|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||78.10 - 89.60|
|52 Week Range||51.10 - 152.30|
|Beta (5Y Monthly)||0.82|
|PE Ratio (TTM)||14.66|
|Earnings Date||Feb 27, 2020|
|Forward Dividend & Yield||1.82 (2.09%)|
|Ex-Dividend Date||May 27, 2019|
|1y Target Est||119.08|
European stocks reversed early losses to trade higher as Wall Street reacted positively to the passage by the Senate of the stimulus bill as well as a report on the spike in jobless claims.
Unfortunately for some shareholders, the Safran (EPA:SAF) share price has dived 40% in the last thirty days. Even...
CHICAGO/SEATTLE, March 13 (Reuters) - Boeing Co's suppliers, already reeling from a 737 MAX grounding one year ago on Friday, face an even slimmer workload as flight cancellations spurred by the spreading coronavirus mean less airline demand for spare parts and services. Equipment suppliers like United Technologies, Honeywell and Safran make a large portion of their profits in the aircraft business on the aftermarket for spares and maintenance. "Our business model involves long cycles," said Philippe Petitcolin, chief executive of France's Safran, the world's second-largest supplier of aircraft equipment and third-largest aerospace contractor overall.
To the annoyance of some shareholders, Safran (EPA:SAF) shares are down a considerable 31% in the last month. The...
(Bloomberg Opinion) -- General Electric Co.’s biggest problem is now the coronavirus. And honestly, that’s a victory for a company that’s spent the better part of the last three years mired in idiosyncratic challenges largely of its own making.GE hosted its outlook meeting on Wednesday and reiterated its expectation that its industrial businesses could generate as much as $4 billion in free cash flow this year, nearly double what they produced in 2019. That’s despite the fact that GE now expects coronavirus knock-on effects to shave as much as $500 million off of its first-quarter free cash flow. The brunt of the pain – as much as $300 million – is being felt the aerospace division as airlines around the world cancel flights and companies ban non-essential travel and cancel events.But the company also flagged a notable turning point: GE expects the long-beleaguered power unit to actually generate positive free cash flow starting in 2021 after years of negative numbers. The company said the renewable-energy unit – expected to burn more than $1 billion of cash in 2020 – is GE’s “key focus” this year, echoing CEO Larry Culp’s comments on a late January earnings call. To make that a priority would have been unthinkable a year ago when the larger, troubled power division had just announced a $22 billion writedown and was facing deepening losses. It’s an encouraging sign that the business is seeing decent enough progress that Culp can divert his attention elsewhere.Part of what made GE’s recent financial distress so incredible was that it first came to light at a time when most industrial peers were enjoying the benefits of the U.S. tax overhaul and a recovery from the oil-price-driven downturn of 2015 and 2016. While other manufacturers were later dogged by questions about the trade war, that was mostly just a footnote at GE amid concerns about the viability of a turnaround in its power unit and its bloated and unpredictable insurance liabilities. I don’t want to belittle the risks from the coronavirus here because they are meaningful, but in general, the tone of this outlook meeting feels … dare I say, normal for an industrial manufacturer right now? Or at least as close to normal as a company that clings to financial complexity like a security blanket is going to get.This being GE, there is always a risk of some kind of nasty surprise, but Wednesday’s presentation brought none of those. In fact, we haven’t had one in a while now and it feels like Culp is hitting his stride on a turnaround. GE had previously cited Boeing Co.’s grounded 737 Max as the biggest risk to its cash-flow guidance, but the companies have since reached an agreement on payment terms for both 2019 engines attached to parked planes that can’t be delivered yet and those it produces in 2020 while Boeing works through a logjam of grounded jets. The question now is how much of a dampening effect the coronavirus will have on its progress.Before Wednesday’s meeting, GE shares had fallen about 13% since the beginning of February amid a broader market sell-off on coronavirus fears. For GE, the impact includes supply-chain disruptions, the sudden upheaval of a steady trend of aerospace traffic growth and the drop in interest rates. It’s entirely possible that these issues extend beyond the first quarter and that the cash impact over the course of the year is more significant. Supply-chain dislocations are predominantly hitting the health-care unit right now, but they risk ensnaring the rest of the company over time, while GE is seeing weaker China demand for certain products. It’s fair to ask if GE, like its engine joint-venture partner Safran SA, is being too optimistic about the possible hit to lucrative spare parts and maintenance work in the aerospace division from the marked drop in demand. Planes bearing GE engines have seen 60% fewer departures out of China. GE is still calling for overall aviation free cash flow in 2020 to be flat to up relative to the $4.4 billion generated last year. Meanwhile, GE’s pension obligations increase by about $2.3 billion with every 25 basis-point drop in the discount rate. The company assumed a 3.36% discount rate at the end of 2019 for its principal pension plan; yields on 10-year Treasuries dropped below 1% on Tuesday after the Federal Reserve announced a surprise 50 basi-point cut to interest rates. The company’s long-term care insurance liability also varies with interest rates, which puts the relatively modest $1 billion pre-tax GAAP charge announced last year and the $100 million expected increase to statutory reserves announced in February in more concerning context. GE said it’s monitoring testing of its insurance reserves, which isn’t included in its 2020 outlook. While that liability appears to have stabilized and is less of a un-analyzable bogeyman than it was, it hasn’t gone away.To say GE has overcome all of its challenges would be a step too far. But when the CEO is devoting a significant chunk of time to issues that every other industrial company is talking about, too, that’s as good a benchmark as any of progress. 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 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/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
There's been a notable change in appetite for Safran SA (EPA:SAF) shares in the week since its full-year report, with...
