboise]

Southwest used fly only 737's and I assume they still do. Wonder if that will change?

I would doubt it. Their entire operating philosophy, from route structure to crew training to spare parts, is predicated on commonality of airframes. It would take a considerable investment to add different aircraft to their fleet, far beyond just ordering some new planes from Airbus or someone.

 

[Texas Proud]

I would doubt it. Their entire operating philosophy, from route structure to crew training to spare parts, is predicated on commonality of airframes. It would take a considerable investment to add different aircraft to their fleet, far beyond just ordering some new planes from Airbus or someone.

This has no basis in any knowledge but I bet that the small 737s have very little in common with the new Max or other large 737s...

 

[Chuckanut]

and there are so few fatalities resulting.


Any of us who fly should be supporting all phases of the airline industry, allowing it to prosper and be healthy. That's just my opinion.

Very true. It would be easy to take a lazy attitude about Boeing if we didn’t care. But, we know what great aviation engineers can do thanks in part to Boeing. I also want Boeing to have a successful Starliner mission soon. We need more than one way to get humans into Space.

 

[youbet]

Also, although I have not worked directly for Boeing, my sense is they have a significant, almost overwhelming arrogance problem.

Actually what Boeing has is a union problem. The SPEEA is notorious for protecting employees who fall behind technology and fail to follow procedures. The IAM rules the shop floor in manufacturing. When management can't enforce rules and procedures for quality standards, there's going to be trouble. Just look at Detroit.

 

[TheHobbit]

Boeing is too big to fail. And the gov will bail them out if they start to sink into BK because they are a national treasure. There will be more government injections of money and more share buy backs to enrich MBA execs! What's not to like? /s

Go look at the history of the Detroit automakers. The way this plays out if it gets that bad, is shareholders almost always get wiped out completely -- especially when the government needs to step in and save them. With the stroke of a Judge's pen, you'll get something like a new company formed (after the agreement with creditors -- but not shareholders) with all the assets called "Boeing New", with new shares issued, and "Boeing" will be wiped out.

This said, I find it extremely unlikely this would happen.

 

[aja8888]

Go look at the history of the Detroit automakers. The way this plays out if it gets that bad, is shareholders almost always get wiped out completely -- especially when the government needs to step in and save them. With the stroke of a Judge's pen, you'll get something like a new company formed (after the agreement with creditors -- but not shareholders) with all the assets called "Boeing New", with new shares issued, and "Boeing" will be wiped out.

This said, I find it extremely unlikely this would happen.

You must have missed seeing my tag (/s)

 

[Montecfo]

In other news, I noticed the horses were out. Immediately I closed the barn door.

 

[tominboise]

Actually what Boeing has is a union problem. The SPEEA is notorious for protecting employees who fall behind technology and fail to follow procedures. The IAM rules the shop floor in manufacturing. When management can't enforce rules and procedures for quality standards, there's going to be trouble. Just look at Detroit.

What do you base this information on? Just wondering, as I worked there for many years and didn't see this going on. But maybe I missed something.

Not to say that the IAM and SPEEA are perfect - they certainly aren't.

However, Management decisions regarding corporate mergers, outsourcing, selling facilities to non union companies, internal staffing, QA processes, etc, etc, etc, are the real cause of these sorts of issues.

 

[threeonesix]

What do you base this information on? Just wondering, as I worked there for many years and didn't see this going on. But maybe I missed something.

Not to say that the IAM and SPEEA are perfect - they certainly aren't.

However, Management decisions regarding corporate mergers, outsourcing, selling facilities to non union companies, internal staffing, QA processes, etc, etc, etc, are the real cause of these sorts of issues.

I have many friends who work at Spirit Aerosystems. I can't tell you what they think of the unions, I would have to use words that would get me banned by this site. And they are members of the unions. Forced members. Mostly CNC machinists but some engineers as well.

You're kind of correct about the real cause of these issues. The REAL REAL cause is greed, and we all play a part in that.

Purdue Pharma killed more Americans than all foreign wars combined. Every American with a buck in their pocket begged for that company to go public. That says a lot about Americans and greed.

 

[Closet_Gamer]

BA's price is essentially where it was a year ago and 5 years ago, and its up significantly from where it was in October. So definitely not helpful to the cause, but not a disaster.

They did $18.1B in revenue last quarter. Admittedly, they spent $18.9B but for a company that large, squeezing down $3B of annual cost is not that difficult. They have $13B of cash on the balance sheet and $52B in debt with a weighted interest rate of 4.6%.

They have a huge, contracted, multi-decade future revenue stream from a global fleet of planes. That revenue stream is supported by entrenched regulations requiring proper maintainance, much of which only Boeing can provide. (See the challenges Russia has ex-Boeing.) Plus the installed defense base and staus as one of the only major defense contractors. If they never sold another 737, the company would survive.

The regulated nature of their industry will help them here. FAA and NTSB have teeth to force change if needed.

IMO, this company is not going out of business any time soon.

(So I will continue investing in index funds. )

 

[pdxgal]

So 100-300 dead passengers every now and then is probably an acceptable price for running a business. much and require ticket prices to go way up. So 100-300 dead passengers every now and then is

This was the calculation at Ford for their Pinto that exploded on rear impact, per internal company docs at the time. Heard a radio show (Freakonomics?) about it. Very disheartening.

