Specialist
Former Executive at The Boeing Co
Agenda
- Current and potential implication of Max 737 groundings on Boeing (NYSE: BA), suppliers and on commercial airlines
- Global aviation regulators and independent review to safety-test the Max 737
- Operational timeline and Boeing's ability to ramp up production to meet demands
- Future outlook – short-term and long-term impact on Boeing's operational efficiency and revenue
Questions
1.
Can you update us on the ongoing process of getting the 737 Max back into service? What should investors be monitoring, and what should be their key concerns?
2.
What do you feel is the likelihood of Boeing getting a consensus approval from the FAA [Federal Aviation Administration] and other certifying agencies?
3.
There is a lag expected between the 737 Max ban being lifted – probably within the next few months – and the aircraft getting into the airlines’ active fleets. Can you outline the process and the timeline there?
4.
Can you elaborate on the economics that made the 737 Max a popular choice for airliners prior to the groundings? Which criteria made it popular across fuel efficiency, aircraft life, engine specification, etc?
5.
Can we explore the timeline and process for Boeing ramping production back up to that 52 planes per month? We will operate under the assumption that approval is imminent in the next several months.
6.
Boeing had a big push in recent years to ramp suppliers up for production of the 737 Max, with significantly reduced production following the ban. Obviously, Boeing has significant buying power, but what do you think is the sentiment among suppliers? How will they react to this?
7.
Boeing obviously has more leverage in the supplier relationships, but do you think it has had to surrender some due to this production slowdown? If suppliers did gain some leverage, what changes in terms and conditions would you expect within their contracts?
8.
You seem confident that larger suppliers who have been storing components can ramp production at Boeing’s desired rate. Do you think the smaller players that Boeing works with can meet this production rate?
9.
Can we explore the cost associated with Boeing’s reduced production rate over the past several months? How do you expect that to impact margins?
10.
Have there been or would you expect indirect impacts to Boeing’s other platforms due to the groundings? Are there other externalities stemming from this that would impact platforms we have not yet addressed?
11.
How should we evaluate the cost of compensating Boeing’s customers for their missed profits?
12.
What do you think is the likelihood that Boeing’s customers would begin cancelling their orders? Could you foresee this happening were the ban to last another three months through December, or is there just not capacity for an Airbus to take on that additional backlog?
13.
My understanding is that at least one additional potential safety issue with the 737 Max platform was identified in June, unrelated to the MCAS [Maneuvering Characteristics Augmentation System]. That has been a contributor to adding months to re-certification timeline. Does that align with your understanding?
14.
We can anticipate some regulatory changes stemming from the certification process. What are your thoughts on potential changes stemming from the 737 Max crisis, and to how the FAA interacts with Boeing?
15.
Do you anticipate pilot confidence in the 737 Max platform being an issue?
16.
How should we assess the cost to Boeing of storing these built planes prior to recertification of the 737?
17.
Do you think there is anything different that Airbus should have done to capitalise on the 737 Max grounding? You mentioned it was a capacity issue, but do you think it could have been more aggressive to try and grow the backlog?
18.
You mentioned Chinese and Russian models that could potentially act to steal share from the 737 Max, but that those models are not necessarily ready. Are there any timelines you are aware of there? How likely are they to compete with the 737 Max, if at all?
19.
Are there any additional topics we could address or expand upon today to assess the Max platform’s outlook?
20.
Did you feel that the corporate governance was doing a good job in ensuring safety while you were at Boeing? Were you aware of any quality or safety factors potentially being sacrificed to meet production numbers?
21.
What should investors be monitoring to gauge this 737 Max situation as it develops? Which 1-2 strategic objectives do you think Boeing should be focused on once the Max is certified?
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