Is Boeing at the most dangerous moment?

1comment 2019-03-14 21:02:35 source:Finance Author:Li Wei Today, A shares are my own bull market.

Faced with various pressures, the Federal Aviation Administration (FAA) announced in the early morning of March 14th, Beijing time that it temporarily suspended the Boeing 737 MAX aircraft operated by American Airlines or operated in the United States. Prior to this, the FAA claimed that the 737MAX is still airworthy.

  Boeing, the biggest drop since the 9/11 incident, is the time to face the problem of whether the 737 model design is outdated, even though this series has provided Boeing with the greatest contribution.

Facing all kinds of pressure, the United StatesaviationThe Authority (FAA) announced in the early morning of March 14th, Beijing time that it temporarily suspended the Boeing 737 MAX aircraft operated by American Airlines or operated in the United States. Prior to this, the FAA claimed that the 737MAX is still airworthy.

Boeing (BA.N) expressed support for the above decision. Boeing said in a recent statement that Boeing supports the suspension of 737MAX operations after communicating with the FAA, the US National Transportation Safety Board and operators. Boeing also recommended that the FAA suspend operations of 371 737MAX aircraft worldwide.

Two air crashes in five months have caused Boeing to be hit hard on public reputation. At the same time, its share price fell by 11.02% in three trading days, and the market value evaporated by 25.561 billion.Dollar.

The Boeing 737 family is the most stable aircraft sold in Boeing history, and has been sold for more than 50 years. This series of aircraft is the backbone of Boeing's profits. However, in the shadow of 737MAX, cracks have appeared in the pillars.

  Aged 737 series

The Boeing 737 MAX is a derivative of the Boeing 737 with a new engine. On December 8, 2015, the first 737MAX aircraft equipped with the LEAP-1B engine was launched, and the first flight was completed on January 29, 2016.

Malaysian National Aviation and DefenseindustryMa Yin, the airline co-founded by the company and Indonesia Lion Air, received the first 737MAX aircraft in May 2017.

The Boeing 737 family has been in existence for 52 years, and the 737MAX is the latest aircraft in the 737 family.

In 1962, more than 30 million passengers traveled around the world via Boeing aircraft. Boeing has become a giant that dominates other airlines. As the airlord of civil aviation at the time, Boeing still had a soft rib – there was no model for short-haul transportation.

Short-range jetliners have already emerged as relatively more close passenger traffic between cities has increased. In the competition of short-haul passenger aircraft, Europe seized the opportunity: the SE-210 fast-sail passenger aircraft produced by the French Southern Aircraft Company first flew in May 1955. This model capable of carrying 80-130 people started in 3 years. Official delivery.

In order to maintain its dominance, the competition to join the short-haul airliner market is an inevitable choice for Boeing. At the same time, in the early 1960s, Lufthansa handed over orders for 10 short-haul passenger planes to Boeing, and developed a short-range twin-engine aircraft with a spacious, quiet cabin, moderate speed, and the ability to fly in harsh conditions. It is the arrow on the string.

In November 1964, under the leadership of Jack Steiner, then vice president of product development at Boeing, Boeing began research on the 737 model.

The Boeing 737 is a short-range passenger aircraft, which is mainly used in small and medium-sized airports, especially at the time when the runway was taken off and landed. Therefore, the Boeing 737's landing gear is designed to be shorter, so that airports with poor conditions can be used to get on and off with simple extension ladders.

Steiner had a little trouble with the Boeing 737 project. According to the original plan, the Boeing 737's first product is a 65-80-seat small-capacity short-distance passenger aircraft, but as a start-up customer, Lufthansa insists on increasing the passenger capacity to 100 seats.

At this time, another person stood up, that is, Joe Sutter, known as the "father of Boeing 747." Joe Sutter, a graduate of the University of Washington in Aeronautical Engineering, has been involved in the development of Boeing 377, Dash-80, 707, 727 and 737 models.

At that time, short-range aircraft were designed with tail-lift double-engine (ie, two engines installed at the rear). The increase in the width of the 737 makes this design advantage unseen. Sartre innovatively proposed placing the engine under the wing.