NEW YORK/WASHINGTON, Feb 28 (Reuters) - Trump administration officials have rescheduled for March 11 a critical meeting to discuss potential new U.S. restrictions on sales of technology to Huawei and China, people familiar with the matter said. The cabinet-level meeting had been set for Friday but was postponed. Commerce Secretary Wilbur Ross, Defense Secretary Mark Esper, Secretary of State Mike Pompeo, and Treasury Secretary Steve Mnuchin are among those expected to attend the meeting, now scheduled for next month, the people said.
Safran's chief executive said on Thursday the French engine maker is in talks with Airbus over plans to increase production of its A320neo jet as Boeing's 737 MAX remains grounded. Representatives of Safran's CFM venture with General Electric, which makes LEAP engines for the A320neo and the MAX, met Airbus boss Guillaume Faury recently to discuss raising production in 2022-23, Safran CEO Philippe Petitcolin said. Petitcolin was speaking as Safran reported that the MAX crisis had put a 700 million euro ($761 million) dent in its 2019 cashflow and was expected to contribute to a 5% revenue decline this year.
Aerospace supplier Safran said it was targeting 300 million euros ($326 million) of cost savings and other measures to cope with the grounding of the Boeing 737 MAX. Safran co-produces the jet's engines with General Electric and makes the bulk of its cabling as well as a raft of equipment from oxygen masks to fuel systems, slides, lighting and cockpit doors after acquiring Zodiac Aerospace in 2018. Safran said earlier on Thursday that it had drawn up an "adaptation plan" involving cost savings, a hiring freeze and lower R&D and capital spending for 2020.
(Bloomberg) -- President Donald Trump has intervened to stop his own administration’s developing plans to block sales of General Electric-made jet engines to China and other proposed restrictions on American exports, declaring that national security is being used too often by his own officials to limit American companies’ ability to transact with China.“We don’t want to make it impossible to do business with us,” Trump said in a tweet on Tuesday. “That will only mean that orders will go to someplace else.”The presidential intervention represents a rare public rebuke of some of the administration’s hardliners on China, who have been pushing stricter rules to curtail sales of U.S. technology to Beijing -- from semiconductors to jet engines. It also comes as Trump is touting a “phase one” deal with China that is meant to spur a $200 billion Chinese buying spree of American exports including commercial jets and other manufactured products.Senior officials were expected to decide by the end of this month whether to block exports to China of jet engines made by a General Electric Co. joint venture with France’s Safran SA for use in the Commercial Aircraft Corporation of China’s C919 single-aisle passenger jet now undergoing flight tests, according to three people familiar with the issue. They also have been considering broadening restrictions on sales by U.S. and overseas suppliers to Huawei Technologies Co.The president indicated to reporters later on Tuesday that his concerns over the use of the “fake term of national security” extended to new proposed Huawei provisions, which are aimed at limiting its access to chips.“I mean, things are put on my desk that have nothing to do with national security, including with chipmakers and various others,” Trump said as he departed Washington. “I’ve been very tough on Huawei. But that doesn’t mean we have to be tough on everybody that does something. We want to be able to sell all of this incredible technology -- we’re number one in the world.”Hawks vs. DovesTrump’s tweets Tuesday brought into public light what in recent years has been a bitter battle between two factions in his administration. One group sees China’s economic rise as an existential challenge to the U.S. and advocates a “decoupling” of the two economies. The other views any such move as too extreme, arguing it would present its own risk to U.S. power and American innovation.The president’s comments also came as another crucial moment was approaching.Both the GE and Huawei potential restrictions and other China-related policies were due to be discussed by senior officials on Thursday ahead of a cabinet-level meeting scheduled for Feb. 28, according to people familiar with the proposals. The measures appeared to have some backing from several agencies including the Department of Commerce, the people said.“I have seen some of the regulations being circulated, including those being contemplated by Congress, and they are ridiculous,“ Trump tweeted.Trump also indicated in his posts that his concerns about the calls from China hardliners within his administration went beyond the issue of jet engines. That leaves him siding with those in his administration who have advocated for a more business-friendly approach to China.