More Boeing Bad News

[PHXPhlyer]

Boeing somehow managed to get itself into even bigger trouble

https://www.cnn.com/2024/04/10/investin ... index.html

Boeing has achieved the unthinkable this week: It managed to fall even deeper into crisis.

Adding to an already miserable start to 2024, Boeing stood accused Tuesday of routinely ignoring a whistleblower’s complaints about the allegedly critically flawed manufacturing process for its 787 Dreamliner planes. The whistleblower claimed Boeing retaliated against him and put him on the 777 unit as punishment. That’s when, he says, he found even more production problems.

Boeing strongly denies the claims and says it is confident in the safety of its aircraft. Still, the US Federal Aviation Administration (FAA) said it would investigate — adding to a growing list of federal probes into the beleaguered company, including a criminal investigation. And next week, a Senate subcommittee will hear testimony about the whistleblower’s case and will presumably air more of Boeing’s dirty laundry in public.

More allegations of lax safety standards are the last thing the company — and the flying public — need right now. The whistleblower complaint is doing further damage to Boeing’s already battered public image: a company with a broken safety record, led by highly paid executives who are careless about quality standards.

Yet the bad news for Boeing apparently knows no end.

The whistleblower’s accusations
The whistleblower, Sam Salehpour, a Boeing engineer, alleged that Boeing took shortcuts when manufacturing its 777 and 787 Dreamliner jets — skipping crucial safety steps, which could lead to catastrophic failure of the airplanes as they age. The shortcuts could dramatically reduce the airplanes’ expected lifespan of up to 50 years in service. The New York Times was first to report the whistleblower’s claims.

His formal complaint to the FAA, filed in January and made public Tuesday, was not entirely new — the FAA had already investigated Boeing over 787 production concerns and halted 787 deliveries. But Salehpour’s complaint shed new light on how crews assembling the 787 Dreamliner apparently failed to properly fill tiny gaps when joining separately manufactured parts of the fuselage for 1,000 planes.
He alleged Boeing knew about the process errors and, what’s more, encouraged them in order to reduce 787 assembly bottlenecks.

Boeing has said the 787 is safe to fly and, before halting deliveries of the model, the FAA rigorously scrutinized Boeing’s manufacturing processes that Salehpour questioned. It ultimately approved the planes for shipments to airlines in March 2023 after becoming satisfied that Boeing had fixed the problem.

“These claims about the structural integrity of the 787 are inaccurate and do not represent the comprehensive work Boeing has done to ensure the quality and long-term safety of the aircraft,” the company said in a statement Tuesday.

Salehpour said that in his new role at the 777 unit he discovered subpar work, with crews misaligning body pieces while Boeing pressured engineers to approve work they had not yet inspected.

“We are fully confident in the safety and durability of the 777 family,” Boeing said in a statement Wednesday. “These claims are inaccurate.”

How Boeing got here
The latest accusations are pouring gasoline on a dumpster fire.

Critics argue the company’s once sterling safety reputation was tarnished in its ill-advised 1997 merger with McDonnell Douglas, and it has been all downhill from there, culminating in two fatal crashes of the 737 Max in 2018 and 2019. Boeing acknowledged it was liable for those crashes — and that they were caused by a design flaw it has since fixed after a nearly two-year grounding.

The recent nonstop streak of bad news began during the last week of 2023, when an airline discovered a potential problem with a key part on two 737 Max aircraft.

Then, during the first weekend of 2024, part of an Alaska Airlines 737 Max blew off the side of the plane just after take-off, and Boeing has been in crisis mode ever since. A preliminary investigation by the National Transportation Safety Board revealed that Boeing probably did not put the bolts in the so-called door plug that are designed to prevent the part from blowing off the plane. Boeing hasn’t acknowledged the specific accusations in the federal report, although CEO Dave Calhoun admitted the company made a mistake and said in response to the probe that Boeing is ultimately responsible.