After the improvement of Sartre, the Boeing 737-100 aircraft that met the requirements of all parties was born. On December 15, 1967, the Boeing 737-100 received the FAA model certificate, and the first Boeing 737-100 was delivered to Lufthansa on the 28th of the month.

But the 737-100 is not popular enough on the market, only 30 are produced. But in the same year, Boeing introduced the 737-200 with a longer fuselage, which is very popular.

Inspired by the market's welcoming 737-200, Boeing has introduced the second generation 737-300, 737-400 and 737-500; the third generation member NextGeneration is Boeing 737-600, 737-700, 737-800 and 737-900.

These aircraft have been improved in many aspects such as wing, fuselage, cockpit technology, and engine. In terms of the landing gear, the original design was basically maintained, and the foreshadowing was also buried here.

When Airbus launched the A320neo series, which had more thrust and accommodated more passengers, Boeing had to reinvent the 737 series and the extended 737MAX series appeared.

Huang Jun, a professor at the Department of Aircraft Engineering at Beijing University of Aeronautics and Astronautics, said that the LEAP-1B engine equipped with the 737MAX aircraft has a larger bypass ratio and a larger diameter. The 737MAX series is based on the 737NG aircraft to modify the LEAP-1B engine. In the case of the aircraft fuselage, wing and landing gear, the engine installation point is improved to ensure that the engine has sufficient ground clearance.

Shen Haijun, a professor at the School of Aeronautics and Mechanics of Tongji University, told the Caijing reporter that if the aircraft design is not changed, the airworthiness cycle will be shorter.

However, the change in engine position has changed the pitch trim performance of the aircraft, so Boeing uses the MCAS system (Mobility Enhancement System) for remediation.

According to Boeing's notice, the MCAS system can increase the load factor and the speed of the flaps close to the stall speed when the flaps are close to the stall speed, and the stabilizer plane is trimmed to the plane to lower the head to enhance the pitch characteristics of the aircraft. MCAS is only effective when the flap is in manual flight and does not require pilot instructions.

This function is reset once the angle of attack of the aircraft (note: the angle between the axis of the aircraft and the airflow) is less than the threshold of the angle of attack or the flight crew has commanded the stabilizer to level. If the original increased AOA (high angle of attack) condition still exists, the MCAS system will re-instruct the stabilizer to level the head according to the Mach number at the current start.

The so-called angle of attack refers to the angle between the projection of the aircraft's speed direction line in the plane of symmetry of the aircraft and the chord of the wing. In a certain angle of attack, increasing the angle of attack, the lift coefficient and drag coefficient increase. The aircraft flies at a small positive angle of attack at high speeds and at a higher angle of attack when the aircraft is flying at low speeds.

The senior captain Chen Jianguo explained that this function is similar to Airbus's angle of attack protection. It will command the aircraft to bow at a high angle of attack, and the aircraft cannot give the aircraft an angle of attack reduction due to the failure of the angle of attack detector. The signal caused the flight control computer to believe that the command was not achieved, thereby further instructing the aircraft to descend. Eventually the aircraft enters a continuous down curve.

The flaw in the system has been a hidden danger for Boeing to be buried in the 737MAX8. More deadly, Boeing did not inform the pilot of the 737MAX8 aircraft in the flight manual, and the possible defects and treatments of the system.

Chen Jianguo told the Caijing reporter thatBefore the lion aviation was difficult, all 737MAX pilots did not know that there was an MCAS system, which was not written in the flight manual. Large domestic airlineHoldThe captain of the Flying 737MAX aircraft also confirmed this to the Caijing reporter.

Chen Jianguo said that when the MCAS system was mistakenly activated, the captain could completely block the system by cutting off the electric door. "This operation takes only two or three seconds for any pilot."

The small hidden dangers that Boeing has laid down step by step, or the difficulty of the Indonesian Lion Air at the end of October 2018.