“We want to sell product and goods to China and other countries. That’s what trade is all about. We don’t want to make it impossible to do business with us. That will only mean that orders will go to someplace else,” he tweeted.The intervention is not the first Trump has made against his China hardliners. In May 2018, he overruled his own Commerce Department on behalf of blacklisted Chinese telecommunications company ZTE after a call with Xi Jinping, the Chinese leader.Derek Scissors, who tracks the U.S.-China economic relationship at the conservative American Enterprise Institute and has advised the Trump administration in the past, said Trump appeared in his tweets to be thumbing his nose at those in Congress and in his own administration who see limiting tech and other exports to China as a national security priority. “He cares about the trade balance right now,” Scissors said.The president didn’t address directly Tuesday proposed changes also under discussion related to Huawei. But he has in the past opposed restrictions on sales by American suppliers to the Chinese company of non-sensitive products. “I like our companies selling things to other people,” he told reporters in Japan last year after a meeting with Xi in which he agreed to allow sales to Huawei.Huawei, which has faced long-standing U.S. accusations of being a conduit for Chinese espionage efforts, was placed on a Commerce Department black list last year that effectively bans U.S. suppliers from doing business with it. Huawei has denied such claims.The new measures under consideration are aimed in large part at semiconductor exports and part of a broader administration campaign to convince allies not to use Huawei’s equipment in new fifth-generation communications networks, an effort that heated up again at a weekend security conference in Munich.The administration is now talking about closing a loophole that allows American companies to use overseas production facilities to sell materials with less than 25% U.S. content by lowering that limit to 10%. It’s also discussing changing something known as the “foreign direct product rule” to further restrict Huawei’s access to products based on U.S. technology manufactured overseas by non-U.S. companies.Semiconductor IndustryTrump’s tweets on Tuesday were welcomed by the Semiconductor Industry Association, which has been lobbying against the new Huawei restrictions and arguing they would “unduly curtail” the ability of U.S. companies to sell products to China.“As we have discussed with the Administration, sales of non-sensitive, commercial products to China drive semiconductor research and innovation, which is critical to America’s economic strength and national security,” said John Neuffer, the SIA’s president and CEO.China’s foreign ministry earlier on Tuesday accused those pushing a ban on the GE engine exports of seeking to “wantonly oppress China.”“What’s worse, it will severely disrupt bilateral and even global exchange and cooperation in science, technology and trade,” Foreign Ministry spokesperson Geng Shuang told reporters in Beijing.The discussions over banning the sale of the GE/Safran Leap 1C engine to China were first reported by the Wall Street Journal over the weekend. Some administration officials were considering whether sales could help Chinese companies reverse engineer the technology used and speed up the development of their own jet engine programs.GE shares fluctuated Tuesday, gaining after Trump’s remarks and later declining.GE, which has lobbied heavily against being blocked out of what it sees as a promising new market, said in a statement Monday that it had decades of experience selling products internationally. “We aggressively protect and defend our intellectual property and work closely with the U.S. government to fulfill our responsibilities and shared security and economic interests,” a spokesperson for the company said in an emailed statement.The engine has been approved for sale to China multiple times since 2014 and a dozen of the engines have already been shipped to Comac, Bloomberg reported Monday.(Updates in paragraphs five and six with Trump quotes)\--With assistance from Bill Faries and Richard Clough.To contact the reporter on this story: Shawn Donnan in Washington at email@example.comTo contact the editors responsible for this story: Margaret Collins at firstname.lastname@example.org, Sarah McGregorFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
President Donald Trump said Tuesday he backed the export of U.S.-made jet engines to China, in an apparent reference to reports that the administration was considering blocking a General Electric venture from selling them.
