Boeing in Turbulence: Financial and Operational Challenges Shake the Aviation Giant

Boeing is currently experiencing one of the most challenging phases in its recent history. The shares of the aerospace company have fallen by 42% this year. The ongoing issues with the Boeing 737 Max seem unsolvable and continue to heavily burden the company. Additionally, Boeing is affected by an ongoing strike involving 33,000 members of the International Association of Machinists, which has been continuing for over a month. Talks between the parties are rare, and an agreement is not in sight. As if that were not enough, Boeing has announced its business results for the third quarter in advance, predicting a loss of $9.9 billion. The cash flow is expected to be negative at $1 billion. Despite the bleak forecasts, Boeing's shares saw an increase of nearly 5% at the close of the week, reaching $151.02, even before this bad news became public. Boeing also announced that it would postpone the market launch of the new 777-9 jet to 2026 and stop the production of 767 freighters for the commercial market once the existing aircraft are completed. However, production for the US Air Force will continue. The company will also have to lay off 10% of its global workforce, which equates to about 17,000 employees. Around 66,000 positions in the Seattle region will be affected. A significant portion of the financial burden results from the months-long strike, which is estimated to cost the company $1 billion per month. Several airlines, such as Southwest Airlines, Alaska Airlines, and Ryanair, rely exclusively on Boeing products, but the aftermath of the 737 Max disasters remains a constant issue. The emergency landing of an Alaska Airlines plane with an improperly installed emergency exit plug on January 5, 2024, in Portland highlights the ongoing quality issues. Analysts are cautious about their assessments of Boeing's stock before trading begins on Monday. Prior to the 2008-09 financial crisis, the stock reached highs of up to $440, but the pandemic and the problems with the 737 Max abruptly ended its former high-flying performance. A fantastically cheap entry price for Boeing is currently not available. Investors should wait for a stable foundation to be established, which can only be achieved through a combination of factors: willingness to reach an agreement between management and unions, stabilization of the production sites in the Puget Sound area, and strengthening Boeing's capital base. Additionally, a satisfactory resolution with regulators and plaintiffs from the 2018 and 2019 crashes will be necessary. Boeing and its unions have been in conflict for decades. Since 1948, there have been seven major strikes, the last one being in 2008. The strategy adopted from McDonnell Douglas to run Boeing as a strict business enterprise has unexpectedly propelled Airbus into a dominant market position. However, Airbus is also not facing rosy prospects, experiencing a 4.9% decline in shares this year.