Derek Waterman, founder and CEO of Aermetric, bluntly told Caijing,The Boeing 737MAX is a brand new aircraft, but its core design has remained at the level of 1960. Not so much Boeing 737MAX is flawed, it is better to design outdated. If Lion Air is difficult to relate to Air China, it may indicate that the Boeing 737 design of 1960 has reached its development limit.

The authoritative technical person of China's civil aviation told the Caijing reporter that the design of the 737MAX system has changed a lot, but the shape is still the same. However, there are loopholes in advanced systems. In frequent operation, problems will be exposed sooner or later. The authority also added that although the flight system has been criticized after the lion aviation, it is still necessary to wait for the final investigation results.

  Cash cow&Star model

As one of the two major airlines in the world, Boeing (BA.N) revenue rebounded in 2018 after experiencing a decline in 2016 and 2017. Among them, the substantial growth of commercial aircraft (BCA) revenue contributed to the company's core products, the Boeing 737 series models, which accounted for the absolute main force in the proportion of the company's delivery, but also gradually increase.

Wind statistics show that from 2015 to 2018, Boeing (BA.N) total operating income was 96.114 billion US dollars, 94.571 billion US dollars, 93.392 billion US dollars, 101.127 billion US dollars, a year-on-year increase of 5.9%, -1.6%, - 1.25%, 7.58%.

In the same period, the company's net profit was 5.176 billion US dollars, 4.895 billion US dollars, 8.197 billion US dollars, 10.46 billion US dollars. Among them, the year-on-year growth of net profit in 2017 and 2018 was 67.46% and 23.67%, respectively.

Wind data predicts that from 2019 to 2020, Boeing's operating income was 105.439 billion US dollars, 112.577 billion US dollars, and net profit was 10.055 billion US dollars and 11.616 billion US dollars, both of which showed growth.

Caijing reporter noted that commercial aircraft (BCA), defense, aerospace (BDS) and provision of solutions (BGS) are Boeing's four core businesses.

From the perspective of product revenue, from 2015 to 2018, Boeing commercial aircraft revenue was 66 billion US dollars, 65.1 billion US dollars, 56.7 billion US dollars, 60.7 billion US dollars, accounting for 68.67%, 68.84%, 60.71% of operating income, respectively. 60.02% is the company's main source of income.

Boeing at 2018annual reportIt was pointed out that due to the increased delivery of Boeing 737 and 787 and the good combination of Boeing 737 and 787 models, the company's commercial aircraft (BCA) revenue increased in 2018, offsetting the reduction in Boeing 777 and Boeing 747 deliveries.

The Caijing reporter noted that in recent years, the operating income of commercial aircraft has not only increased significantly, but the business data has an increasing advantage over the latter two business benefits.

In 2016, Boeing commercial aircraft operating income was 1.981 billion US dollars, lower than the current solution business of 2.159 billion US dollars, national defense, aerospace 1.678 billion US dollars. In 2017, Boeing commercial aircraft operating income rose to 5.452 billion US dollars, higher than the latter business total of 4.439 billion US dollars.

By 2018, the Boeing commercial aircraft operating income further rose to 7.879 billion US dollars, which was 3.376 billion US dollars more than the current business totaled 4.116 billion US dollars. The contribution of commercial aircraft to Boeing's operating income increased rapidly.

Although there is no specific sales data for each model, but from the data delivered by each model in recent years,737Undoubtedly the core product of Boeing and bring it objective income and profit.

The Boeing 2018 Annual Report shows that from 2016 to 2018, the number of Boeing 737 models delivered was 490, 529, and 580, respectively. The total number of 737, 747, 767, 777, and 787 models delivered was 748 and 763, respectively. The proportion of 806 aircraft and 737 models delivered was 65.51%, 69.33% and 71.96% respectively.

In 2018, the Boeing 737 model delivered a total of 7312 aircraft, and the total cumulative delivery of the latter four models was 5,044.

It can be seen from the above data that not only the number of Boeing 737 models delivered exceeds 60%, but the ratio is gradually increasing.