That incident resulted in a temporary nationwide grounding of certain 737 Max jets, followed by congressional hearings, production and delivery delays, multiple federal investigations — including the criminal probe — and a fall of about 30% in Boeing’s stock this year, which shaved nearly $50 billion off the company’s market valuation.

The bad news didn’t stop there. In February, pilots on a United Airlines 737 Max reported that the flight controls jammed as the plane landed in Newark, New Jersey. A month ago, the FAA flagged safety issues with the de-icing equipment on 737 Max and 787 Dreamliner models that could cause engines to lose thrust. The FAA is allowing the planes to continue flying and Boeing said the problem does not pose an immediate safety risk.

But, after reviewing Boeing’s production workflow and standards, FAA Administrator Mike Whitaker said last month that the regulator found issues with “really important” aspects of Boeing’s manufacturing and assembly line and gave the company until late May to produce a plan to fix is production problems.

Boeing said it is working on several of the issues Whitaker identified.

What’s next for Boeing
The fallout for Boeing has reached the top ranks of its leadership. The company has let several executives go, including the overseer of its commercial jets and a longtime executive in charge of the 737 Max unit. CEO Dave Calhoun also said he would step down before the end of the year — after he was paid $32.8 million last year and as he is set to take home $45 million for his retirement.

Boeing’s latest problems will cost it dearly: Airlines effectively stopped ordering planes from Boeing in January, and the only 737 Max planes they ordered last month were for the version that isn’t allowed to fly yet — specifically, the larger Max 10 — because of the de-icing issue. The company could also be subject to hefty fines and onerous lawsuits. Boeing has already paid Alaska Airlines more than $150 million in compensation for the temporary grounding of its planes following the door plug blowout.

The company hasn’t turned a profit in years, and the Alaska Airlines incident won’t help Boeing make money this year either.

Boeing faces no existential threat, though. The company has just one major competitor in the production of commercial aircraft globally — Airbus. Airlines can’t easily switch between airplane manufacturers, making the company immune to typical market forces like passengers choosing a different manufacturer. Although there’s some evidence that angry or nervous flyers prefer Airbus flights, opting for that can be impractical or impossible depending on where they want to travel.

Still, Boeing’s shareholders, regulators and customers are growing more irate by the day, and the company is ultimately beholden to them. Boeing’s already bruised reputation means regaining airlines’ trust could prove difficult — let alone the confidence of flabbergasted regulators. The drip, drip, drip of bad news makes a turnaround even harder.

With new leadership on its way, Boeing’s future top brass have their work cut out for them. And the world’s eyes will be on them.

PP

[PHXPhlyer]

Boeing spent $500,000 more than it previously disclosed on personal private jet trips for top executives

And none of them were Boeings.

https://www.cnn.com/2024/04/11/business ... index.html

Embattled airplane maker Boeing disclosed it lavished an additional $546,000 on the cost of personal air travel in recent years for four top executives, including CEO Dave Calhoun, who announced last month that he will leave the company by the end of the year.

The increased spending estimate, disclosed in a recent company filing, brought the total cost to the company for the personal air travel for the four to $1.9 million since 2021. Besides Calhoun, the other executives include CFO Brian West; Stan Deal, who recently departed as CEO of its commercial airplane unit; and Theodore Colbert, the CEO of its defense, space and security business.

The disclosure comes as the plane maker is facing additional scrutiny for a series of safety incidents, including a midair blowout of part of a fuselage in January, which prompted a number of investigations into the company’s practices, an executive shakeup and promises that the company will turn itself around.

The air travel is part of what are known as perquisites, or perks granted the executives, which also include ground transportation, lodging and meals during personal travel.

And for air travel, the reported costs include only the incremental costs to Boeing, such as fuel, crew travel expenses, on-board meals, landing fees, and parking costs. It does not include the cost of the corporate jets or the salaries of the flight crew, which Boeing said it would be paying whether or not the executives made the personal trips.

The cost of personal air travel by Calhoun alone came to $979,000 during those three years.

