Boeing Faces Federal Fraud Charges

Tell us First off, about this deal. You know, it was widely telegraphed. We knew there was some kind of combination that was going to happen. So what's it look like now that the details are final? Morning, Matt. So, yeah, Boeing is in sort of in the midst of taking over its former unit spirit. And they've said that they'll pay, they'll pay for over $4.6 billion and essentially they will, they will try and complete this deal by mid 2025 is the timeline that they've set. And as part of the deal, their Spirit is also getting rid of its Airbus related businesses. And for that Airbus will pay the princely sum of $1.00. And they will actually in fact get money from spirit of $559 million. And so it is a good deal for Airbus in terms of being able to secure their supply chain at a time when they're struggling with their supply chain. It's also a sort of, it's a homecoming for Boeing and they can sort of bring back a former unit that has been sort of source of a lot of quality issues for them. And they can sort of bring it back into their sort of fold and try and be able to sort of turn that around and make sure that they can be aligned on the same quality issues. So essentially said they need to do better. Boeing does, and one of the ways they're going to try and do that is pay, what, $8.3 billion to get Spirit back into the fold. Still, it looks like the US Department of Justice is going to charge Boeing a criminal fraud after finding that they violated a deferred prosecution agreement. What do we know about that? Yes. So Bloomberg News reported late on Sunday that essentially the DOJ is leaning towards basically finding Boeing guilty or find asking Boeing to plea, take a deal that would basically have them plead guilty to corporate fraud, fraud. And they would also sort of that would basically put them under pressure in terms of government contracting and other things. But at the same time, the alternative is for Boeing to actually face a trial. And that could be sort of more damaging, especially for a company that's sort of trying to turn around and trying to get their business afloat again and try and sort of earn cash again. It it doesn't really look like Boeing has taken that much of a hit Sid in terms of its stock price. Right now, we're trading at 182, OK. We've been a little bit higher than 150 right at the start of the year, or rather the end of 2023. But it's been hovering around this price for the past three or four years. At what point do investors say they've lost enough that I can go in and and buy this with some certainty? It's always tricky with Boeing. I mean, every time you think they've turned around another corner, something else hits them. And so it's, it's been a really difficult period for Boeing. And the company has been trying to move along in terms of just getting their stuff together in terms of quality, in terms of sort of getting new management in. They've been talking about how they want to ramp up, sort of ramp up deliveries again from when the FAA allows them to. So they've got a lot of issues that they need to resolve at the moment, and they're in that sort of consolidation phase where they're trying to sort of try and assess the issues and sort of work through them. And so it's going to be a bumpy time for Boeing, at least for the next couple of months as until they can sort of get deliveries back on track and sort of smooth sailing ahead. It's obviously an industry with very long lead times. Does any of this give Airbus an advantage, the problems that Boeing's been having for the past few years? Does it mean that, you know, airlines are more likely to order Airbus aircraft instead of Boeing? Not really. So Airbus has been struggling with its own supply chain gremlins. And I mean, they're sold out to the end of the decade on their A320, which is the Boeing 737 Max competitor. And they've been sort of cutting their forecast for the year. I mean, boy, Airbus cut their delivery target for 2024 to 770 from 800 just last week. And they've been talking about how the supply chain isn't improving, it's actually getting worse. So at the moment, Airbus isn't able to cash in on any of this and they're struggling with their own issues. And so as a result, airlines are sort of stuck between sort of waiting for new planes or just flying all the aircraft.