|Bid||67.00 x 1000|
|Ask||68.25 x 1100|
|Day's range||67.00 - 68.56|
|52-week range||65.72 - 100.34|
|Beta (5Y monthly)||1.11|
|PE ratio (TTM)||11.04|
|Earnings date||29 Jan 2020 - 02 Feb 2020|
|Forward dividend & yield||0.48 (0.71%)|
|Ex-dividend date||11 Dec 2019|
|1y target est||84.07|
Without wings and going nowhere, rows upon rows of 737 MAX frames sit idly in Wichita, Kansas at Boeing's largest supplier of parts for its troubled jet. Sources tell Reuters that the plane manufacturer's decision to halt its MAX production line could lead to furloughs in the state, where this fuselage maker, Spirit AeroSystems, is located. With 17,000 people, Spirit makes roughly 70% of the 737's parts. The company declined comment. Boeing's assembly line halt could have huge ripple effects on the overall U.S. economy and employment. The aerospace giant is the largest U.S. exporter. Economists say the output suspension would stop the surge in inventories, thereby cutting first quarter economic growth by at least half a percentage point. And it could push suppliers to layoff or furlough employees or cut their hours. Atmosphere Research Group president, Henry Harteveldt: SOUNDBITE: ATMOSPHERE RESEARCH GROUP PRESIDENT, HENRY HARTEVELDT, (ENGLISH) SAYING: "For Boeing to announce that it could suspend production - and we don't know how long that would be - is really going to create some chaos for the airlines that are involved in this, as well as the 600 or so companies that are part of the 737 MAX supply chain and Boeing itself." Southwest Airlines, the biggest operator of 737 MAXs, and American Airlines have already pushed back cancellations of MAX flights through early April. Investors are also getting hurt. Boeing stock has lost a quarter of its value since March, when 737 MAX planes were grounded worldwide following two crashes that killed 346 people. Larger, more diversified suppliers like United Technologies or Honeywell may fare better. That's because their revenue is spread across other planes produced by Boeing and Airbus. But back in Kansas, Spirit AeroSystems has already cut contractors and temporarily reduced the work week for employees in June. ----------------- They look like sausages, but they're fuselages. They sit in storage in Kansas at Boeing's largest supplier of parts for its troubled 737 jet. Sources say its decision to halt its MAX production line could lead to furloughs in Kansas, where this fuselage maker, Spirit AeroSystems, is located. With 17,000 people, Spirit makes roughly 70% of the 737's parts. The company declined comment. Boeing's assembly line halt could have huge ripple effects on the U.S. economy and employment. The aerospace giant is the largest U.S. exporter. Economists say the output suspension would stop the surge in inventories, thereby cutting first quarter economic growth by at least half a percentage point. And it could push suppliers to layoff or furlough employees or cut their hours. Atmosphere Research Group president, Henry Harteveldt: SOUNDBITE: ATMOSPHERE RESEARCH GROUP PRESIDENT, HENRY HARTEVELDT, (ENGLISH) SAYING: "For Boeing to announce that it could suspend production - and we don't know how long that would be - is really going to create some chaos for the airlines that are involved in this, as well as the 600 or so companies that are part of the 737 MAX supply chain and Boeing itself. It's going to have substantial impact on the U.S. economy." Southwest Airlines, the biggest operator of 737 MAXs, and American Airlines have already pushed back cancellations of MAX flights through early April. Investors are also getting hurt. Boeing stock has lost a quarter of its value since March, when 737 MAX planes were grounded worldwide following two crashes that killed 346 people. Larger, more diversified suppliers like United Technologies or Honeywell may fare better. That's because their revenue is spread across other planes produced by Boeing and Airbus. But back in Kansas, Spirit AeroSystems has already cut contractors and temporarily reduced the work week for employees in June.
The crisis surrounding Boeing deepened on Friday as US politicians lined up to attack the company over the latest revelations about its safety culture, a major supplier cut thousands of staff and regulators proposed fining it over faulty parts. of hundreds of messages in which Boeing employees mocked regulators and admitted flaws in its ill-fated 737 Max jet, which was later involved in two fatal accidents.