The upward adjustment means that Boeing spent at least $734,000 in 2022 and $306,000 in 2021 on these executives’ personal air travel, according to figures provided. Some of the amounts for air travel for Colbert and Deal are not broken out for the earlier years, despite the increased cost now being reported for those years for all four. And 2023 personal air travel costs for the four came to $872,000.

Boeing has been struggling financially for five years, since fatal crashes of its 737 Max in late 2018 and early 2019 resulted in a 20-month grounding of its best-selling plane. It was also hit by the pandemic, which caused a near-halt in air travel for months and deep losses at most airlines that buy its planes.

Since the start of the grounding in 2019 the company has reported adjusted losses totaling more than $31 billion, and losses are projected to continue going forward.

Company policy requires its CEO to fly on its fleet of private jets, or leased aircraft, even when flying for personal reasons for security reasons, and the other top executives are permitted to do so as well when aircraft are available.

But an internal company review of some of the flights that had previously been classified as business travel determined the flights should be classified as personal travel under Securities and Exchange Commission rules, according to the filing. That review resulted in a newly reported cost of personal travel that was $546,000 more in 2022 and 2021 than previously disclosed.

That review appears to have been conducted after a September 2023 article in the Wall Street Journal detailing the perks of top Boeing executives, including the liberal use of the aircraft to travel from homes far from company headquarters in Alexandria, Virginia.

The new filing came Friday evening. Boeing did not have any comment on the costs of the executives’ personal air travel beyond the information in the filing.

That Friday filing also disclosed that Calhoun’s total compensation for 2023 came to $32.8 million, up 45% from his 2022 compensation. He did decline his annual incentive bonus, which would have paid him an additional $2.8 million, after a Boeing 737 Max plane being flown by Alaska Airlines on January 5 had a door plug blow out, leaving a gaping hole in the side of the plane.

The incident sparked a series of federal investigations, a temporary grounding, executive ousters and renewed questions about the safety and quality of Boeing planes.

Last month, Calhoun announced he would step down as CEO of the embattled aircraft maker by the end of the year. At the same time, it was announced that Deal would retire from his position atop Boeing Commercial Airplanes, effective immediately.

PP

[PHXPhlyer]

Boeing defends its planes’ safety ahead of whistleblower hearing

https://www.cnn.com/2024/04/15/business ... index.html

Boeing on Monday scrambled to address safety and quality concerns about its planes ahead of a whistleblower hearing in the Senate on Wednesday.

A briefing for journalists came in the wake of reports last week that the Federal Aviation Administration is looking into allegations raised by Boeing engineer Sam Salehpour that Boeing took shortcuts when manufacturing its 777 and 787 Dreamliner jets and that risk of catastrophic failure will increase as the planes age.

Salehpour is set to be the key witness at a Wednesday hearing of the Senate permanent subcommittee on investigations. Boeing, which has seen its once pristine reputation for safety and engineering quality badly diminished recently, held the briefing Monday to try to pre-emptively answer Salehpour, although the executives said they wouldn’t comment directly on his allegations.

Boeing has faced more than five years of questions about the safety and quality of its commercial jets following two fatal crashes of a different model, the 737 Max, in 2018 and 2019. Those crashes killed 346 people and led to a 20-month grounding of that jet.

It came under renewed scrutiny earlier this year after a door plug blew out on an 737 Max flight by Alaska Airlines on January 5, leaving a gaping hole in the side of the jet. That has sparked investigations and allegations that some Boeing employees felt reluctant to raise questions about the safety of the planes they are building or inspecting for fear of retaliation.

Boeing cites increased tips, vigorous tests
While Salehpour charged last week that Boeing employees are scared to speak up about problems at factories, Boeing says the number of employee tips about quality and safety issues — as well as improvement ideas — has “exploded” since the Alaska Air incident. January and February submissions already equal the number of submissions for all of 2023, according to the company.

I don't see how Boeing can put a positive spin on this!

