It’s All Boeing Wrong 🛬

by 13 Jan, 2020

It’s All Boeing Wrong

When it comes to Boeing’s worst crisis in 92 years of commercial aircraft manufacturing, yesterday’s news is old news! The grounding continues to drag on following two 737 MAX downings, with the planemaker’s order book having collapsed like a warm Easter egg.

Catching megabrands at 52-week lows has proven a very rewarding strategy for investors with thick skin and a strong stomach. However, betting against prevailing sentiment is only wise if the prevailing sentiment is wrong. A mistimed investment in an embattled name can drag down returns if it hasn’t found the bottom of bad news.

Speaking of, the Federal Aviation Authority (FAA) recently got its hands on more than 100 pages of internal messages within Boeing. Uh-oh! In Boeing executives’ own words, this “airplane was designed by clowns who were in turn supervised by monkeys,” the India regulator is “stupid,” their customers are “morons,” and they’d try to “gang up” on the very regulators in control of their destiny!”

Shareholders are hoping new CEO Dave Calhoun can dig Boeing out of its hole and be the catalyst for a turnaround, but many aren’t convinced. Calhoun sat on the board of directors as these messages went back and forth. Plus, no matter what he thinks he has up his sleeve, regulatory approval only comes from regulators.

“He’s not new blood,” points out Bank of America analyst Ron Epstein. However, a $7 million bonus offered for righting the ship could bring out his best again. Would you bet on it?

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