Time to buy Boeing?

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Tony-S
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Re: Time to buy Boeing?

Post by Tony-S »

Mister A wrote: Tue Mar 12, 2019 8:12 amWhether both crashes were caused by the MCAS, whether both crashes were caused by something else, or whether neither crash had anything to do with the other, it's asking a lot from your ordinary consumer to understand the fine points, or even the broad strokes of the investigation. Most were willing to write off Lion Air as a complicated incident involving a questionable discount airline. My point was simply that this now has plenty of room to turn into a situation where passengers are fearful of it or governments ground it in spite of all logic, in which case we haven't seen how low the stock can go yet.
There are many issues surrounding the 737 MAX beyond the MCAS. The reported flight profile of the Ethiopian flight has many congruencies with the Lion air flight, suggesting the MCAS was receiving faulty information from one or both of the angle of attack sensors. The lack of clarity on the modified manual override from previous 737s is an issue of contention that was also raised by, at least, the American Airlines' pilot's association. There has also been discussion of the FAA's role in certifying the 737 MAX. Boeing claimed, and the FAA acquiesced, that the MAX is just another evolution of the 737, thus its certification was less rigorous than had it been a new design. There are many aviation experts that think the redesigned MAX, principally with it larger and more forward engines, changed the aerodynamics enough that it should have gone through a more thorough certification.

With most disasters, two or more statistically unlikely events usually coincide. Perhaps this is one of those instances.
DrGoogle2017
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Re: Time to buy Boeing?

Post by DrGoogle2017 »

The CNBC talking heads kept mentioned there’s a software fix. I don’t think there is, if there is they already fixed that before the release of this plane.
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Re: Time to buy Boeing?

Post by 02nz »

DrGoogle2017 wrote: Tue Mar 12, 2019 11:51 am The CNBC talking heads kept mentioned there’s a software fix. I don’t think there is, if there is they already fixed that before the release of this plane.
There absolutely is a software update in the works: https://www.washingtonpost.com/business ... f847d434ac

It sounds like the "enhancement" would make the MCAS action less drastic.

As an aside: Where did you get the idea that software fixes only happen before products are released? Practically anything electronic these days - TVs, cars, computers, even planes - gets updates well after release, and often to fix serious problems that, yes, should have been caught during testing.
DrGoogle2017
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Re: Time to buy Boeing?

Post by DrGoogle2017 »

02nz wrote: Tue Mar 12, 2019 11:57 am
DrGoogle2017 wrote: Tue Mar 12, 2019 11:51 am The CNBC talking heads kept mentioned there’s a software fix. I don’t think there is, if there is they already fixed that before the release of this plane.
There absolutely is a software update in the works: https://www.washingtonpost.com/business ... f847d434ac

It sounds like the "enhancement" would make the MCAS action less drastic.

As an aside: Where did you get the idea that software fixes only happen before products are released? Practically anything electronic these days - TVs, cars, computers, even planes - gets updates well after release, and often to fix serious problems that, yes, should have been caught during testing.
Where did I say that software fixes only happen before products are realesed. Please don’t put words into my mouth. I was a software engineer before I retired for goodnesssake. I said I don’t think this is a software fix because they mentioned pilots have to manually override the control. Here is a link for more info on this.

https://theaircurrent.com/aviation-safe ... cas-jt610/
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Re: Time to buy Boeing?

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Re: Time to buy Boeing?

Post by LadyGeek »

Although this is an unfortunate situation, conjecture on the accident is derailing the discussion. Please to stay focused on the investing aspects.
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Church Lady
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Re: Time to buy Boeing?

Post by Church Lady »

As of today's close, Boeing yields 2.05% vs SPY at 1.89%. Not much of a premium to hold BA until the dust settles, in my opinion.

If it crashes (sorry!) through support at 359 or so, the next stop is 300. As recently as December, it traded at its 52 week low of 241.16.

Maybe all the bad news is already 'baked in' . Or maybe another shoe is about to drop. Who knows?

Let's not forget to keep the victims and their families in our thoughts and prayers.
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CurlyDave
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Re: Boeing-time to buy?