“We’re continually encouraging it,” said Lisa Fahl, Boeing’s vice president of engineering for Airplane Programs at Boeing Commercial Airplanes, during Monday’s briefing.

Fahl and Steve Chisholm, Boeing’s vice president and chief engineer for mechanical and structural engineering, told media members Monday that Boeing’s planes face stress tests designed to replicate far more flights taking place than they ever will in the real world. The average 787 does 600 flights a year, according to Chisholm, and the tests Boeing put the planes through simulated 165,000 flights.

And they said real world inspections on the planes now in service show even after as many as 16 years of use, no evidence of fatigue in parts of the plane now facing questions. Chisholm said the planes were designed to pass tests replicating far more stress over many more flights than they are subjected to in the real world.

“Frankly we’re not surprised by lack of fatigue findings,” he said.

Salehpour’s complaint alleges crews assembling the plane failed to properly fill tiny gaps when joining separately manufactured parts of the fuselage. That puts more wear on the plane, shortening its lifespan and risking “catastrophic” failure, Salehpour’s attorneys alleged.

Boeing and the Federal Aviation Administration have admitted that some of the planes did have problems with the gaps between parts of the fuselages that were wider than the standards set by Boeing. The delivered planes were allowed to continue to fly, but the non-conformance with Boeing’s standards led to long periods in recent years during which the aircraft maker had to halt deliveries of the 787 Dreamliner.

But Chisholm said the inspections done after those questions were raised have shown no problems in actual operations of the planes. He said some of the standards for the size of the gaps were changed in the wake of the inspections.

Fahl described the original standards of a gap of only 5/1000th of an inch, as equal to the width of a human hair or two pieces of paper. Chisholm said the original standards were “hyper-conservative” ones set by Boeing, not by regulators.

“It was very difficult to meet that standard. There are areas where we’ve increased what is allowable. We’re [still] talking about very tight alignments,” he said.
PP

[PHXPhlyer]

Boeing’s problems just cost United $200 million

https://www.cnn.com/2024/04/16/business ... index.html

United Airlines was pushed into the red by Boeing and its ongoing quality issues, the airline said Tuesday. The company took a $200 million hit in the first quarter after the Boeing 737 Max 9 was grounded following the door plug incident aboard an Alaska Airlines flight.

United did not say whether or not it expects to be reimbursed by Boeing for the cost of the grounding of its 737 Max 9s for three weeks following the January 5 incident. But it did say that it would have been profitable without the cost of the grounding.

The blow out of a door plug on an Alaska Airlines flight caused a three-week grounding by the Federal Aviation Administration of the 737 Max 9 model of jets, and brought fresh questions about the safety and quality of Boeing planes. United, which depends on Boeing planes for about 80% of its mainline fleet, had 86 of the Max 9 jets, more than any other airline in the world and it was hit particularly hard by Boeing’s problems.

But United has also been hit with a series of other incidents, including engines catching on fire and wheels falling off of planes, problems that got increased attention in the wake of Boeing’s problems. It has forced United CEO Scott Kirby to reach out to customers to assure them the airline would itself make a greater focus on safety by its own employees. The FAA has also said it is putting United under greater scrutiny.


Boeing’s publicity woes and the grounding of the jets weren’t the only way that the airplane manufacturer hurt United.

The airline said Tuesday it now expects to take delivery of only 61 single-aisle jets from Boeing this year, or 40 fewer than it had anticipated at the start of the year. The airline had previously disclosed it had put a freeze on the hiring of pilots, and that it is asking pilots to accept voluntary unpaid furloughs due to the cut in the number of flights it is operating.

United now says it no longer expects the Boeing 737 Max 10, the latest and longest version of the Boeing 737, to be delivered this year. That plane has not been certified to carry passengers as yet by the FAA. With questions about the quality and safety of Boeing jets, the certification has likely been pushed back to at least 2025.

So United said it has converted a portion of those Max 10 orders to the Max 9 for deliveries from 2025 through 2027, and said it may convert more orders to the smaller versions of that plane.

