Last November, the FAA finally revoked the reasoning order Boeing:to: (NYSE: BA) 737 MAX 20 months later. This allowed the aerospace giant to resume deliveries of its best-selling model by the end of the year.
Boeing’s long-suffering shareholders hoped that this milestone would mark the end of an unsuccessful but isolated episode. Unfortunately, in 2021, new problems continue to arise in the enterprise, further undermining the credibility of the management. Until Boeing improves its performance, investors should probably stay away from the company.
Large-scale jet applications in the mess
While deliveries of the 737 MAX have resumed, Boeing’s large family of aircraft has emerged as a new hotspot in its product line. Production of the 747 Jumbo will be completed next year. Boeing has reduced production of its next largest model, the 777, to just two a month. Many of them are trucks, as the demand for passenger options has almost disappeared.
The next-generation 777X was to revive demand for large passenger aircraft. However, while the first shipment was originally scheduled for 2020, it was delayed until the end of 2023 earlier this year. Even hitting that target can be impossible. The FAA recently slowed down the certification process because Boeing did not fully address the problems found in early flight tests in December last year. And almost eight years after the 777X was officially launched, Boeing has only eight approved customers for this type.
The 787 Dreamliner, meanwhile, has undergone a number of production errors. Boeing has repeatedly discovered new manufacturing defects over the past year, forcing it to suspend deliveries again and again. In the first quarter, it delivered only two 787 aircraft, and after returning to the runway in April, had to stop deliveries again in May. The industrial giant cut production to 787 as it tried to address its quality control issues.
Ironically, the 767 was the loudest executor of large-scale Boeing models in 2021. However, the new emissions rules are likely to force Boeing to stop building commercial versions of the 767 by 2028.
Another failure for the space program
Unfortunately, Boeing’s commercial aircraft business is not the only part of the company struggling with performance issues. Earlier this month, Boeing was forced to cancel an unsolicited Starliner test flight to the International Space Station because 13 engine locks were not opened by order.
Last year, Starliner’s first test flight went badly due to a software glitch that needed to be done (at the company’s expense) this year. After spending more than a week trying to fix the Starliner capsule while still attached to the Atlas V rocket, Boeing recently admitted that it had to take the capsule back to the Boeing facility to find out the root cause of the latter problem.
The latest failure will result in Starliner’s second test flight in months (at least) while boosting Boeing costs. And with each failure, the risk of NASA abandoning the Starliner program increases. After all, SpaceX has already accomplished many successful manned missions for NASA.
A company still in turmoil!
Boeing has certainly had some success in 2021. Most notably, he won several large orders for the 737 MAX, including one with 200 MAX 8 և MAX 10 aircraft. United Airlines:. The company also managed to return to profitability in the previous quarter.
At the same time, the accumulation of orders for Boeing aircraft has hardly increased year by year, as the cancellations have neutralized most of the new orders won by the company. Moreover, its accumulated balance remains almost 30% smaller than it was at the end of 2018. This backward erosion will only keep Boeing’s revenue and cash flow much lower than it was a few years ago.
Extensive performance issues in Boeing’s business, from 787 production to 777X development to Starliner, make the company an even more attractive investment prospect. Management skills do not seem to have a status in the company, which increases the risk of further costly problems. Simply put, to be a worthy investor, Boeing needs to master the basics of running a high-tech industrial business.
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