Orders at Boeing Drop to a 16-Year Low

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New plane orders at Boeing are the lowest since 2005 and deliveries the lowest since 2005. Blame the Boeing 737 Max.

Due to never-ending 737 Max issues, plane orders at Airbus have soared while Boeing Orders Fall to 16-Year Low.

Quick Comparison Facts

  1. Boeing New Orders: 246 new orders for commercial jets of all types before cancellations and model swaps is the lowest tally since 2003.
  2. Airbus New Orders: 1,131 new orders last year for a net total of 768 counting cancellations.
  3. Boeing Deliveries: 380 aircraft, including military versions of its jetliners, a 14-year-low that compares.
  4. Airbus Deliveries: Airbus had 863 deliveries, a record high.
  5. Boeing Backlog: 4,500.
  6. Airbus Backlog: The A320, Airbus’s rival to the Boeing 737 family, is currently sold out until late 2024.
  7. Airbus new orders were boosted by the launch of a A320 variant that boasts more range. The bigger A321 XLR has been eating into the potential market that Boeing envisions for its first all-new aircraft model in a decade.
  8. American Airlines Group Inc. said Tuesday that it would remove the MAX from its schedules until June, two months longer than previously planned.

Layoffs Tensions Spread

The 737 Max woes are starting to impact Boeing suppliers like Spirit AeroSystems. A couple weeks ago, Spirit announced it would shift its workforce around to work Airbus production.

On January 10, Spirit AeroSystems announced a 2,800 Worker Lay Off.

The biggest Boeing Co. 737 MAX supplier said it is planning an initial 2,800 layoffs, the first announced job cuts since the grounding of a plane that is rippling through the broader aerospace industry.

Spirit AeroSystems Holdings Inc. makes the fuselage and engine parts for the MAX and had been producing enough for 52 jets a month before Boeing said it would freeze assembling the planes in January for a “temporary” time.

Spirit Chief Executive Tom Gentile said the decision was a “necessary step” given the uncertainty with MAX production. The company said it could have to cut more workers.

Internal Comments Released

Also on January 10, Boeing Released Internal Documents showing some employees mocking the aircraft and other bragging about tricking the FAA into certification.

  • "Would you put your family on a MAX simulator trained aircraft? I wouldn’t"
  • “This airplane is designed by clowns, who in turn are supervised by monkeys.”
  • Mark Forkner, then chief technical pilot for the 737 MAX, in the messages released earlier described “Jedi mind tricking” regulators and said he had unknowingly lied to the FAA. Mr. Forkner’s name was redacted from the messages, but his title, 737 chief technical pilot, wasn’t.

Trump Will Suck Airbus Into the Crisis at Boeing

Also recall the opinion of Leeham regarding a tariff spillover: Trump Will Suck Airbus Into the Crisis at Boeing.

"Airbus is almost certain to become a target for higher tariffs. I won’t rule out adding the Mobile (AL) final assembly line to sanctions despite Alabama being the No. 1 supporter of Trump. There is no way Alabama will vote for a Democratic challenger to Trump; it’s a completely safe state," commented analysts at Leeham.

Meanwhile, Airbus to Expand in UK After Brexit

Manufacturing Already Weak

The latest ISM report was a disaster: Manufacturing ISM Down 5th Month to Lowest Since June 2009

Following the GM strike there was a job recovery that lasted precisely one month: Manufacturing One Hit Wonder is Over, Jobs Up a Modest 145,000 in December. Manufacturing jobs unexpectedly declined by 12,000.

Expect another 2,800 or so layoffs from Spirit.

Tomorrow, Trump and China to Sign Trade War Ceasefire, but that will not restore any jobs.