Of more concern to Boeing, United also said Tuesday that it has reached agreements with two lessors to lease 35 new Airbus A321neos, a 737 Max competitor. Deliveries of those Airbus planes is due in 2026 and 2027.

United said it had an adjusted loss of $50 million in the quarter, an improvement from the $207 million loss it had in the same period of last year. Revenue was up nearly 10% to $12.5 million.

Most of that gain came because the miles flown by paying passengers rose 9%, as United was able to increase capacity from a year earlier despite the 737 Max 9 grounding. The measures of fares, such as the average amount paid by passengers for each available seat, adjusted for miles flown, were up about 1%.

PP

[OFSO]

Hearings: Ed Pierson, the director of the Foundation for Aviation Safety, begins his testimony by saying that the world should be "shocked" by what he says are Boeing's lack of safety protocols.

"Every person stepping on board a Boeing airplane is at risk," he says.

The only thing more dangerous than a dangerous environment is the illusion of a safe dangerous environment, he adds.

"This is a criminal cover-up," he says, accusing Boeing's bosses of a conspiracy.

[PHXPhlyer]

RSS Leeham News and Analysis
Boeing unlikely to meet FAA’s 90-day deadline for new safety program
April 18, 2024

https://leehamnews.com/2024/04/18/boein ... y-program/

Boeing appears unlikely to meet a 90-day deadline to submit a comprehensive plan to address safety concerns, insiders tell LNA.

The Federal Aviation Administration (FAA) on Feb. 28 gave Boeing three months to address “systemic quality-control issues,” a move sparked by new safety concerns following the Jan. 5 accident of Alaska Airlines flight 1282. A 10-week-old 737-9 MAX was minutes into climb-out from the Portland (OR) airport when a door plug blew out, prompting explosive decompression of the cabin. Nobody died but there were injuries and damage throughout the cabin.

“FAA Administrator Michael Whitaker told Boeing that he expects the company to provide the FAA a comprehensive action plan within 90 days that will incorporate the forthcoming results of the FAA production-line audit and the latest findings from the expert review panel report, which was required by the Aircraft Certification, Safety, and Accountability Act of 2020,” the FAA said in the Feb. 28 press release.

Boeing firefighters union rejects contract again; free to strike May 3. See below.
SPEEA, Boeing’s engineer and technician union, tells members to start saving for a strike. See below.
“The plan must also include steps Boeing will take to mature its Safety Management System (SMS) program, which it committed to in 2019. Boeing also must integrate its SMS program with a Quality Management System, which will ensure the same level of rigor and oversight is applied to the company’s suppliers and create a measurable, systemic shift in manufacturing quality control.”

Now 45 days later, LNA is told Boeing is unlikely to meet the deadline. Furthermore, Boeing’s engineering and technicians union has had no outreach from Boeing seeking its input into the plan.


Collaboration Needed
“The current status of safety culture issues at Boeing underscores the need for collaboration between the company and its labor unions. This collaboration is necessary to elevate an unfiltered voice for safety experts who have been ignored and employees who have been silenced,” SPEEA said in a memo reviewed by LNA.

SPEEA proposed several steps to improve safety and quality assurance, but so far with little progress, according to the memo.

Boeing’s touch-labor union, the IAM 751, has not heard from Boeing.

Boeing did not respond to a request for comment.

What happens if Boeing fails to meet the deadline?
What happens if Boeing fails to meet the deadline set by the FAA? One former Boeing employee whose duties included safety compliance told LNA at the time the FAA issued the mandate that Boeing would be unlikely to meet the deadline due to the complexities of the task.

On the one hand, the FAA could extend the deadline. On the other hand, the FAA could take the extreme step, if unlikely, of suspending Boeing’s PC 700 production certificate for the troubled 737 line. (It could also suspend the production certificate of all 7-Series airplanes, including the 737- and 767-based military aircraft. This seems highly unlikely.)

