Boeing Lost $32 Billion Over Last Five Years
Boeing Corporation building.
Boeing has taken a massive financial hit, and this started well before the Alaska Airlines door panel issue earlier this year.
Simply put, Boeing has been hemorrhaging money for the better part of the last five years.
How much? Try $32 billion. With government investigations, safety protocol questions, and delivery delays, one wonders how long Boeing will last.
But remember that the company maintains a bit of exclusivity. It is one of only two manufacturers in the world that build full-service commercial jets. Few companies could handle that kind of financial hit, meaning Boeing could survive for several more years just on that alone.
But the January 5 Alaska Airlines door panel incident exacerbated the financial woes.
“Given the dynamics of their place in the industry and the industry itself, they have the luxury of time,” said Richard Aboulafia, managing director at AeroDynamic Advisory, an aerospace and defense industry consultant. “It’s an industry with the highest possible barriers to entry and very strong demand for its products. But they’ve wasted a lot of that time.”
A Good News, Bad News Situation
Boeing is in a good news and bad news situation. The company has more than 5,000 airplane orders, but it can’t fulfill them fast enough to make a profit.
“Can the current situation go on forever? No, it can’t,” said Ron Epstein, aerospace analyst for Bank of America. “That being said, they have some leeway. They’re not going to be in trouble tomorrow.”
Management said it is now concerned more about safety and quality issues than profitability.
“It is important that our people and our stakeholders understand how promising Boeing’s future looks,” CEO Dave Calhoun said. “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.”
Still, he and several other executives said they would step down by year’s end.
The company has a staggering $48 billion in debt right now, and may have to issue more debt this year to avoid falling into junk bond status.
Chief Financial Officer Brian West recently told investors that Boeing is handling its debt load.
“We’re committed to managing the balance sheet in a prudent manner with two main objectives,” he said then. “One, prioritize the investment grade rating; and two, allow the factory and supply chain to stabilize for a stronger trajectory as we exit this year.”