Shares of General Electric Co. dropped 1.8% in premarket trading Tuesday, after The Wall Street Journal reported over the weekend that the Trump Administration is considering a proposal to block GE's joint venture with France-based Safran S.A. from selling jet engines to China. GE's stock is on track for a third-straight decline--it has lost 2.5% over the past two sessions--since closing at a 19-month high of $13.16 on Feb. 12. Citing people familiar with the discussions, the WSJ report said the Trump administration may decline to issue a license that would allow the JV, CFM International, to export more LEAP 1C engines to China, which are being used to in the development of China's Comac C919 jetliner. The administration is concerned that the Chinese would reverse-engineer the engines, which would allow China to break into the jet-engine market, the WSJ report said, while GE is arguing that trying to mimic the advanced manufacturing techniques to produce the engine is a lot harder than some administration officials seem to believe. GE's stock has run up 12.2% over the past three months through Friday, while the Dow Jones Industrial Average has gained 4.9%.
German aircraft engine maker MTU Aero Engines expects Boeing to offer two jet engines for the successor model to its 737 plane, its chief executive told a weekly paper, adding this could double MTU's market share in the segment. Airbus offers engines from two manufacturers for its A320neo aircraft: CFM International LEAP, a 50-50 joint venture between GE and France's Safran; and United Technologies' Pratt & Whitney, which is being supplied by MTU Aero Engines.
(Bloomberg Opinion) -- Asia’s largest budget carrier is in trouble, caught up in an anti-corruption investigation of Europe’s aerospace industry. Things could get worse.AirAsia Bhd. Chief Executive Officer Tony Fernandes stepped down for two months earlier this week along with Chairman Kamarudin Meranun, after the airline was named in a 3.6 billion euro ($4 billion) settlement of bribery allegations against Airbus SE. Shares have fallen about 16% since the agreement was announced. The carrier denies any wrongdoing.Like his mentor Richard Branson, Fernandes has made his identity synonymous with that of his company. The former music executive appeared at events in a branded baseball cap and vigorously defended the sprawling group on social media before he quit both Facebook and Twitter over the past year. It’s often been hard to tell where Fernandes ends and AirAsia begins.That issue is at the heart of the current allegations. European prosecutors and Airbus say the aircraft manufacturer agreed to pay $50 million to sponsor a sports team — the Caterham Formula One team, at the time owned jointly by Fernandes and Meranun — in return for AirAsia purchasing 180 aircraft. AirAsia, for its part, says that Airbus had its own branding reasons for sponsoring Caterham, while there was a sound commercial logic in purchasing A330s from Airbus.It’s not the first time AirAsia has been named in connection with such activities. In a 2017 case brought by the U.K.’s Serious Fraud Office, Rolls-Royce Holdings Plc admitted to providing $3.2 million worth of credits to an AirAsia executive in connection with an engine contract, with the expectation they would be used to pay for maintenance of a private jet owned with other executives. AirAsia has previously said there was nothing improper in the arrangement and that relevant information was disclosed in investor materials.As Branson and Fernandes himself have demonstrated, consumer businesses led by flamboyant executives with interests beyond spreadsheets and boardrooms can often receive valuable free publicity. The problem comes in knowing where to draw the line between personal interests and those of the company.There’s certainly been no shortage of related-party transactions between AirAsia and companies associated with Fernandes and Meranun. AirAsia’s annual reports disclose multiple examples: 20 million ringgit ($4.9 million) paid to Caterhamjet Global for the lease of a Bombardier Inc. private jet like the one mentioned in the Rolls-Royce case, and another 3 million ringgit to Tune Group to crew the plane in 2016. In multiple years, Tune Insurance Malaysia Bhd. has provided insurance for AirAsia passengers outbound from Malaysia, with commission fees returning to AirAsia itself.The question is whether this activity is improper or not. In its statements on the Airbus and Rolls-Royce cases, AirAsia makes the point that all such deals were agreed by the board and disclosed in financial statements. In that sense, it’s up to directors and shareholders to decide if anything was amiss, and to censure management if they don’t like it.Charismatic chief executives are famously hard to rein in. When they’re also major shareholders in the company — Fernandes and Meranun jointly control about a third of AirAsia shares via affiliated companies — it’s even harder.Of the four independent directors on AirAsia’s seven-person board, one of them, Stuart Dean, is a retired long-time executive for General Electric Co., a major provider of aircraft engines to the company through its joint venture with Safran SA. Given the issues that the Airbus and Rolls-Royce cases have raised around AirAsia’s relationships with its other