Post by CurlyDave »

miamivice wrote: Mon Mar 11, 2019 9:12 am
calmaniac wrote: Thu Mar 07, 2019 9:12 pm Buy Boeing? I want to sell! I'm trying to unload my 25 year old Boeing stock and move it into index funds (taxable account), but the capital gains give me the willies.

Another reason to stick with index funds in my next life: you don't get stuck with appreciated stock that is expensive to liquidate.
I am curious why you feel index funds would result in less capital gains tax than individual stock?
There is no such thing as getting "stuck" with appreciated stock that is expensive to liquidate. You might have to pay capital gains tax on the sale, but this is the price for great appreciation.

If you really want to avoid the capital gains tax, you can dispose of the stock in other ways.

We put about $20k in AAPL back in 2005. We have given appreciated shares to our kids who have incomes low enough that their capital gains rate is zero. So far that $20k has turned unto two house down payments, two new cars, and private school for our grandkids. And, we still have most of the stock left. Now tell me again how we would have been better off buying index funds...

I believe in index funds, but have some fun money and hit a good one every once in a while.
jminv
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Re: Time to buy Boeing?

Post by jminv »

The time to buy would probably be if the FAA decided to ground the planes in question, following many other regulators. The problem with that is if the home country regulator decided to ground the planes, the problem could be worse than expected, remaining confidence could be lost in the near term, and further downside could be an eventuality. I followed this when it happened and expected BA to open low and close a bit higher than the low after the first day. That happened. You could have made money there. I also thought there would probably be at least a few regulators that grounded the plane so I didn't want to play with a day frame. With the cascading regulatory issues, I would generally expect BA to either come out with a very quick resolution or the FAA to go with the tide and ground the planes. No regulator wants to be the last one standing if an event occurs that leads to a public relations problem.
CurlyDave
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Re: Time to buy Boeing?

Post by CurlyDave »

mmcmonster wrote: Mon Mar 11, 2019 7:42 am
...Why do people keep asking about Boeing? Do they think they know more about the company than everyone else in the market?
That is a common question. For me, the answer has significant complexity.

No, I don't know more than everyone else in the market. In fact, as an individual I probably know less than at least some people in the market. BUT I process the information I do have differently than the other people in the market.

Personally, I am going to pass on BA with my fun money, but there is a famous quote I believe in about the time to buy is "when there is blood running in the streets."

If BA fell by 30%, and I was convinced of their long-term prospects in aerospace, that could represent a buying opportunity.
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Wiggums
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Re: Time to buy Boeing?

Post by Wiggums »

mmcmonster wrote: Mon Mar 11, 2019 7:42 am
Why do people keep asking about Boeing? Do they think they know more about the company than everyone else in the market?
I don't have any individual stocks, however, Boeing sells services which is an important revenue stream. They have a pretty good track record and many orders to fill. they, to a certain extent, self certify the planes. It does not appear that the government does not perform extensive, independent testing. All reasons why Boeing stock does well over a long timeframe.

Not something that interests me though...
Last edited by Wiggums on Wed Mar 13, 2019 9:59 am, edited 4 times in total.
StandingRock
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Re: Time to buy Boeing?

Post by StandingRock »

I doubt they will fail as a going concern for the foreseeable future, but I have no idea what the stock price will do. I'm not interested in buying their stock anyway so what do I care lol.
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Kitty Telltales
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Re: Time to buy Boeing?

Post by Kitty Telltales »

Joeko wrote: Mon Mar 11, 2019 8:03 pm Profiting on a crash causing fatalities? Even if I was ok with stock picking, I wouldn’t buy Boeing right now.
I agree! After hearing about the deaths of so many, my first thought wasn't, "Can I make money off of this stock?" I was only surprised that I had to scroll so far down the thread to find a similar opinion.
TNWoods
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Re: Time to buy Boeing?

Post by TNWoods »

Ditto all the comments about buying individual stocks...

Having said that, however, when an individual stock "goes on sale", and you are tempted to take advantage of the opportunity, you must clearly understand WHY it went on sale.

