Boeing’s Dreams and Nightmares

Boeing has been flying in severe turbulence since over a year now. The effects of the COVID-19 crisis are now adding to the battering winds, and it is not yet clear where the world’s now
second largest aircraft manufacturer will land. What is the outlook and why are Dreamlifters lining up?

Though it would be preferable altogether to not have the cause for this event in the first place, the sight of three Boeing Dreamlifters lining up on a special mission is certainly impressive and
unique. Dreamlifters are converted 747-400 Large Cargo Freighters capable of holding up to three times the volume of an ordinary B747-400F, namely 1840 m³, and were originally designed back in
2003 to transport B787 parts deemed too big to fit even the AN225. Converted from passenger B747-700s, Boeing now counts 4 such aircraft in its fleet.


All good things come in threes
Boeing has been deploying its corporate fleet since 18APR20, to help transport PPE as part of the COVID-19 recovery efforts. This particular airlift-trio took place on 11MAY20 and brought over
150,000 protective eye goggles and face shields from China to South Carolina, USA.
The transport was arranged in partnership with the Medical University of South Carolina (MUSC), who were the first in the U.S. to set up a combined virtual urgent care platform and drive-through
specimen collection site, allowing for mobile COVID-19 also in remote and underserved communities. Given the cause, Boeing donated the cost of the mission transport.
The Dreamlifter flights were operated by Atlas Air on behalf of Boeing and carried the medical supplies in the lower decks of the three aircraft, whilst the main decks contained 787 parts. More
such flights are to come, since the MUSC is awaiting more than 400,000 units of PPE in the near future.
The Boeing press release contains a number of similar citations of praise from grateful politicians, along with the Boeing’s CEO Dave Calhoun and the MUSC President, David J. Cole. North
Charleston’s Mayor, Keith Summey sums it up succinctly: “Through the generosity and logistical might of Boeing, our local health care providers are receiving much needed equipment to keep
them safe while they care for the most vulnerable in our community. We should all be inspired by the efforts of Boeing and their teammates, because together, all challenges can be met.”

Grounded Boeing 737 MAX aircraft parked at Boeing Field in SEA, 01JUL19. Image: LINDSEY WASSON/REUTERS
Grounded Boeing 737 MAX aircraft parked at Boeing Field in SEA, 01JUL19. Image: LINDSEY WASSON/REUTERS

Maximum challenges
Challenges are something that Boeing is all too familiar with in recent times. 422 of them are currently parked up across the west of the U.S. That is the number of MAX jets so far assembled and
not delivered since they were grounded in March last year. 2019 was already bad enough for Boeing which ended the year US$27 billion in debt (double that of 2018). This year, even prior to the
corona crisis, the company has been plagued by bad luck, with weather twice delaying the test flights of its 777X in JAN20, adding to the delay it already suffered because of GE engine issues.
The year started with no new commercial jet orders in JAN20, and this has happened again in APR20. Instead, a wave of order cancellations has come in – 108 alone in APR20, adding to the 150
cancellations in the previous month – and an uncertain future as major customers such as Norwegian file for insolvency, no doubt with more to come. The MAX revival which had been expected for
summer 2020, looks very unlikely to happen until late this year, if at all.
Added to this, the pending settlement case with Ethiopian Airlines. CEO Tewolde Gebremariam told Reuters on 15MAY20 that he expects to have a result by the end of next month: “We have invited
Boeing to discuss compensation. It’s compensation for the grounded MAX…there is also compensation for delayed delivery of the MAX that was supposed to come and loss of revenue. By the end of
June, which is the end of our fiscal year, we should have something…meaning compensation.”


Taking stock?
The world’s second largest aircraft manufacturer (it was overtaken by Airbus at the start of this year) is facing its largest crisis. Corona forced it to stop production for a time in MAR20, and
thus far it has only produced 56 aircraft in 2020 – 67% less than the year before. Its CEO Dave Calhoun and Board Chairman Larry Kellner announced in MAR20, that they would forgo pay for the rest
of the year, and moved to raise US$25 billion in bond sales to boost liquidity, but also that its workforce of 160,000 would be trimmed by around 10%. In a recent NBC interview, Calhoun took
stock of the situation: “Apocalyptic does actually accurately describe the moment [however] I don’t think it describes the recovery, and I don’t think it describes medium- or long-term for
the airline industry or aviation in general.”

Boeing stock has fallen 70% this year – even hitting an all-time 80% low in MAR20 compared to previous year, so any prospective investors might be wondering if now is the time to buy Boeing
shares. While Calhoun expects a more positive medium-term (next 3 years) production outlook, saying in the NBC interview: “We really do believe there’s stability in there,” the advice
from Gillian Rich on is not so optimistic: “Boeing stock is also not in any kind of buy zone, and is not forming a discernible pattern. Bottom line: Boeing stock is not a

Dreamlifters lining up on a special mission. Image courtesy of Boeing
Dreamlifters lining up on a special mission. Image courtesy of Boeing

Working to gain confidence
Boeing’s work to alleviate the effects of COVID-19 on the aviation industry includes the recent appointment of one of its long-term executives, Mike Delaney, to lead its “Confident Travel
which will work with airlines, global regulators, industry stakeholders, flying passengers, infectious disease experts and behavioral specialists on minimizing the risk of
surface and airborne virus transmission, and to define industry-recognized safety recommendations, including topics such as compatible disinfectants for plane interiors, further improving air
filtration systems (Boeing already works with High Efficiency Particulate Air [HEPA] filters similar to those used in hospitals) or new technologies like ultraviolet light disinfecting systems
and antimicrobial coatings for high-touch surfaces, for example.
“Air travel is coming back,” Mike Delaney believes. “As that happens, we want passengers and crews to board Boeing airplanes without hesitation.”
One thing is certain, Boeing has not yet pushed through the clouds, and things will be rough for a while yet.

Brigitte Gledhill

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Source: Cargoforwarder

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