Do Ya Feel Lucky, Punk?

"Distraxi's idea of perfection is a Jagroen" (distraxi) 06/29/2020 at 20:47 • Filed to: 737 Max, hell no

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Boeing are starting FAA re- certification for the 737 Max. Personally, they can re-certify it till they’re blue in the face, but I ain’t keen to be getti ng on one till a few million other people have done so and not died.

Fortunately, stuck in a Covid-free, A320-using gulag as I am for the ne xt year or two, that’s unlike l y to be a decisi on I face in the foreseeable future.

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Tripper > Distraxi's idea of perfection is a Jagroen 06/29/2020 at 20:58

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As i f I wasn’t already all set with flying.

facw > Distraxi's idea of perfection is a Jagroen 06/29/2020 at 21:01

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I mean, I’m pretty sure millions flew it before anyone died too...

Regardless, I expect it will be pretty safe by the end of this mess. 

ranwhenparked > Distraxi's idea of perfection is a Jagroen 06/29/2020 at 21:03

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Do you think that will really be enough? Millions of people have already flown on the 737 MAX without dying (2.5 million on American Airlines’ Maxe s alone ), but that didn’t exactly help the folks on JT610 or ET302.

wafflesnfalafel > Distraxi's idea of perfection is a Jagroen 06/29/2020 at 21:05

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right - first thing you do as you are walking onto the plane is pound the cockpit door and yell at the top of your lungs, “turn the f’n MCAS off right now!” just to make sure the pilots know what to do.

ranwhenparked > facw 06/29/2020 at 21:15

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Teething problems happen, the important thing is to learn from your mistakes. When Disneyland first  opened, rides were breaking down all over the place, but look at them now, nobody even remembers that.

Distraxi's idea of perfection is a Jagroen > ranwhenparked 06/29/2020 at 21:45

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Millions of seat- flights, maybe not millions of individuals. But you’re right: lets make it billions. I’m happy deferring my first leap of faith.

Distraxi's idea of perfection is a Jagroen > facw 06/29/2020 at 21:48

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I expect that particular issue will be pretty safe by the end of this mess. I’m less convinc ed that the pl ane as a whole will be - even assuming Boeing fix their safety culture for the future, it’s a big ask to go back and review every decisi on they’ve made in the last decade. There may well be more nightmares  lurking.

ranwhenparked > Distraxi's idea of perfection is a Jagroen 06/29/2020 at 21:51

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They’ll get it fixed. 20 years from now, when its time to roll out the upgraded , re-engined 737X, everyone will be singing the praises out the outgoing 737 MAX workhorse and the grounding early in its production run will be a little footnote.

ttyymmnn > ranwhenparked 06/29/2020 at 21:57

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You mean the 737-9000 MAX Super Ultra Stretchy BOI?

ranwhenparked > ttyymmnn 06/29/2020 at 22:29

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Assuming the world economy ever rebounds, yes. Boeing will make a decision to produce that by end of Q2 2034, offer for sale to airlines beginning in Q1 2035, first flight by end of 2036, and deliveries commencing in maybe 2039, 2040, 2041, when ever, they’ll get around to it, just pay them and wait. 

Distraxi's idea of perfection is a Jagroen > ranwhenparked 06/29/2020 at 23:03

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Or alternatively, it’ll be the Note 7 of 737s. Even after they fix it, there’ll be enough residual nervousn ess among passengers and airlines that w hen it comes to replacement time, Airbus will have pole position. Eventually Boe ing will decide they have to give up and start again, and in 20 years time on the very odd occasion when you’re not flying shorthaul on an A321En efwo (Even Newer Engine, Fuselage and Wings Option ), it’ll be on a Boeing Super WingDing , beca u se they’ll be so keen to erase the memory of the Max that they’ll have given up on numbers altogether even though 75% of the plane will be carryover 737 .

ranwhenparked > Distraxi's idea of perfection is a Jagroen 06/29/2020 at 23:14

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They’ll probably be a rebrand of some sort, but they’re not going to just ditch the whole 737, that would require designing some sort of new plane or something, which is just crazy. I’m pretty sure that’s not what an aircraft company does. 

Highlander-Datsuns are Forever > Distraxi's idea of perfection is a Jagroen 06/29/2020 at 23:15

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I think the COVID pandemic is actually helping them as there is no demand at the moment. Maybe they will get recertifications by the time air travel increases. 

Distraxi's idea of perfection is a Jagroen > ranwhenparked 06/29/2020 at 23:27

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I dunno, even aside f ro m the whole Max thing, they must be ending EOL on the 737 platform. It’s fundamentally limited by the low ground clearance both in terms of engine size and how long you can stretch it, and there’s been enough materials and aerodynamic improve ments in the past umpty years that more modern platforms are always going to beat it on running costs and passenger-friendliness. The main thing it’s got going for it nowadays are the (admittedly vast) existing infrastructure and trained-user bases. But that only protects you for so long - ask Nokia.