Mike "Mish" Shedlock

Comments (35)
No. 1-15
Casual_Observer
Casual_Observer

Airplane business effectively is a zero sum game globally. However it negatively affects growth in the US, the EU will pick up the growth lost in the US via Airbus order growth. This is actually a net positive for the world as the US had a larger share of global GDP in recent years.

lol
lol

Boeing simply following the lead of virtually every US industry,ie offshore to take advantage of slave labor.....and they're fate is the same as GM,Black & Decker,Whirlpool,move to China,pay them a dollar an hour (if that),ship the cheap ass crap back to Walmart,dump it on US consumer .Might work for a while,but it'll catch up to you and bite you ass.

Roger_Ramjet
Roger_Ramjet

Not good for a company with negative shareholder equity and looking to issue even more debt. Does anybody look at balance sheets anymore?

Sechel
Sechel

Boeing debt put on credit watch downgrade for junk status. They're also in talks with Citgroup and a small number of banks for borrowing. The article says investment grade, not sure how they do that, unless they give the debt a senior claim of some sort. Boeing signed new revolving credit facilities totaling $9.5 billion in October and almost doubled the size of its existing lender commitment. Boeing clearly anticipates ongoing problems for some time to come

This while the new China deal supposedly has China guaranteeing to buy a certain amount of Boeing aircraft. I would not count that Boeing backlog as a certainty, those deals always have cancellation clauses. They are more like options. Also keep in mind Boeing sold the 737-Max to airlines on the promise that they wouldn't need to purchase simulators. That's gone now

NormGriffin
NormGriffin

“This airplane is designed by clowns, who in turn are supervised by monkeys.” Talk about hitting the nail on the head. Who would fly on a Max aircraft after this? I’d rather walk.

Six000mileyear
Six000mileyear

Boeing's share price has made a head and shoulders pattern over the last couple of years. With the right shoulder complete and the neckline being tested, look out below.

Stan88
Stan88

I have a great idea. The Federal Reserve should implement a special QE program where they buy 737 Max’s from Boeing and add these planes to its balance sheet. The Fed can pay full retail price. This will alleviate Boeing from the ill effects of poor management decisions surrounding the 737 Max program. Kind of like how the Fed saved the big banks via QE 1, 2, 3 & 4 from their stupid business decisions. Additionally, the Boeing QE program will allow Boeing to continue stock buy-back programs. A few years down the road when Boeing is back on its feet the Fed can sell these airplanes into the market, but if it is too disruptive to the commercial aircraft market then the Fed can keep these planes on its balance sheet forever!

Greggg
Greggg

Keeping public trust established by a corporation costs 20% of what it costs to re-establish that trust.

Webej
Webej

It's not just the Max. Internal reports and conflicts are coming out about quality issues with other models, QA guys who tell their family to avoid the 787, etc.

Maximus_Minimus
Maximus_Minimus

Please remember that bad news is good news. Boeing's trouble deserve a cut in FED rate, and the pension world is expecting that debt issue priced 0.5% above ZIRP.

Sechel
Sechel

5 year credit default swaps on boeing curently at 53.925 basis points. higher than recent history but back in 2013 it was at similar levels

FloydVanPeter
FloydVanPeter

“This airplane is designed by clowns, who in turn are supervised by monkeys.”

Boeing is a large company. It is bound to have unhappy employees who disagree with management. This email in of itself proves little.

The actual documented problems with the MAX, on the other hand, could destroy the company. Sending execs to jail will not suffice to undo the damage.

FromBrussels
FromBrussels

....Boeing still up 300% since 2016....Insanity obviously has no limits in a Central Banks driven financial system !

Tony Bennett
Tony Bennett

Durable goods orders will take (major) hit as this reverberates thru the supply chain ... couple this with rising auto loan delinquencies (highest since 2011) and likely cutback in auto sector ...

HAL9000
HAL9000

Well, in some ways, it's funny.

BOEING CLARIFIES: 737 MAX WAS DESIGNED BY MONKEYS, WHO WERE SUPERVISED BY CLOWNS

Boeing has reacted strongly to the emails, saying that they are from “obvious idiots who shouldn’t have been hired,” who, “had the situational awareness of braindead gibbons.”