(Bloomberg) -- Airbus SE signaled that it’s ready to move beyond a previously uneasy relationship with the U.K. over Brexit, saying the future of its British wing plants is secure and pledging to work with the government to expand a business that goes from helicopter maintenance to planetary rovers.Chief Executive Officer Guillaume Faury said Prime Minister Boris Johnson’s Brexit deal, which will see Britain leave the European Union on Jan. 31, means the split from the bloc “is at least now for certain,” though the nature of future ties still needs to be worked out.The European aerospace giant, which employs more than 13,500 people at 25 U.K. sites and supports 100,000 supplier jobs, warned under previous CEO Tom Enders that future production might be in doubt as the prospect of a no-deal Brexit threatened to create border delays and inflate costs. Faury said in November that Britain represents a very strong industrial and technical base that Airbus has no desire to leave and his latest comments indicate a further thawing in relations.“Airbus is committed to the U.K. and to working with the new government on an ambitious industrial strategy,” Faury said late Wednesday at a company event in London. “We see great potential to improve and expand our operations in the U.K. this year.”Wings for all Airbus models are made in Britain, chiefly at sites near Chester and Bristol, as well as in Belfast at a plant previously owned by Bombardier Inc. and now operated by Spirit AeroSystems Holdings Inc. The U.K. will also play a vital role in helping Airbus transition to low- and zero-carbon technology, Faury said, while also praising its increased funding for the European Space Agency.Andrea Leadsom, Johnson’s business secretary, said at the gathering that Britain was proud to be one of four Airbus “home nations” and pledged U.K. support for EU efforts to reach a negotiated settlement in the company’s clash with the U.S. and Boeing Co. over aircraft subsidies.Britain added 2,000 aerospace jobs last year and the government plans further steps to support Airbus and the sector as a whole after Brexit, she said.To contact the reporters on this story: Charlotte Ryan in London at firstname.lastname@example.org;Siddharth Philip in London at email@example.comTo contact the editors responsible for this story: Tara Patel at firstname.lastname@example.org, Christopher Jasper, Brendan CaseFor more articles like this, please visit us at bloomberg.com©2020 Bloomberg L.P.
Union workers who assemble parts of Boeing’s 737 Max fuselage are weighing whether to voluntarily leave their jobs, without compensation, and without information as to when the aircraft will go back into production.
A network of almost 600 suppliers manufacture Boeing (BA) 737 Max components. Following the latest turn of events, a few of these may try to supply more parts to Airbus (EADSY).
(Bloomberg Opinion) -- To get Brooke Sutherland’s newsletter delivered directly to your inbox, sign up here.Boeing Co. was an aerospace industry bully for years, leveraging its position as the preeminent U.S. commercial-jet maker to squeeze its suppliers, badger its rivals with trade disputes and reportedly lobby for more oversight over the regulatory review of its own planes. Two fatal crashes and a global grounding of its best-selling 737 Max jet have upended the power dynamic. With its latest decision to halt production, Boeing’s comeuppance is complete.The company announced this week that it would completely shut down production of the Max starting in January. The decision follows a surprisingly indignant and public upbraiding by the Federal Aviation Administration over the company’s unrealistic timeline for the jet’s return and concerns that it was trying to pressure regulators to act more quickly. The Max has been grounded for nine months as regulators review a proposed software fix to a flight-control system and grapple with deeper questions about Boeing’s priorities and flaws in its oversight processes and understanding of pilot reactions. The FAA reportedly may not clear the plane until February at the earliest, and seems increasingly likely to move in tandem with more reticent international regulators rather than lead the charge on approving the Max for flight. Faced with a glut of 400 undeliverable planes, a deepening cash crunch and no clear end in sight to the grounding, the gravity of the damage Boeing has done to its reputation finally seems to be sinking in. It didn’t help matters that Boeing’s unmanned CST-100 Starliner failed to reach the International Space Station Friday. One way to read this production cut is that the company is going into self-preservation mode. While undoubtedly a drastic step, pulling the plug on production should help Boeing conserve cash in the near term as it will stop adding to inventory. But it will raise the longer-term financial cost of the Max crisis, put Boeing’s competitive position further at risk and wreak havoc on many of its suppliers. Citing these concerns, both S&P and Moody’s Investors Service lowered Boeing’s credit rating this week. Boeing in April cut 737 production to 42 planes per month, down from a pre-crash pace of 52. Many suppliers would likely have preferred to see another cut versus a complete stop because it becomes much more difficult to ramp up again if their own network of parts and service providers goes cold. Boeing reportedly believed a full-blown halt over a specific time period would offer more certainty for workers and