Yesterday, Boeing finally bowed to the inevitable and announced that the two astronauts stuck on the ISS would be coming down in a SpaceX, module in early 2025. The Boeing space project has faced many problems in developing a new launch vehicle. However, the issue at the company is far wider than just the space element of the company, its commercial aircraft business is suffering at the hands of the Europeans and now the Chinese, with the B737 knock-off.
The demise of Boeing has been long anticipated, an aerospace company run for short-term profits was always bound to be a problem. As Elon Musk famously said, an engineering company run by accountants will eventually fail.
What emerged about Boeing's capsule is far more worrying than was first reported. there are three massive problems (1) About half the trustees are inoperable, (2) the vessel has run out of Helium, as it has leaked out, (3) wires have been found to be defective and traces of fires have been found in the electrical system. All this tells you that engineers were overruled by management because having one system fail is fine, but three is absolutely unacceptable.
This habit of cutting corners has shown itself in the assembly of its aircraft, the cutting corners on under-playing or even hiding systems has already gravely affected the company, now even its flagship B787 has been under fire for problems with its composite wing box.
Every time the problems are investigated there are endless memos discussing the issues and the remedies and more often than is acceptable these remedies are rejected because of costs. Now I don't want to imply that cost control is not important but when the leaders of the company are in Chicago and the operations are in Seattle high problems can be hidden and ignored.
As I mentioned Beoing was an easy play in the early 2000s, the company had an aggressive dividend policy and stock buyback and was relying on the success of the company over the past 20 years, like every other analyst saw the benefit of owning Boeing Stock, and it paid off handsomely. However, in the late teens, we recommended liquidating the stock, problems were starting to emerge and the stock price had nearly doubled.
Now, the new CEO is facing trouble in almost all divisions, and the latest embarrassment with the space program is probably an unwelcomed reminder that others are better than they.
Comments