Boeing firefighters could strike on May 3
Separately, Boeing’s in-house firefighters rejected on April 15 for the second time a contract offer from the company. It may strike on May 3. Boeing is advertising for replacement workers (“scabs” in union nomenclature). Boeing Firefighters IAFF Local I-66 “represents the uniformed Firefighters, Inspectors and Lieutenants of the Boeing Fire Department. We have departments in Seattle, Everett, Renton, Auburn, Fredrickson and St. Louis,” the union says on its Facebook page of Boeing’s facilities.

If the union goes on strike, it will be the first time in 40 years anywhere in the US. But the union has little power. Provisions in the contracts of the IAM 751 and SPEEA prohibit them from honoring picket lines or lockouts.

SPEEA tells members to start saving
“The time to start saving is NOW.” That’s the message the Society of Professional Engineers and Employees in Aerospace (SPEEA) sent to its members in its April house publication, Spotlite. The newsletter was published April 1.

SPEEA’s current contract doesn’t expire until October 2026, 30 months from now. But Spotlite is laying the foundation for members to prepare for a strike authorization vote as a bargaining chip when negotiations begin. Typically, negotiations start around nine months before contract expiration.

“The tenor of the negotiations along with any decision on calling for a strike authorization vote is yet to be determined. However, what is known is if a strike vote authorization is called, it is best to approve the strike authorization to show strength and unity,” Spotlite said. “The decision to seek a strike authorization vote of the membership is made by negotiating teams and is not taken lightly. It is extremely premature to discuss a strike on the merits of any contract offer, but it is never too early to prepare.”

Spotlite plans a series of articles to tell members how to prepare for a potential strike. The leadership wants members to have the financial resources to honor a picket line and not go into credit card debt because of a lack of preparedness.

Create a special savings account
Members are urged to create a special savings account with three to six months of cash available to cover expenses.

SPEEA leadership tells its members that a strike is “extremely unlikely.” SPEEA doesn’t have a strike fund. “In the event a strike is called, you will need to support yourself with your own emergency funds. Every single represented individual in the SPEEA Professional and Technical units can save 8% in the after-tax 401(k) to support themselves for a 75-day strike in the extremely unlikely event a work stoppage is called.

“The time to start saving is now. If every single SPEEA-represented person changed their 401(k) contributions and saved 8% in their after-tax 401(k), Boeing would know that SPEEA is unified and prepared to do what it takes to get the contract we deserve in 2026,” Spotlite wrote.

PP

[Fox3WheresMyBanana]

Moody's just downrated Boeing to Baa3, one level above Junk, with a negative outlook.
Stock dropped 7.5% on the news.

[PHXPhlyer]

Boeing to pay $443 million to airlines for Max 9 grounding as losses and problems mount

https://www.cnn.com/2024/04/24/business ... index.html

Boeing reported a slightly smaller loss in the first quarter compared to the same time a year ago, but said fixing the problems that got attention after the Alaska Air incident will push back its financial recovery and cost it $443 million in compensation to its airline customers.

Boeing reported a core operating loss of $388 million, or $1.13 a share, from the $440 million it lost on that basis a year earlier. That was significantly less than analysts’ forecast of $1.63 a share in the quarter. But the improvement came from outside its key commercial airplanes unit, where losses from operations nearly doubled to $1.1 billion.

Revenue tumbled $1.4 billion, or 8% to $16.6 billion, as the problems at the airplane maker resulted in a sharp drop in deliveries of jets to its airline customers. The company gets most of its money from sales of commercial planes only upon deliveries to customers.

The slightly better than expected financial results don’t make up for a company struggling with questions from Congress, regulators and the traveling public about the quality and safety of its aircraft. It is not only scrambling to repair its badly damaged reputation but also to satisfy airline customers being hurt by not receiving the aircraft they had been promised. Boeing said it is taking the necessary steps to fix the quality issues. But those fixes will continue to cause additional losses and missed delivery targets in the months ahead.

Boeing said it would produce fewer 737 Max jets than it originally planned for the rest of this year as it tries to fix problems on its assembly lines. Production of its larger 787 Dreamliner will also be limited by supplier issues, it said.