 

[threeonesix]

Potential for human death caused by a product goes into many decisions made by corporations. With every new drug release there is the potential that humans will die from allergies, overdoses or several other possibilities. Building skyscrapers or bridges isn't a perfect science; some collapse for various reasons, not the least of which are environmental conditions. Common household chemicals can cause death, unexpectedly. Humans should be aware going into their use of a product they did not themselves create that unknown/unexpected results may present themselves. It's simply part of life. Hence the reason we have product usage warnings on pretty much everything these days.

 

[Mansderm]

Curious...what industry or industries currently don't have Quality assurance issues?

 

[brett]

Curious...what industry or industries currently don't have Quality assurance issues?

The issue with Boeing is that these are historic issues that have not been addressed.

The military stopped delivery of Boeing transport products because of serious QA problems. Boeing said sorry...we will address and do better. Three years ago or so.

Two or three years later the was the 737 Max issues that resulted in deaths. Once again it was sorry, we will do better. We have done better and QA is now water tight. We at Boeing have sharpened our QA focus. Trust us.

Fast forward another 2 years and yet again we have serious QA issues with a passenger aircraft that, like the 737 Max issue, could have just as easily ended with passenger deaths.

So now,,, same old same old. We will tighten QA, believe us. And the airlines that use the relevent Boeing models are left holding the bag on losses and customer sat because their aircraft were taken our of service for safety reasons.

So what will it be this time? Maybe fire an exec, give a great exit package, say sorry yet again and claim they have a 'renewed' focus on QA and a renewed process?

And what about next time, if there is one? Will the same old, same old get trotted out for the benefit of the FAA, Congress, and their customers?

From my perspective there is a definite trend at Boeing.

 

[Chuckanut]

The issue with Boeing is that these are historic issues that have not been addressed.
<snip>
So now,,, same old same old. We will tighten QA, believe us. And the airlines that use the relevent Boeing models are left holding the bag on losses and customer sat because their aircraft were taken our of service for safety reasons.

From my perspective there is a definite trend at Boeing.

Sadly the Boeing Starliner is a good example. SpaceX may complete its initial contracted launches before Boeing completes its first manned test. That’s what an extra billion dollars bought NASA. Not so good.

 

[CaptTom]

Here's one I've pondered: You might say SpaceX is the "startup" here. Full of energy and new ideas. In this story, Boeing is the old, bloated, overly-conservative corporation. Used to suckling on the government teat, with no incentives to improve.

But I keep wondering, what if? What if SpaceX has a spectacular failure. Maybe a loss of life. Maybe they prove totally unable to supply the multiple Starliners required to do in-orbit refueling. Or the whole concept (starliner, or the refueling) turns out to be unworkable with the engineering they've chosen. What if some major flaw shuts the whole program down?

At that point, Boeing (and ULA and whoever else) might start looking like the smart ones. Slow and steady. Safety focused. Conservative.

I would much prefer they all succeed, and we end up with multiple options. But SpaceX has had a long run of success. Are they that much better, or is it dumb luck? Musk has certainly made things happen. But we're finding now that his judgement isn't always quite as good as he believes. Is he getting complacent? Space is hard.

 

[Gearhead Jim]

This has no basis in any knowledge but I bet that the small 737s have very little in common with the new Max or other large 737s...

Almost no parts commonality between early B737s (1960's) and the latest designs.
Much more parts commonality between B737's made over last decade and current production.
Huge training commonality between the various 737 models any particular airline flys.

When I was flying for United (now retired), we were qualified on all versions of the 737 in our fleet. The cost savings from training and crew scheduling is huge.

 

[Gearhead Jim]

32 of my 36 years flying at United were on Boeing airplanes.
I also flew the DC-8 and DC-10, the 8 was a cumbersome antique and the 10 was a nice flying airplane with serious mechanical issues.

The old saying was "If it's not Boeing, I'm not going." I never really bought into that, but definitely considered Boeing airplanes to be the superior product.

My opinion started to decline when I trained on and flew the B-737-300 (first bigger engine version). Simply put, the necessary extra power produced some flight characteristics that I considered annoying and possibly even dangerous. Too complicated to discuss here but I was unimpressed.

Back when Boeing moved their headquarters from Seattle to Chicago, I said that was the triumph of the MBAs. I believed, and still do, that the headquarters should be right where the workers are pounding tin. Now that the headquarters is near D.C., I see that as a tacit admission that the future for Boeing is no longer centered around airliners.
Too bad, at one time they were the greatest.

 

[tenant13]

BA's price is essentially where it was a year ago and 5 years ago, and its up significantly from where it was in October. So definitely not helpful to the cause, but not a disaster.

They did $18.1B in revenue last quarter. Admittedly, they spent $18.9B but for a company that large, squeezing down $3B of annual cost is not that difficult. They have $13B of cash on the balance sheet and $52B in debt with a weighted interest rate of 4.6%.

They have a huge, contracted, multi-decade future revenue stream from a global fleet of planes. That revenue stream is supported by entrenched regulations requiring proper maintainance, much of which only Boeing can provide. (See the challenges Russia has ex-Boeing.) Plus the installed defense base and staus as one of the only major defense contractors. If they never sold another 737, the company would survive.

The regulated nature of their industry will help them here. FAA and NTSB have teeth to force change if needed.

IMO, this company is not going out of business any time soon.

(So I will continue investing in index funds. )

Yes. I know all that but as I mentioned in my original post, I just don’t like BA and that’s good enough reason for me to divest. My personal boycott.