Specialist
Former executive at The Boeing Co
Agenda
- Boeing’s (NYSE: BA) key challenges, including the 737 Max and 787 Dreamliner delays
- Market share shifts and Boeing’s ability to retake share
- Supply chain and labour outlook
- Industry-wide complexity headwind
- Commercial aftermarket opportunities, discussing recent partnership with Spirit AeroSystems (NYSE: SPR)
Questions
1.
What is your near-term outlook for commercial aerospace and Boeing? We’re seeing near-2019 levels of traffic, so what are your expectations for the remainder of 2022 and what should investors be paying the closest attention to?
2.
Obviously, it’s been a difficult two years for Boeing – it’s almost three years since the Max first went down and there have been delays to the 787 and 777. With all these challenges, what are you most focused on as it relates to the company’s future? Which of the problems that have arisen over the last two years is the most concerning to you, moving forward? Is there a systemic problem here?
3.
In recent earnings calls, people seem to be trying to get to the common denominator for all the issues. To you, it seems to be complexity. Could the issue also be a more stringent FAA [Federal Aviation Administration]? Is it perhaps the fault of Boeing engineers? Outside of the complexity, is there any other common denominator to all the issues?
4.
Does Boeing struggle to hire or retain talent when it comes to engineers or other crucial parts of the workflow?
5.
What is the solution to the complexity issue, which you’ve mentioned as a common denominator?
6.
As far as the reducing complexities, is there a lower limit there? Is there a limit to how much Boeing can actually reduce and therefore this complexity issue might just remain?
7.
You mentioned Airbus doesn’t deal with the complexity issue so much and pointed us to the number of parts in the aircraft. Why doesn’t Airbus have the same complexity issues as Boeing?
8.
On the 787, when do you expect deliveries will resume? I saw a recent article that pointed to Q3 2022 or just H2 2022 generally. Does that timeline seem realistic to you for the 787 return?
9.
What are the main factors or details with regarding the 787 that regulators or other counterparties are still considering or looking for?
10.
You brought up the privilege to self-certify being stripped away and you outlined the more obvious impacts of that. Are there any second-order impacts as it relates to taking that privilege away? Obviously, it would elongate timelines, but what other impacts might that have on Boeing in 1-3 years?
11.
How would you describe Boeing’s relationship with the FAA and how has it evolved? You mentioned the FAA when describing the key challenges.
12.
With the delays we’ve seen for the 777X, do you think there’s any chance the programme could get outright cancelled? What would lead Boeing to cancel the programme altogether?
13.
On the cost issue, how concerned are you about Boeing’s supply chain as it relates to production pace and cost? How confident are you that the company’s supply chain can support current and future levels of increased production?
14.
Do you have any idea where Boeing might run into some challenges with its suppliers? Would it be smaller suppliers generally? What would be the characteristics of a supplier who is likely to come back to the company to renegotiate?
15.
On the Max, when do you expect China-based carriers to start taking delivery? I saw some news flow about the end of 2022 potentially, but what are you looking for relating to the Max issues?
16.
Is there any chance of a further delay in the delivery date for the Maxes in China? Is there any risk that carriers could cancel delivery altogether? How should we think through the viability of that risk?
17.
What is the risk that China-based carriers turn to different suppliers – such as Airbus or Comac – for future orders? Do you view that as likely?
18.
You mentioned Boeing needs to perform to make sure everything stays as it is with China. What are the signposts that our clients or investors should monitor along the way to assess if the company is indeed performing?
19.
How do you expect Boeing’s market share will evolve? Recent news flow has highlighted the company losing the 50% market share it’s commanded for quite some time. What driving factors are leading you to your forecasts for share growth or decline?
20.
You seem to think Boeing is almost on the finish line. Obviously, we need to see things come through on the FAA side, but what do you view as the biggest impediment to Boeing getting through all the issues? What is the one part you’re most concerned about?
21.
Are you concerned about Boeing’s liquidity position? You mentioned the firm’s cost of capital rising and liquidity. Recently, the company said it needs about USD 10bn-12bn in cash just to run the business and is sitting around USD 12bn today. Its CEO said he was comfortable with where the company stands now.
22.
How would you describe Boeing’s relationships with major airlines? You mentioned customer relationships are one of your focus areas. Has there been any strain or issues with any particular customer or geography, or anything relating to the customer relationships?
23.
Are there any customer relationships that you’re more concerned about when it comes to cost pass-through? Obviously, ULCCs [ultra-low-cost carriers] are more price-sensitive because of their business models. Are there any relationships that you think might be at risk of shifting as a result of the expected cost increases?
24.
I saw there was a new agreement with the 737 Max MRO [maintenance, repair and overhaul] partnership with Spirit AeroSystems. Do you have any high-level thoughts about any opportunities, challenges or risks of agreement?
25.
What should we be watching over the next 12-24 months as it relates to Boeing? What were your thoughts on the company moving its headquarters to Arlington? What has that enabled it to do?