They’ ve previously indicated plans to replace the 737 with a new platform by 32030, either with a Y1 derivative or something else: I’d be amazed if someone in corporate hasn’t been looking seriously at how they accelerate that, of late.

They’re stuck with it for the next 6 or 7 years at least though: hard to envision even a crash program moving faster than that. So an intermediate facelift and r ebrand   is a likely “nothing to se e here” holding action if they lose market share to Airbus in the next year or two. P ost-C ovid, I expect domestic air travel will recover faster than international, so shoring up their competitiveness in the narrowbody market will be survival-critical for them.

ranwhenparked > Distraxi's idea of perfection is a Jagroen 06/29/2020 at 23:35

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On the other hand, the first place publicly traded companies make cuts in a down economy is r&d, followed closely by sales, which causes a further drop in revenue, so it becomes a repeating cycle. Shore up the bottom line for a quarter or two, then be left behind when things recover. At which point, the strategy shifts to selling valuable and strategic assets to shore up the numbers short term.

Distraxi's idea of perfection is a Jagroen > ranwhenparked 06/29/2020 at 23:44

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Surely you’re not accusing Boeing’s highly paid executive team and board of directors of having no long term plan to protect brand integrity and shareholder value beyond their next bonus payment? The horror of it: I’m shocked - shocked, I tell you - that such a cynic lives amo ng us.

ranwhenparked > Distraxi's idea of perfection is a Jagroen 06/29/2020 at 23:56

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My company’s doing it right now. We have a decent CEO and I generally respect our leadership, but we’re in the middle of selling off our “crown jewel” division that’s a major moneymaker in order to make good on a pledge from several years ago to boost the share price above a certain threshold and improve our cash position. If our executive team doesn’t do it, activist investors will throw them out at the next shareholders meeting. They’re putting a positive spin on it, but nobody that works here is really buying it.

Its what happens when shareholders are totally disconnected from and disinterested in the actual business and long term health of the company. Warren Buffett does not invest that way, it’s not the only way to do things, but it is the prevailing one. In Boeing’s case, they could be a reseller of Chinese made ear bud headphones and suitcase record players for all their investors care.

Distraxi's idea of perfection is a Jagroen > ranwhenparked 06/30/2020 at 00:01

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We’re going the other way at present - doing whatever we can to protect R&D spend in the face of collapsed revenue , in the hope that when things turn back up again we’ll be better placed than our competitors to take advantage with an updated product range. Since I work in R&D, I regard that as a Good Thing(TM). However our CEO has a disappointingly US-corporate way of thinking at times, so when the pressure *really* comes on I suspect he won’t be prepared to hold the line on that approach. We just raised capital though, so provided we see the start of a recovery in the next 6 months or so I think we’re OK: otherwise, I’m jobhunting.

ranwhenparked > Distraxi's idea of perfection is a Jagroen 06/30/2020 at 00:11

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Weird thing is we’re actually doing OK at the moment, our sales volume shot way up during the lockdown, and we were in good shape going into it. The biggest problem we’ve got is dealing with outsourced manufacturers and the lack of control that causes - constant extended out of stock issues, delayed product launches, etc. Our sales staff is always questioning why they should be aggressively selling products we might not be able to deliver. Two years ago, we started taking steps to bring a bit more back in-house in the US, but any more of that is stalled due to covid.

Distraxi's idea of perfection is a Jagroen > ranwhenparked 06/30/2020 at 00:26

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Our problem’s entirely demand side. We’re a B2B company selling a deferrable capital produ ct mostly used by lar ge corporates , and when times get uncertain, corporates freeze their capex budgets. Plus our product gets integrated into someone else’s product before getting to the end user, and most of the “ someb ody else” s’ factories are in low labour cost countries in Latam and Eastern Europe, so are FUBAR at prese n t. So our sales are a a tra in wreck.

We had a really great 2019, managed to keep the wheels on our supply chain through China’s Covid event and have an OK Q1, but Q2, which is usually our peak season, i s massively down and Q3's looking worse. The teller for us will be whe ther we see an order upturn in November-December as customers start preposition ing for capex to resume in 2020 . I f so, we’re all good: if not, it’s go nna be ugly.

ranwhenparked > Distraxi's idea of perfection is a Jagroen 06/30/2020 at 00:28

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We are just pretty simple consumer packaged goods, but we do source from Cuba, Dominican Republic, and Puerto Rico. There's been some really drastic interruptions in the DR, really bad, like nothing coming out for months.