Boeing (BA) investors have died a death of a thousand cuts. 787 delays and problems continue to be vexatious. I am sure that on a technical level they are diligently working to fix it. Management is trying to sooth investors by claiming that late delivery fees are within expectations. But the margins for 2011 787 and 747-8 deliveries are nill. Boeing worked for free. Not good.
On a certain level you need to get costs behind you. Short term pain long-term gain has always made sense. The two wild cards in margins and profitability are unexpected costs and further cancellation or delay fees.
The fixes that Boeing is looking to will continue to be expensive. The engineers have a mandate to fix not save nickels. The near term desperation will adversely affect margins. Also while Boeing may be managing cancellation and late fees ona cash basis we have no idea what they are promising for future prices allowing customers to average down. This is further risk of the pricing compression variety.
Disclosure: “George Gutowski” writes from a “caveat emptor perspective”. I hold no positions in stocks mentioned in this post. I do not intend to initiate any in the next 72 hours.
- America’s Worst Directors: Kenneth Duberstein Of Boeing: Update (247wallst.com)
- Boeing’s Dreamliner Delays: Outsourcing Goes Too Far (dailyfinance.com)
- Boeing says 2011 profit hurt by 787, defense cuts (seattletimes.nwsource.com)