suppliers, adding another independent director with less of an aerospace background might provide more reassurance to smaller shareholders.Another board member, Noor Neelofa binti Mohd Noor, popularly known as Lofa, is a model, fashion entrepreneur and Instagram influencer. Her presence brings some welcome gender balance to the otherwise all-male board, but the 30-year-old has a short resume for someone expected to bring the managers of this multi-country business empire into line.Even before the Airbus settlement, this wasn’t likely to be an easy year for AirAsia. Quite apart from the impact of coronavirus on airlines in Asia, it’s dealing with a switch in accounting rules that’s turning its long-standing practice of making money leasing aircraft to group affiliates from a profit center to a money loser. Of its six regional carriers, only the Indonesian one currently has ordinary revenues sufficient to cover its costs.For nearly two decades now, Fernandes and Meranun have been central to making sure that every instrument in this sprawling orchestra plays in tune. Shareholders may be about to find out how the music sounds when they’re no longer holding the baton.To contact the author of this story: David Fickling at email@example.comTo contact the editor responsible for this story: Rachel Rosenthal at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- General Electric Co.’s shares have traded more on hope than hard math over the past year, but it looks like CEO Larry Culp’s turnaround efforts are starting to yield real results.Free cash flow is the key number to watch when the company reports earnings, and GE said Wednesday that it generated $2.3 billion from its industrial businesses over the course of 2019. That exceeded the high end of GE’s guidance range, which was updated twice over the course of the year from an initial call in March for free cash flow to be at best zero. Was Culp sandbagging expectations, or setting a low bar to start with and artfully managing to a positive surprise? (1) It’s a fine line, but either way, the strategy worked. GE shares climbed more than 50% in 2019 and shareholders were still wowed enough by Wednesday’s results to send the stock up an additional 10%.A lot of that optimism has to do with GE’s forecast for 2020. The company is projecting free cash flow will at least roughly match 2019’s performance and potentially rise to as high as $4 billion. That would still fall below what GE generated in 2018 amid depressed results, but would represent significant progress nonetheless, and exceeds most analysts’ estimates. The company plans to hold a meeting with investors this coming March to lay out its outlook in more detail. On the earnings call, however, Culp let a few details slip.The beleaguered power and renewables units will likely continue to burn cash in 2020, with power improving from the negative $1.5 billion in cash flow in 2019 and renewables seeing a deterioration from the negative $1 billion the unit saw last year. Aviation will be flat to up from the $4.4 billion level of 2019, with the return of Boeing Co.’s 737 Max the biggest source of variability. That leaves health care as the one question mark. We already know the unit will be losing cash flow from the biopharma business that’s being sold to Danaher Corp. Without biopharma, the health-care division would have generated about $1.2 billion in cash flow in 2019 and GE had previously guided for an increase in 2020. Taking all of that together, GE should be able to fall well within its guidance range, but the potential to rack up a similar string of outsize positive surprises is arguably more limited this year.Boeing’s Max is the biggest source of volatility for GE’s guidance, Culp said on the earnings call, and the company is currently modeling for a mid-2020 return of the jet, in line with Boeing’s most recent “best estimate.” Boeing also reported earnings today and, based on that timeline, announced a fresh $5.2 billion in charges tied to compensation for airlines and additional production costs. The company also said it anticipates $4 billion in “abnormal costs” for restarting production of the jet. That brings the total bill for the Max crisis to more than $18 billion, before accounting for any fines or legal penalties from numerous lawsuits and government investigations.GE makes the engines for the Max through its CFM International joint venture with Safran SA and expects to see its shipment rate cut in half in 2020 amid the production halt. Asked about the $1.4 billion drag on free cash flow from the Max grounding in 2019, outgoing Chief Financial Officer Jamie Miller implied free cash flow would have been that much higher without that impact. In that case, arguably 2020 results could also be higher, but there are a lot of moving pieces here and it feels like GE is being more prudent than deliberately conservative.The shift from optics to fundamentals is a welcome one. Culp’s task now is to keep the momentum going. In contrast to this time last year — when expectations could hardly have been much lower for GE — there’s now a fair amount of optimism reflected in the shares. After the stock pop on Wednesday, the company is currently valued at about 28 times its expected 2020 industrial free cash flow of at most $4 billion. That compares with about 20 times at Honeywell International Inc. and about 18 times for Emerson Electric Co. Put another way, much of GE’s anticipated progress in this multi-year turnaround is already priced in to the stock. But so far, Culp has proved the skeptics wrong and the optimists justified. So maybe there’s more room yet for hope.