Back in 2008 I had a big wad of cash most of the year from a cash out refi of my home, and had not been exposed to the Boglehead 3-fund ideas, and so I was looking for individual stock opportunities. That fall there were suddenly hundreds of stocks on sale. I did a ton of research, reading, asking questions, and took my time, and ended up picking several that I thought were on sale, NOT because the companies themselves had done something wrong, but because they were victims of the massive panic/selloff/market exit. So I judged them to be strong enough to weather the crash, and eventually come out strong and recover all lost value at that point. I was right about several, wrong about a couple. Over 90% of the value of that portfolio now is made of long term cap gains.

But this current sale on Boeing stock is NOT due to "prevailing market and economic conditions that affect stocks broadly".

It is because 2 of their planes crashed, and many pilots have commented on a specific flaw they have had to take counter-measures to in order to prevent their planes from crashing too.

So this sale on Boeing is probably a bad time to buy.

Thought experiment: "What would happen to Boeing if another plane goes down?"

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HomerJ
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Re: Time to buy Boeing?

Post by HomerJ »

Mister A wrote: Mon Mar 11, 2019 4:35 pm
Earl Lemongrab wrote: Mon Mar 11, 2019 4:05 pm From what I've heard, it's more of a training issue with pilots in some countries. That doesn't mean that they won't go with a technical solution requiring updates.
That's certainly the position Boeing took with Lion Air, causing Lion Air to all but go to war with Boeing for trying to pin it on them.

https://www.ndtv.com/world-news/the-man ... ke-1964157

Now that it's happened again at a more reputable global airline, with witnesses apparently reporting smoke and luggage pouring out of the back of the plane on the way down, those claims may come back to haunt them and do some lasting damage to the brand.

My sense is that China is capitalizing on it as an opportunity to promote their competing aircraft and break into Boeing's territory in emerging markets. Still, I don't think anyone can say if this is a good time to buy or not. If customers start cancelling 737 MAX orders, then you might see the real low.
The whole thing is ridiculous. Two crashes can certainly be coincidence, not a pattern, and smoke and luggage pouring out of the back of the plane do not indicate a software problem, so we may be talking about two completely different events.

Buying the stock would just be gambling, until we know what actually happened.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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Re: Time to buy Boeing?

Post by barnaclebob »

Kitty Telltales wrote: Wed Mar 13, 2019 9:56 am
Joeko wrote: Mon Mar 11, 2019 8:03 pm Profiting on a crash causing fatalities? Even if I was ok with stock picking, I wouldn’t buy Boeing right now.
I agree! After hearing about the deaths of so many, my first thought wasn't, "Can I make money off of this stock?" I was only surprised that I had to scroll so far down the thread to find a similar opinion.
I would think of it more as profiting off those who don't understand the aerospace industry.
Admiral
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Re: Time to buy Boeing?

Post by Admiral »

Just buy the Dow, Boeing is the largest stock there by market price anyway.

Me, I'm happy with my TSM!
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Re: Boeing-time to buy?

Post by fposte »

CurlyDave wrote: Wed Mar 13, 2019 12:04 am
miamivice wrote: Mon Mar 11, 2019 9:12 am
calmaniac wrote: Thu Mar 07, 2019 9:12 pm Buy Boeing? I want to sell! I'm trying to unload my 25 year old Boeing stock and move it into index funds (taxable account), but the capital gains give me the willies.

Another reason to stick with index funds in my next life: you don't get stuck with appreciated stock that is expensive to liquidate.
I am curious why you feel index funds would result in less capital gains tax than individual stock?
There is no such thing as getting "stuck" with appreciated stock that is expensive to liquidate. You might have to pay capital gains tax on the sale, but this is the price for great appreciation.
But that's what calmaniac is saying. He's stuck with big capital gains if he liquidates. (I didn't get the part about less capital gains in index funds either, though.)

