Boeing faces customers looking for concessions
Jun 29th 2009 8:00AM
Updated Dec 3rd 2009 11:52AM
Boeing's (NYSE: BA) fifth delay of its 787 Dreamliner launch may give it more problems than earnings being pushed out to future years. Some customers are planning to use the delay as a way to get better deals from the airline maker. The actions by airlines could permanently undermine Boeing's financial results now and for several years.
According to The Wall Street Journal, "Boeing is coming under pressure from its customers to offer fresh concessions." It is hard to imagine how Boeing has much leverage under the current circumstances.
With the problems with the delay of the 787 and the rising effect it will have on earnings, shareholders should raise the question of how Boeing's senior executives have kept their jobs. The firm's CEO James McNerney, Jr., has been in his position since July 1, 2005, so all of the problems with the Dreamliner have happened on his watch. Scott Carson, who runs Boeing Commercial Airplanes, took his job in September 2006.
Boeing has become a company in which management mistakes have not caused management changes. The company's stock traded above $100 in September 2007 and now changes hands at under $42. Boeing's board does not seem to be doing much about it.
Douglas A. McIntyre is an editor at 24/7 Wall St.