Boeing (BA) Stock - What Keeps Me From Investing

Boeing (BA) Stock - What Keeps Me From Investing. Boeing just disclosed new problems with the 787 Dreamliner and they way its being handled by the airline and the FAA is extremely alarming, and reminds me about the 737 MAX scandal. The Boeing 737 MAX airliner was grounded for almost 2 years, a world record, after 346 people died in two 737 MAX crashes 6 months apart from each other in 2018 and 2019. Boeing began to develop the 737 MAX over a decade ago as a competitor to the highly popular Airbus A 320 and its variants, its basically a bus. A cheap short range commuter plane that is designed to perform multiple flights per day.

This is a thing margin category where every dollar counts. Boeing was feeling the pain from Airbus, as they came out with a new much more fuel efficient engine that made the A320 a cheaper plane to operate. Those engines were larger than the older generation engines, but since the 737 MAX was based on the older 737, it was much lower to the ground compared to the A320, since this plane was not designed for sleeves but rather mobile staircases for passengers to embark and disembark from the plane.

Boeing had no choice, they needed the new engines. This wasn’t a question of IF but rather HOW. The new and larger engines needed to be placed higher of the fuselage compared to existing engines, since the plane was simply too low.

Placing the engines higher significantly altered the aerodynamics of the 737 MAX and that required new pilot training, which would mean extra costs which was unacceptable. Thus, Boeing created a software fix to get around it, they called it the MCAS, which would cause the airplane’s nose to pitch down at times to counter the weight of the bigger engines sitting higher on the body of the plane. Only thing is, they never told the airlines, nor the pilots, this plane was marketed as completely plug and play plane, just take regular 737 pilots and they can fly this thing with no extra training. This was done to improve the competitive strength of the 737 MAX vs the more modern A 320.

Pilots flying the 737 MAX were given no information, training or materials relating to MCAS, despite the fact that the MCAS system could effectively takeover the plane at any time.

It only gotten worse from there, on October 29, 2018, Lion Air Flight 610 crashed after takeoff killing all 189 passengers and crew. Weird how that was not enough to stop this from getting any further. Five months later, on March 10, 2019, Ethiopian Airlines Flight 302 crashed shortly after takeoff, killing all 157 passengers and crew.

Three days later, Boeing’s 737 MAX was grounded.

So Yesterday Boeing discloses a new problem with the 787 Dreamliner, a plane that has been dogged with problems ever since its creation. According to Boeing, some of the planes' fuselage is not joined together properly.

Boeing was actually having a great month so far, they just delivered 45 jets last month and the orders for new jets, including the 737 MAX seemed to be picking up again. They needed it, they just lost $20 billion in the past 2 years alone and finally, they should be able to post profits for Q2 for the first time in a while, but yesterday’s news make it clear that Boeing’s quality and transparency issues have not been fully resolved.

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I have a no positions in Airbus / Boeing.

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