The number of orders also shows that the 737 series models still play an important role in Boeing's short-term performance impact. As a result of net orders exceeding delivery, as of December 31, 2018, Boeing commercial aircraft backlog orders totaled $412.307 billion, up from $41.986 billion on December 31, 2017.

In 2018, Boeing confirmed 4,708 737 products that were not delivered in the order. In the same period, the total number of 747, 767, 777, 777X, and 787 models confirmed to be undelivered was only 1,165.

The aircraft model Boeing 737MAX series that was involved in the accident is a star product of Boeing, and its influence on the company cannot be ignored.

The Caijing reporter asked Boeing's official website to know that as of the end of February 2019, the total order of the Boeing 737 MAX models in the world had reached 5012, of which 376 had been delivered and 4,636 were not delivered.

According to the data, Boeing's offer for the 737 MAX series in 2018 is: 737 MAX 7: $96 million, 737 MAX 8: $117 million, 737 MAX 200: $120 million, 737 MAX 9: $124 million , 737 MAX 9: $124 million, 737 MAX 10: $130 million.

According to the minimum of US$96 million per unit, as of the end of February this year, the total undelivered orders of Boeing 737 MAX models in the world totaled 445.506 billion US dollars, which is 7.33 times of the company's business aircraft revenue in 2018, which is the company's total revenue in 2018. 4.4 times.

  Multiple pressure

Boeing has stood in the world for the past 100 years.High-end manufacturingOn the tip of the industry. likesecurities companyAccording to Brian Nelson, president of equity research at Valuentum Securities, it's hard to dislike Boeing's business economics.

Nelson told the Caijing reporter that the manufacture of commercial aircraft is a long-term factor. When aerospace executives consider creating new products, they must consider the consumer and competitive landscape for the next 10-20 years, or longer. This forward-thinking approach is consistent with long-term investors, whose vision may have to be seen further.

It is always easier to persuade investors to make long-term investments. Take Boeing as an example. One side of the contradiction is: 737MAX is the fastest selling model in history. The aircraft's operations also coincide with the global expansion of civil aviation in developing countries, making Boeing's share price almost quadrupled in the past three years.

The other end of the contradiction is that this gorgeous model that was held on the sky soon appeared in the past two months, and in October last year, an Indonesian Lion Air plane crashed shortly after take-off, with 189 people on board. Life is still. In March of this year, Ethiopian Airlines Flight 302 crashed 6 minutes after take-off, and all 157 people on board were killed. This has led people to wonder if this type of aircraft is still airworthy.

The comfort of Boeing is very weak. They said they still have confidence in the safety of the 737 Max, but the market, national aviation authorities and customers and public opinion around the world voted against it. Affected by factors such as crashes and suspension of operations, Boeing's share price fell more than 8% on the German Tradegate and Stuttgart exchanges on March 11, and Boeing plunged 8.9% before the US stock market. On March 11th, the US stock market Boeing's share price plummeted 13%, setting the biggest decline since the "911 incident." When the US stock closed on the day, Boeing fell 5.33% to $400.01. Its share price fell 14.4% from its peak during the year.

In the New York stock market, Boeing's share price opened lower on March 12, and eventually fell 24.60 US dollars to close at 375.41 US dollars per share, a decrease of 6.15%. So far, after the crash, Boeing’s share price has fallen more than 11% in two trading days and has been dragged down.Dow Jones Index.

For the first time in nearly two years, the German Central Bank has downgraded Boeing's stock rating from “buy” to “sell”. Edward Jones Financial Services said that the crash will lead to an increase in Boeing's expenses, delays in orders, and possible financial performance pressure, so the Boeing stock rating will be lowered from "buy" to "hold".

Nelson said that Boeing is one of the most resilient companies in history. Boeing’s profit for the fourth quarter of 2001 was $722 million, but it paid $622 million for the September 11th incident. In 2001, Boeing’s stock was among the 30 stocks in Dow Jones. The worst, the stock market value lost 41%. But even in the premise of the collapse of the market and the end of air traffic, customers have not abandoned Boeing, and the number of cases for canceling orders is negligible.

