Boeing's Turbulent Times: Stock Faces Multiple Headwinds

Boeing, once the undisputed giant of the aerospace industry, finds itself in turbulent times in a year plagued by false starts and an engineer found dead—but was it really a suicide?

Boeing stock (NYSE:BA) performance in 2024 is showcasing a blend of strengths and areas needing improvement. Boeing, once the undisputed giant of the aerospace industry, finds itself in a turbulent phase.

In a year plagued by false starts and controversy around several areas of their business, investors are concerned on Boeing's role in their portfolio.

In this article, we deep dive into the major issues overshadowing Boeing stock and what it may mean for the company going forward.

Boeing Whistleblower Found Dead

John Barnett, a former Boeing employee known for raising concerns about the company's production issues, was found dead of an apparent suicide, authorities in South Carolina reported. Barnett, who had worked at Boeing for 32 years before leaving in 2017, had been actively involved in highlighting production issues within the company.

The 62-year-old was confirmed to have died from a self-inflicted gunshot wound, according to the Charleston County coroner's office. The Charleston City police are investigating the circumstances surrounding his death, though no further details have been provided.

Barnett's death occurred while he was in the midst of a deposition for an ongoing whistleblower retaliation case against Boeing. His attorneys, Robert Turkewitz and Brian Knowles, expressed shock at the news, stating, "He was in very good spirits and really looking forward to putting this phase of his life behind him and moving on. We didn't see any indication he would take his own life. No one can believe it."

John Barnett actually warned his family that potentially his life was in danger several weeks before his death.

'If anything happens, it's not suicide' - John Barnett

As a quality manager at Boeing, Barnett had uncovered significant safety issues with the Boeing 787 Dreamliner. His efforts to bring these problems to light reportedly led to retaliation and a hostile work environment, according to his attorneys.

Barnett had been vocal about safety concerns, notably following a January 5 incident involving a Boeing 737 MAX 9 plane, where a panel blew out mid-flight, exposing passengers to the outside air and necessitating an emergency landing. This incident contributed to the ongoing crisis around Boeing's safety and quality standards, which have since led to regulatory scrutiny and production delays across the aerospace industry.Ongoing Problems with the MAX Airliner

The 737 MAX crisis continues to haunt Boeing. Despite the aircraft's return to service after lengthy grounding due to safety concerns, new issues have emerged. Reports of electrical problems and the need for additional inspections have caused delays and disrupted delivery schedules. These ongoing technical difficulties not only erode customer confidence but also strain Boeing's financial recovery efforts.

Safety Crisis at the Largest Plant

Boeing's largest factory in Everett, Washington is facing a crisis as workers and union officials describe it being in "panic mode". Managers are accused of pressuring staff to remain silent about quality concerns, as the US plane maker deals with a safety crisis following a cabin panel blowout earlier this year.

The Everett site, known for building planes like the 747 and 767, as well as fixing the 787 Dreamliner, is reportedly full of faulty jets that need repairs, with some flying in from Boeing's South Carolina site. Workers have raised issues about a lack of quality assurance and rushed repairs, emphasizing speed over safety.

Boeing met with US regulators to address quality-control problems and has submitted a plan to address concerns raised by an expert panel appointed by the FAA. The company's safety culture has come under scrutiny, with calls for leadership changes and a focus on implementing recommendations to improve safety standards.

Amid investigations into production quality, allegations of falsified aircraft records, and disputes with unions over safety concerns, Boeing is facing significant challenges at its Everett factory. The pressure is mounting on the company to address these issues and ensure the safety and quality of its aircraft moving forward.

CEO David Calhoun Resigns

Boeing has faced significant challenges in recent years, culminating in issues with the 777 program and quality control problems with the 787. It makes sense, then, that the CEO said in March that he would resign.

Boeing's president and CEO, Dave Calhoun, stated in a letter to employees that he intends to resign by the end of the year. He acknowledged growing safety concerns, specifically highlighting the recent incident on an Alaska Airlines flight where a plane panel detached mid-air.

The problems at Boeing can be traced back to the 1997 merger with McDonnell Douglas, which is seen as a turning point where profit began to take precedence over quality. This shift in focus eventually led to the flawed management that contributed to the 737 Max crashes in 2018 and 2019.

“It’s become an extreme embarrassment. The board seems weirdly absentee, investors seem weirdly complacent, and the government doesn’t seem to have a mechanism for dealing with this. ” - Richard Aboulafia, Aviation Analyst

Calhoun was brought in to help Boeing return to its engineering roots, despite his background in accounting. Some have drawn comparisons between Calhoun and his predecessor, Jim McNerney, whose tenure was marked by strained labor relations and cost-cutting.

Canceled Starliner Launch with NASA

A visitor at the International Astronautical Congress (IAC) in Paris looking at a model of the Boeing Starliner astronaut capsule, due for six manned missions to the ISS.

Boeing's first Starliner flight with astronauts on board was canceled at the last minute, along with the backup launch scheduled for the next day. The malfunction was attributed to a hardware or network problem that is currently under investigation.

Boeing is still contracted to fly six operational Starliner missions to the International Space Station (ISS).

The next possible launch dates are June 5 and June 6. Launch was previously called off in May due to a rocket valve issue and a small helium leak was found in Starliner, considered stable. Starliner's crew debut has been delayed for years, costing Boeing $1.5 billion and nearly $5 billion of NASA funds.

Financial Results

Boeing has chosen not to provide financial guidance for 2024 due to the current uncertainties surrounding the company. While they have baseline plans in place to inform supplier schedules, the leadership feels that the circumstances are too unpredictable to issue a firm guidance. This decision was made to avoid sending misleading messages to shareholders and stakeholders during a time of crisis.

Boeing Stock (BA) Earnings History - Synvestable

Despite the lack of official guidance, there is potential for growth in deliveries for Boeing in 2024. Even in a low case scenario, production could see a significant increase compared to previous years. With proper management of inventory, the company could potentially exceed delivery growth rates seen in 2023.

Boeing Stock (BA) Growth Snapshot - Synvestable

Most concerning has been the consistent destruction of shareholder equity under David Calhoun. Interesting to see that the board has continued to approve raising his compensation at the expense of shareholders.

Boeing's board of directors has continuously approved raising David Calhoun's compensation at the expense of shareholder equity.
Boeing Stock (BA) Financials - Synvestable

The Road Ahead: Navigating the Challenges

Boeing faces a daunting array of challenges. The engineer's lawsuit could result in costly legal battles and necessitate changes in corporate culture. Addressing the persistent issues with the MAX airliner is crucial for restoring customer trust and stabilizing revenue streams. The safety concerns at its largest plant require urgent attention to avoid further regulatory penalties and production delays.

Boeing’s stock is navigating through stormy weather, with significant issues that require immediate and effective resolution. The company’s ability to address these challenges will determine its path forward. Investors are watching closely, hoping for signs of a turnaround in what has been a period of unprecedented turmoil for one of the world’s most iconic aerospace companies.

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