It's a good problem to have, along the line of having big RMDs, but it's still a problem to be negotiated. When I moved away from a not-bad, very old-school advisor who had me only in single stocks, I had a lot of stocks with unrealized gains. I've liquidated some, put others in my DAF, and amassed a diversified index-based portfolio in tax-advantaged and from the proceeds in taxable, but I still have more single stocks than I'd like. I don't dislike them so much that I'm willing to take the considerable tax hit to liquidate all of them at once, though, so I will have some Boeing and a dozen others for a while yet.
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Phineas J. Whoopee
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Re: Time to buy Boeing?

Post by Phineas J. Whoopee »

I neither bought nor sold, but my stake in Boeing went down in line with its decline relative to the rest of the market.
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Re: Time to buy Boeing?

Post by spectec »

I think you should buy Boeing when it hits bottom, hold it until it goes up a lot, then sell it. If is isn't going to go up a lot, don't buy it. Simple way to make a bundle.
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. - Will Rogers
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Fieldsy1024
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Re: Time to buy Boeing?

Post by Fieldsy1024 »

I'll wait to buy back when I hear what contracts are 100% proof. For now I have 10%, but I'd like it to drop to about 350 and might put in 25%.
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Re: Time to buy Boeing?

Post by CyclingDuo »

Fieldsy1024 wrote: Wed Mar 13, 2019 8:15 pm I'll wait to buy back when I hear what contracts are 100% proof. For now I have 10%, but I'd like it to drop to about 350 and might put in 25%.
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uberme
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Re: Time to buy Boeing?

Post by uberme »

Meh, the price was way lower in December / January. Low in Dec was $293
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Re: Time to buy Boeing?

Post by Grt2bOutdoors »

Kitty Telltales wrote: Wed Mar 13, 2019 9:56 am
Joeko wrote: Mon Mar 11, 2019 8:03 pm Profiting on a crash causing fatalities? Even if I was ok with stock picking, I wouldn’t buy Boeing right now.
I agree! After hearing about the deaths of so many, my first thought wasn't, "Can I make money off of this stock?" I was only surprised that I had to scroll so far down the thread to find a similar opinion.
When you buy an index fund, how is that any different? The index is down because of either perceived or actual bad news and you buy it to profit into the future. No one is thinking or saying that people have suffered or died, let’s buy. They are looking at the effect on a specific company and the potential for profit into the future. Kind of hypocritical to be pointing fingers when in reality anyone holding a large cap or total market cap index also owns Boeing.
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Fieldsy1024
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Re: Time to buy Boeing?

Post by Fieldsy1024 »

Grt2bOutdoors wrote: Thu Mar 14, 2019 7:07 am
Kitty Telltales wrote: Wed Mar 13, 2019 9:56 am
Joeko wrote: Mon Mar 11, 2019 8:03 pm Profiting on a crash causing fatalities? Even if I was ok with stock picking, I wouldn’t buy Boeing right now.
I agree! After hearing about the deaths of so many, my first thought wasn't, "Can I make money off of this stock?" I was only surprised that I had to scroll so far down the thread to find a similar opinion.
When you buy an index fund, how is that any different? The index is down because of either perceived or actual bad news and you buy it to profit into the future. No one is thinking or saying that people have suffered or died, let’s buy. They are looking at the effect on a specific company and the potential for profit into the future. Kind of hypocritical to be pointing fingers when in reality anyone holding a large cap or total market cap index also owns Boeing.
Haha. I guess people shouldn't buy anything index. I agree with you.
RussellWilson
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Re: Time to buy Boeing?

Post by RussellWilson »

bump :D
stocknoob4111
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Re: Time to buy Boeing?

Post by stocknoob4111 »

since now it has become apparent that ba will not survive without a bailout what are the chances that there will be shareholder dilution?
RussellWilson
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Re: Time to buy Boeing?

Post by RussellWilson »

I know next to nothing about this company, am not planning on buying...but...don't airplanes have to come from somewhere? Isn't there only one other manufacturer in the world? I guess maybe in a month we'll read about Blue Origin purchasing Boeing or something like that.
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Phineas J. Whoopee
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Re: Time to buy Boeing?