Later, in the case of multiple delays in the delivery of the Boeing 787 aircraft, customers still insisted on the use of Boeing aircraft.

Perhaps because of Boeing's long-term performance, Boeing's share price on March 13th suspended all 371 737 Max aircraft in the FAA, meaning that there are more than 50 countries around the world on the Boeing 737 MAX model. After the news came out, Boeing's share price plummeted by about 3%, but at the close, the share price rebounded slightly by about 0.5% to $377.14.

Several US investors pointed out to Caijing reporters that Boeing’s fair value range is between US$256 and US$404. If you look at Boeing’s value fundamentals, the 737’s manufacturing process is only a component of Boeing and is attributed to commercial aircraft manufacturing. Department, but this is basically a semi-monopoly in the world; Boeing still has a large piece of defense, space and security, building military spacecraft, satellite and space exploration technology. Many investors consider Boeing's important reason for investing in the company; and Boeing Global Services provides after-sales maintenance and service to global military and commercial customers.

Richard Aboulafia, vice president of Tiel Group Consulting, which advises in commercial aircraft and military aircraft, told Caijing that 911 is a market issue for Boeing. It is a technical issue for Boeing.

Nelson's company did the calculation, and according to its discounted cash flow, Boeing's fair value is estimated at $330 per share. This is lower than nowStock tradingThe level of this analysis is not based on the news of the past few months, but based on the reasonable trajectory of the free cash flow in the future.

Research has pointed out that Boeing has invested heavily in equipment, construction, R&D and talent. Boeing is working on developing electric for the commercial and military marketsunmannedThe aircraft, waiting for the approval of the regulatory body. The plans were consolidated as early as 2017, when the company announced plans to acquire Aurora Flight Sciences, one of the few companies to develop "air taxis" with Uber.

In 2018, Boeing created record revenue, earnings, earnings per share and cash flow. Boeing not onlyRepoIt has a $9 billion worth of its own stock and has paid a dividend of nearly $4 billion. Some analysts on Wall Street believe that Boeing has not delivered about 5,900 orders, and may deliver about 800 this year. In 2021, the number will increase to 900. Although the value of orders for many years and the increase in revenue are two different things, the company's supply and demand prospects Well, it should be able to push the stock price to rise for a long time.

A negative factor affecting Boeing stocks in the future is the suspension of operations. As the best-selling model, the 737MAX is Boeing's printing machine. In 2013, the US authorities banned the Boeing 787 due to a battery fire. The optimistic view now is that this time, the Boeing trend will be repeated six years ago. Once the ban is lifted, Boeing will recover the loss as it did. The pessimistic view points out that only 50 Boeings were in operation six years ago. There are now 350 aircraft in operation, which is seven times that. According to estimates by Wall Street Research and Jefferies, the cost of a no-fly to Boeing may range from $1 billion to $5 billion.

More people are worried that the Air Egypt incident will eventually lead to Boeing’s judicial consequences. The largest aviation industry-related settlement in the United States is $150 million. Some experts pointed out that if the no-fly time is set to three months, with reference to the no-fly flight six years ago, the cost of Boeing replacing other aircraft with a non-stop aircraft is about $1 million per frame, and the potential cost of redesigning the aircraft. At $465,000 each, the final is a fixed cost of just under $1 billion, and a time-related cost of billions of dollars, depending on the scenario you want to assume. This number does not involve the cancellation of a reservation by a customer.

Some of the cost that can be seen at present is from the revenue and additional costs that require Boeing to compensate for the loss. Norwegian Airlines has made this request, and Boeing has a precedent for compensation. In addition, some analysts pointed out that Boeing is likely to upgrade the software of the crashed model. The cost may cost between $1 million and $2 million. The airline may also delay the final payment of the order, giving Boeing $2 billion. The cash flow was postponed.

But given that Boeing has a large backlog of orders and a market value of $226 billion, Abrafia believes that these costs will not have a major impact in terms of Boeing's size. What he is now more worried about is the negative impact of political and public opinion.

Keyword reading:Boeing

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