make them less likely to jump ship in a tight labor market. The production cut it announced this week is instead open-ended. In a way, the lack of a fresh timeline shows the FAA’s effort to humble Boeing is working. But it also makes suppliers – and the broader economy – that much more exposed to the Max crisis at a time when U.S. manufacturing is still soft.Spirit AeroSystems Holdings Inc., which gets more than 50% of its revenue from 737 aircraft components, had been continuing to manufacture airframes at the 52-a-month pace throughout the grounding. Now, it, too, is fully halting production. In the understatement of the year, this suspension “will have an adverse impact on Spirit's business, financial condition, results of operations, and cash flows,” the company said in a statement Friday. Spirit shares fell about 6% this week, while fellow Max suppliers Woodward Inc. and Moog Inc. dropped about 5% and 2%, respectively. The production halt will reduce first quarter U.S. gross domestic product by about 0.5 percentage point, according to estimates from IHS Markit and JPMorgan Chase & Co.General Electric Co.’s CFM engine joint venture with Safran SA is the sole provider for the Max and will likely need to rejigger its own production plans. Perversely, that could actually boost GE’s cash flow because new engine shipments tend to be less profitable than spares or maintenance work. The situation also could allow the company to devote more resources to maintaining engines on stored jets so they can be more quickly brought back into service. Boeing’s commitment to prioritize delivering the 400-odd planes in storage over cranking out new ones should help speed associated payments to GE. Meanwhile, GE is reportedly in discussions with Airbus SE about increasing production of engines for that company's rival to the Max to help maintain its factory capacity. Longer term, however, the company’s elevated exposure to any slippage in the Max backlog or lingering reputational damage is a liability, notes JPMorgan analyst Steve Tusa, who says it’s a possibility the plane doesn’t return at all.I think those suppliers are going to remember all of this the next time they enter contract negotiations with Boeing. Before the two Max plane crashes, Boeing had been pushing for cost cuts in an effort to capture some of its suppliers’ rich profit margins for itself, and had pushed to bring more parts and services work in house through joint ventures and acquisitions. That all likely ends. In the near term, rather than negotiating with Boeing over cost, its suppliers are more likely going to be negotiating for compensation or some sort of arrangement to smooth out the hits to their business from this binary approach to production. In the long term, Boeing’s efforts to rebuild its reputation must entail a reckoning with persistent allegations that it prioritized profit over safety. How does the company do that while encouraging its suppliers to make the kind of cutbacks and outsourcing decisions that landed it in hot water?Apart from the obvious fact that Boeing won’t have cash to spare for acquisitions anytime too soon, the Max crisis should prompt regulators to question the wisdom of allowing the company to continue to consolidate more of the aerospace industry within itself. And suppliers would be justified in being more critical of these attempts to raid their market share. The Max crisis was manufactured largely by Boeing itself, rather than its supply chain. As painful as the production cut will be, the suppliers now at least have more leverage.RETURN OF THE REVERSE MORRIS TRUSTWhoever said taxes were a certainty on par with death was clearly not an M&A banker. There were at least two big Reverse Morris trust deals announced this week, with DuPont de Nemours Inc. agreeing to combine its nutrition and biosciences division with International Flavors & Fragrances Inc., and Ecolab Inc. merging its Nalco Champion oilfield chemicals unit with Apergy Corp. Reverse Morris trusts are a way for larger companies to divest assets without having to pay taxes, as they would in a direct sale. These transactions historically are somewhat rare because the two businesses have to be almost equal in size to meet the requirements, but there’s been a resurgence this decade, particularly among industrial companies, in a natural consequence of the breakup frenzy that’s gripped the sector. The IFF deal values the DuPont nutrition business at $26.2 billion and marks the latest in a long line of breakups for DuPont. The company also is reportedly contemplating a divestiture of its transportation and industrial division. But DuPont doesn’t have much to show for all its slicing and dicing to date, and its conclusion that the solution to its underperformance is yet more breakups makes me ask — yet again — if this craze is going too far. (1)The Apergy-Ecolab deal offers a counterpoint. Apergy was spun off from Dover Corp. last year, and while it’s outperformed the S&P 500 energy sector, it hasn’t been able to avoid the drag from low oil prices and a shift in priorities among exploration companies under pressure to boost shareholder returns. From the outside, Apergy looked like another example of when a spinoff has benefited the parent company much more than the unshackled business. But one argument that activist investors often make for breakups is that businesses benefit from having independent control over their capital spending decisions, which include M&A. The deal with Ecolab likely wouldn’t have happened if Apergy was still part of Dover. Ecolab had initially planned to spin off its energy business. But the combined company, which is expected to have an enterprise value of $7.4 billion, should be stronger than either would have been on their own. Its increased international exposure and well-rounded offerings across oilfield chemicals, equipment and services should help it in a world where energy investors are prioritizing scale and stable free cash flow.