Post by Phineas J. Whoopee »

RussellWilson wrote: Wed Mar 18, 2020 12:31 pm I know next to nothing about this company, am not planning on buying...but...don't airplanes have to come from somewhere? Isn't there only one other manufacturer in the world? I guess maybe in a month we'll read about Blue Origin purchasing Boeing or something like that.
I think it's correct that Boeing or some successor to it will continue designing and building large aircraft, and the aerospace business will continue. Its present stockholders may not own it.

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Re: Time to buy Boeing?

Post by Inframan4712 »

When I think of companies I want to own, I think of companies that I WANT to own. Ones that have a hx of excellent products. Boeing, recently, not so much.

737MAX - nuff said. Everyone knows this.

Starliner (next gen crew capsule for getting astronauts to ISS) - over budget and most recent unmanned test failed miserably. They have numerous bugs in the software and didn't bother to do a full 48 hour test of all software end-to-end prior to the 48 hour real flight. If crew had been on board, there were multiple opportunities for them to die.

Osprey - vertical take-off/land and horizontal cruise aircraft for the military. Also fraught with problems and multiple crashes killing many, during test program - not talking about combat. From Wikipedia - "The V-22 Osprey had 12 hull loss accidents that resulted in a total of 42 fatalities. During testing from 1991 to 2006 there were four crashes resulting in 30 fatalities."

This company has lost its way. I don't see how it finds its way back, even if bought out. It has grown soft and complacent and basically just awful.

So that's three examples of a company that puts profits before quality, and even before human lives. I wouldn't invest a single dollar.

Edited to add: Oh, yeah, and also undelivered 737 MAX aircraft were inspected, and rags, tools and other debris found in the fuel tanks. This after Boeing already got caught doing the same thing with other aircraft. I hope they go out of business and their patents and products are sold off to different companies so they can be improved.
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Re: Time to buy Boeing?

Post by jb1 »

I just bought some Boeing so we will see.
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Re: Time to buy Boeing?

Post by sergio »

stocknoob4111 wrote: Wed Mar 18, 2020 12:21 pm since now it has become apparent that ba will not survive without a bailout what are the chances that there will be shareholder dilution?
This is what would worry me. I think that Boeing will survive with substantial government aid, extra contracts, loans, whatever.

Whether or not their stock hits $0 and shareholders are wiped out in the meantime is what I'm not sure about.

What they really need is a total reset. It's really difficult to see them recovering after the MAX situation. Go back to their roots and focus on building planes, not financial engineering. Really sad to see what's become of Boeing.
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firebirdparts
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Re: Time to buy Boeing?

Post by firebirdparts »

RussellWilson wrote: Wed Mar 18, 2020 12:03 pm bump :D
That was savage.. Hey, Boeing's only $390! It's a bargain!

I feel sorry for the guy in the locked thread who didn't want to sell it for $400 last year because he didn't want to pay taxes on it. I wonder what he ever did.
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dreamrider
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Re: Time to buy Boeing?

Post by dreamrider »

What's the rationale to why Boeing stock value has fallen 75+%? I saw an analyst on CNBC say the cost of the 400 or so 737max on the tarmac is worth approx 7 Billion. You got development cost but it cant be as bad as 787 considering Boeing took the 737 and put different engines on it thus creating the nose dive problem. I get 737max was meant to be their bread and butter but Boeing has other planes and businesses.
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Re: Time to buy Boeing?

Post by mrspock »

dreamrider wrote: Thu Mar 19, 2020 1:24 am What's the rationale to why Boeing stock value has fallen 75+%? I saw an analyst on CNBC say the cost of the 400 or so 737max on the tarmac is worth approx 7 Billion. You got development cost but it cant be as bad as 787 considering Boeing took the 737 and put different engines on it thus creating the nose dive problem. I get 737max was meant to be their bread and butter but Boeing has other planes and businesses.
I'm not an aviation expert, but here's my take:

1. They have the 737 MAX issues -- This alone had the possibility to weigh shares down for a number of years. It's their "Deep Water Horizon" if you will.
2. COVID-19 crisis - Their customers are going to either go bankrupt or be severely damaged by effectively having to shutdown operations for a number of weeks. Orders will be parred back or cancelled if they haven't already, the "contracts" they have, no aren't worth the paper they are written on.
3. Train Wreck Balance Sheet - 141B in liabilities - 133B in assets = -8.6B .... last I checked that's not a great place to be. This was in December... imagine what things will look like by June? Without government help, there's a good chance their shares would goto $0, zilch, nada.