“We will take the time necessary to strengthen our quality and safety management systems, and this work will position us for a stronger and more stable future,” said CEO Dave Calhoun, who announced during the quarter his plans to leave his post by the end of the year.

The company said the results were hurt by the compensation to airline customers for the three-week grounding of the 737 Max 9 jets, following a January 5 incident in which a door plug blew off of an Alaska Airlines flight leaving a gaping hole in the side of the plane shortly after take-off.

Alaska Air and United Airlines, the two carriers with the most 737 Max 9 planes in their fleets, have already announced they had reached compensation agreements with Boeing.

The incident has sparked a series of investigations into Boeing by the National Transportation Safety Board, the Federal Aviation Administration and the Justice Department, the latter of which could expose the company to criminal liability. It also focused attention on the safety and quality of its aircraft, and its way of treating employees who raise concerns about those issues, including congressional hearings.

Boeing has said it has made a new commitment to improving its quality and safety issues and that it wants employees with concerns to bring them forward.

Calhoun said he’s confident that Boeing will be able to make the changes it needs to return to profitability for the first time since 2018, but he said the changes it will be making will delay the timeline to be profitable once again.

“While this effort will slow our recovery timing, we are now seeing proof points that give us confidence that we’ll begin to stabilize and improve performance moving forward,” he said on the company’s investors call.

The company would not give any guidance for how much money it will lose this year or exactly when it expects to be profitable. Calhoun said the company is confident with its goal of producing positive cash flow of $10 billion a year, although he said it is now looking to do that later in the 2025 to 2026 window it had set as its goal.

“We are absolutely committed to doing everything that we can to make certain our regulators, our customers, and most importantly, our employees and the public are 100% confident in Boeing,” he said. “It is important that our people and our stakeholders understand how promising Boeing’s future looks. Demand across our portfolio remains incredibly strong. Our people are world class. There’s a lot of work in front of us, but I’m proud of our team and remain fully confident in our future.”

But credit rating agency Moody’s doesn’t have as much confidence in Boeing’s outlook for turning things around. It downgraded the company’s credit rating to Baa2, just one step above junk bond status, and it gave it a negative outlook, suggesting another downgrade could be on the horizon.

Moody’s said it believes “the headwinds buffeting commercial airplanes will now persist at least through 2026.” And it said that the company’s projected annual cash flow will fall short of the $4.3 billion of debt coming due in 2025 and also the $8.0 billion coming due in 2026, and that Boeing will therefore have to issue new debt to fund those shortfalls.

Shares of Boeing (BA), which had lost 35% so far this year through Tuesday’s close, were down another 3% in afternoon trading following the investors call, after being up more than 3% in early trading on the smaller-than-forecast loss.

Boeing has had a string of losses and problems with its planes’ quality dating back at least five years. Two fatal crashes of the 737 Max in late 2018 and early 2019 that killed 346 people were tied to a design flaw in the plane and led to a 20-month grounding of Boeing’s best-selling model. It had subsequent problems with the quality of jets once the 737 Max was returned to service.

All told the company has reported core operating losses of $31.9 billion since the start of the grounding in 2019.

But it reported a record month for orders in December, capping what had been one of its best years ever in terms of commercial jet sales. Deliveries also reached a five-year high, and it even reported a rare core operating profit of $90 million for the fourth quarter of 2023. It also announced plans to increase production of the 737 Max throughout 2024 in order to return to sustained profitability.

But by the time it reported those better results for 2023, the incident aboard the Alaska Air flight had already occurred, dashing hopes that it was about to put its financial problems behind it.

While the NTSB has not determined who specifically is at fault for the accident, a preliminary investigation has found that the jet left a Boeing factory missing the four bolts needed to hold the door plug in place.

PP

[Fox3WheresMyBanana]

CNN is wrong, I am right. Boeing's new rating is Baa3

https://www.moodys.com/credit-ratings/B ... 050?cy=can