(2)FEDEX SPECIAL DELIVERY: CHRISTMAS COALBoeing had the worst 2019 by far among industrial companies, but FedEx Corp. comes in second on my list. The company this week reported yet another cut to a fiscal 2020 forecast that was disappointing to begin with as it continues to struggle with the challenge of ferrying the deluge of e-commerce shipments to consumers’ doorsteps. FedEx continues to blame exogenous factors for its shortcomings: a cyberattack on its TNT Express business that delayed the integration of that acquisition; the U.S.-China trade war; the quirks of the calendar this year. All of those things undoubtedly played a role in FedEx’s earnings slippage, but the real problem seems to be a management team that was unprepared to weather those shocks and has worn out investor patience with unfulfilled promises of a turnaround. Chief Financial Officer Alan Graf says FedEx is nearing a bottom. Practically speaking, that may be true but that leaves a lot of unanswered questions about how FedEx will compete in a shipping world that now includes Amazon.com Inc. as a full-blown competitor. Amazon stopped working with FedEx for its own deliveries earlier this year and this week banned third-party merchants from using the carrier for Prime deliveries because of what it said was a decline in performance. Lest there were any lingering doubts about Amazon’s delivery capabilities, the company also announced this week that its logistics arm now handles about half of deliveries and is on pace to deliver 3.5 billion of its own packages this year.DEALS, ACTIVISTS AND CORPORATE GOVERNANCELeidos Holdings Inc. this week agreed to acquire research and national-security services company Dynetics for $1.65 billion. Dynetics focuses on some of the fastest growing parts of the U.S. Defense Department’s budget, including hypersonics, space, directed energy, artificial intelligence, machine learning and micro-electronics, according to Cowen analyst Cai von Rumohr. So the deal should be a boon to Leidos’s margins and growth. This is the latest example of a defense company betting bigger is better as they jockey for positioning in the DoD budget. The strategic benefits offset a somewhat rich price. Leidos is paying roughly 15 times Dynetics expected 2020 Ebitda, but that multiple drops to 12.6 after accounting for tax benefits. Dynetics is a private, employee-owned company, which Leidos was as well before it went public, so that should help smooth the cultural integration, notes von Rumohr.FirstGroup Plc, having already committed to selling the U.S. Greyhound bus service and other assets, is expanding its breakup plan to include the North American school bus and transit divisions. FirstGroup came under pressure to shake up its business after rejecting two takeover offers from Apollo Global Management that the company said undervalued it, only to see its share price flounder amid disappointing results. The North American assets have a value of at least $5 billion, according to activist investor Coast Capital, which earlier this year sought an overhaul of the board to push through its breakup strategy. Coast Capital’s proxy fight failed, but FirstGroup Chairman Wolfhart Hauser still departed.Clariant AG agreed to sell a plastic-pigments unit to PolyOne Corp. for about $1.5 billion. The chemicals are used to color car parts and packaging, and Baader analyst Markus Mayer hadn’t expected Clariant to get that much for it amid a slump in automotive markets. The deal values the business at about 11 times its adjusted Ebitda in the past year, but expected cost savings of $60 million bring that multiple down to less than 8 times. For PolyOne, the deal continues the company’s shift toward higher-margin specialty chemicals.BONUS READING A Major Shipping Change Is Coming, and So Are Higher Fuel Prices Truckmakers Slash Jobs by the Thousands as Orders Dry Up Billionaire Agnellis Get to Keep Their Sweetener: Chris Bryant Foxconn Plays Tax-Credit Poker With Wisconsin: Tim Culpan Tesla, Saudi Aramco and the Stock Price Bros: Liam DenningA Third of America’s Economy Is Concentrated in Just 31 Counties(1) At least DuPont is getting well-compensated for its nutrition business, much to the chagrin of IFF investors who sent the stock down 8% on the week.(2) The value of diversification through M&A doesn’t fare so well in this example. Ecolab, primarily a provider of chemicals for water and waste-water treatment, built its oilfield services business through the acquisitions of Nalco Holding Co. for $8.1 billion (including debt) in 2011 and Champion Technologies Inc. for $2.2 billion in 2013.To contact the author of this story: Brooke Sutherland at email@example.comTo contact the editor responsible for this story: Beth Williams at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Boeing has announced production halt of 737 MAX airliner in January with no timeline of output resumption. The news could benefit/hurt these ETFs.
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