-75%? It was really bad in December, it's worse now, and there's a good chance this gets much worse for them by June/July.
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Re: Time to buy Boeing?

Post by iamlucky13 »

stocknoob4111 wrote: Wed Mar 18, 2020 12:21 pm since now it has become apparent that ba will not survive without a bailout what are the chances that there will be shareholder dilution?
It is not apparent, but clearly there are major risks, and the possible options are more difficult to weigh without aid than with aid.

The request is federal loan guarantees, not a cash grant or purchase of an ownership stake. That, of course, is a shareholder risk, because the loans would be senior to shareholder interests if they can't be repaid. However, the liquidity provided would mean that once they burn through their current cash and loans, they can continue working on certifying the 777X, recertifying the 737 MAX, and building inventory to deliver whenever their customers can accept them.

That, in turn, helps avoid losing employees who would seek other jobs during a furlough. Until 2 months ago, the generally strong labor demand would have guaranteed that a furlough resulted in a high rate of attrition, which was presumably a factor in deciding to keep their 737 production workers on full pay despite stopping the line. Now, it is less of a risk, but still a real one. Even more acutely right now, Boeing needs to make sure their suppliers stay operating, most of whom I'd bet have less financial cushion than Boeing. Spirit, one of their largest suppliers, already laid off 20% of its workforce due to the 737 MAX delivery halt. Being able to continue to pay suppliers for parts they produce is a mutually beneficial way to keep them afloat.

The considerations change quite a bit if isolation necessitates factory shutdowns. In that case, either they stop paying employees, their spending plummets, and the loans become less necessary, or they keep paying them, and the loans basically become bailout of the employees without direct benefit, and with long term costs to the company.

Although it has become clear the impacts of the pandemic will be major and sustained, especially for the travel industry, at some point it will pass, and people are going to want to travel again.
mrspock wrote: Thu Mar 19, 2020 2:51 am 3. Train Wreck Balance Sheet - 141B in liabilities - 133B in assets = -8.6B .... last I checked that's not a great place to be. This was in December... imagine what things will look like by June? Without government help, there's a good chance their shares would goto $0, zilch, nada.
But also $463 billion in backlog. In recent years, they were averaging 10-15% operating cash flow. That's likely to decrease some due in particular to the effects of the MAX crashes and demand deferred due to the pandemic, but it's still a lot of expected future income.
Pikel
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Re: Time to buy Boeing?

Post by Pikel »

I have been making my way through the Squam Lake Report over the winter. I keep thinking about the proposal they had for a new security - bonds that convert to equity when certain crisis criteria are met. They were obsessing over the financial crisis at the time, and were proposing only the 'tentacle-like' corporations be subject to that rule, but maybe the current crisis is proving all companies need some kind of a self funding safety trigger.

Lots of interesting things in that book, they don't perfectly apply to the current situation, but it addresses a lot of the issues we are now facing. Like Boeing will not reissue all that stock they bought up because they would rather wait for a bailout. "Too big to fail."
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Re: Time to buy Boeing?

Post by 1130Super »

stocknoob4111 wrote: Wed Mar 18, 2020 12:21 pm since now it has become apparent that ba will not survive without a bailout what are the chances that there will be shareholder dilution?
I see this playing out exactly like GM bailout if BA cannot source enough debt or a second offering in the capital markets. If I was the US I would require BA to supply all parts from the US as part of the bailout.
Oregano
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Re: Time to buy Boeing?

Post by Oregano »

If we all pitch in a few dollars, by the time this is over Bogleheads might be able to buy the whole company.
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tvubpwcisla
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Re: Time to buy Boeing?

Post by tvubpwcisla »

It's always a good time to buy! :sharebeer
Stay invested my friends.
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