Discussion in 'Stocks' started by dealmaker, Jan 2, 2018.

  1. dealmaker


    Boeing’s Next Airliner Might Fly Investors Into Turbulence
    Demand for a midsize plane isn’t clear yet, but airlines’ desire to link midsize cities in Asia could make such a plane ideal in 10 to 15 years
    The next Boeing plane is expected to meet airlines’ need for an aircraft smaller than the 787 Dreamliner and bigger than the single-aisle 737. Shown, a Boeing Co. 787 Max 10 aircraft on the tarmac ahead of the 53rd International Paris Air Show at Le Bourget, in France in June 2017. Photo: Bloomberg
    Alex Frangos
    Dec. 31, 2017 10:00 a.m. ET

    One reason things have being going so well for Boeing Co. shareholders: The airplane giant hasn’t tried to build a new type of plane lately.

    That looks about to change. Next year, Boeing is likely to decide whether to start developing its first new airliner in 15 years.

    Investors would be right to worry. New planes are hugely risky, in terms of cost and design and predictions of market demand years in advance. Boeing’s last big bet was the 787, which launched in 2003, cost $30 billion and only began turning a profit on each plane in 2016.

    The next new Boeing, known as the “new midsize airplane,” “middle of the market” and unofficially, the 797, would likely be a double-aisle jet intended for delivery around 2025. The goal is to meet airlines’ needs for a plane bigger than the single-aisle 737, and smaller and with less range than the 787 Dreamliner. The new plane would overlap with the discontinued but still widely used 757 and 767, ferrying 200 to 280 passengers up to around 5,000 nautical miles.

    Flying HighBoeing free cash flow as a percentage of revenueSource: FactSet
    %19992000’01’02’03’04’05’06’07’08’09’10’11’12’13’14’15’16’17-7.5-5.0- 30, 2016x8.1%
    The market for such a plane isn’t obvious today, which is one reason Boeing isn’t building it already. The last 757 came off the line in 2004, and while airlines might like a replacement, it hasn’t been a major priority.

    Airbus, too, has a ready response. It can stretch its popular single-aisle A321 to cover some of the same market Boeing’s new plane would, but possibly at lower cost and lower execution risk, since it wouldn’t be a completely new plane.

    That doesn’t mean pursuing the 797 is the wrong decision. Boeing’s cash flows are strong, and aircraft makers have to take risks and bring the newest technology to market. While demand for this plane isn’t clear yet, the desire by airlines to link midsize cities, especially in Asia, could make the plane ideal in 10 to 15 years. And what it learns on the 797 might be invaluable for a much bigger and more important task down the road: replacing its best-selling 737 family.

    Do nothing and Boeing could end up ceding the midsize-jet market completely to Airbus. If Airbus accumulated insurmountable market share, it would be able to negotiate lower rates from suppliers and sell planes for less than Boeing.

    Despite the best intentions, the history of new aircraft programs is littered with tears. Airbus’s double decker A380 and Boeing’s 787 are recent examples where costs skyrocketed. The good news is any pain from a botched 797 would be some time down the road. Problems tend not to crop up for several years after a project’s launch.

    Boeing shares were the best performer in the Dow Jones Industrial Average for 2017, up 90%. Free cash flow, the metric most followed by investors, is the best in years. This has no doubt attracted new investors who may need to be reminded: Building planes isn’t a risk-free business.

    Write to Alex Frangos at
    murray t turtle likes this.
  2. dealmaker


  3. dealmaker


  4. vanzandt


    (ERJ) Embraer
    52 week high.
    Here4money and dealmaker like this.
  5. dealmaker


    Jet maker Airbus buys flight training center in Colorado
    European jet maker Airbus SE has acquired a flight training operation in Aurora – its first in the western U.S. It's a move that soon could be followed by its key U.S. rival, Boeing Co., as the two companies battle to grow their services businesses. Airbus bought Strategic Simulation Solutions, a privately held flight training center near Denver. Terms of the deal weren't disclosed.(Business Journals)
  6. dealmaker


    Boeing, Adient teaming up to sell airplane seats
    Boeing says it has entered into a joint venture with Adient, the global leader in automotive seating, to manufacture and sell a portfolio of seating products to airlines and leasing companies. Adient Aerospace will fill a huge gap in the airplane supply chain, said Kevin Schemm, senior vice president of supply chain management, finance and business operations and chief financial officer for Boeing Commercial Airplanes.(GeekWire)
  7. dealmaker


  8. dealmaker


    Boeing HorizonX invests in Cuberg battery venture
    Boeing’s HorizonX venture investment team says it has led a seed funding round for Cuberg, a California startup focusing on next-generation battery technology for potential aerospace and industrial applications. Among the most relevant applications would be power storage for electric airplanes and underwater drones – both of which are in Boeing’s wheelhouse.(GeekWire)
    vanzandt likes this.
  9. vanzandt


    Great stock, great company... but up here at $358 I think the animal spirits have gotten a tad ahead of themselves on a great quarter. Its still an industrial. We'll see.
    TrendSpider_Jake likes this.
  10. dealmaker


    It's great to be in a duopoly business....
    #10     Jan 31, 2018
    murray t turtle likes this.