(1) To put that in perspective, consider that about a month before GE gave its initial comments on 2019, uber-bear JPMorgan Chase & Co. analyst Steve Tusa was forecasting $2.5 billion in industrial free cash flow for 2019 -- meaning the actual results are actually weaker than what even he had expected heading into the year.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 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/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- This time two years ago, General Electric Co. could do nothing right and Boeing Co. could do little wrong. GE had just shocked the markets by revealing a $15 billion reserve shortfall in its long-term care insurance business, proving that a tendency to dress up poor decision-making with an optimistic sheen ran much deeper than its power unit. Boeing, having surpassed GE in November 2017 as the largest U.S. industrial company by market value, continued to wow investors with ever-rising cash flow and escalating share buybacks amid an expected surge in output for its best-selling 737 Max jet.As GE’s struggles continued, much was written about the tarnishing of its once-prized corporate culture and the deserved comeuppance of executives’ push for market dominance at any cost. In hindsight, some of that criticism should have also found its way to Boeing, which had counted many a GE executive among its leadership ranks and bore the same hallmarks of extreme corporate hubris. But shares of Boeing continued their rise even after the first fatal crash of the Max in October 2018. They peaked on March 1, 2019, about one week before a second Max jet crashed and everything changed.As the global grounding of the Max approaches one year and troubling disclosures around its development continue to pile up, Boeing is having its own reckoning. Using GE as a guide, the road to redemption will be long and challenging. In a twist of fate, both companies are due to report earnings on Wednesday. The actual numbers matter less than whatever symbolic guideposts the updates might yield as far as the companies’ progress on putting their missteps behind them.At GE, cash flow remains the focal point and the Max grounding affects that number. GE’s joint venture with Safran SA provides engines for the jet, and the company had predicted a $1.4 billion drag on receivables in 2019 in the event the Max grounding persisted through the end of that year. But the impact on overall free cash flow for the aviation unit is mitigated by the fact that GE loses money when it ships new engines and has likely been able to shift production to more profitable spares instead, according to JPMorgan Chase & Co. analyst Steve Tusa. Just as important for CEO Larry Culp’s turnaround efforts is the level of transparency on the puts and takes behind the numbers and the degree to which management is still trying to manage expectations to set up optical “beats” in 2020.For Boeing, it will be the new management team’s first official appearance since CEO Dennis Muilenburg’s abrupt ouster and the subsequent release of damning internal messages that portray a culture where business goals trumped safety concerns. A recent warning that its “best estimate” for the Max’s return is now mid-2020 will likely translate into significant charges, but may signal a more conservative tone is finally taking hold. Jefferies analyst Sheila Kahyaoglu estimates payments to customers coping with continuing delays could add up to $16 billion, while the drag on the overall productivity of the program could force a $9 billion accounting charge in total. Boeing reportedly has secured commitments for more than $12 billion in financing to help backstop the company while it deals with the fallout from the grounding.The Max crisis is the culmination of decades of bad decisions – from putting 2,000 miles between Boeing engineers in the Seattle-area and executives in Chicago to initially underestimating the appeal of a more fuel-efficient narrow-body offering from Airbus SE and declaring the market would wait for ”something more revolutionary” from Boeing. Those decisions were unique to Boeing and yet in some ways, they really weren’t. Having covered GE throughout its recent crisis, there’s a lot of deja vu and not just because some of the same characters come into play over and over again.A stubborn aversion to coming in second place or admitting shortcomings runs deep at both companies. In the best of times, that can be a powerful motivational tool. In the worst of times, it leads to out-of-the-loop or willfully blind executives. This is how the $15 billion hole in GE’s legacy long-term care insurance business was allowed to lurk beneath the surface for years and why a convoluted way of reporting results persists to this day. It’s how Boeing senior executives didn’t know until after the first Max crash that company engineers had discovered much earlier that warning sensors meant to be standard only worked for customers who had paid up for additional features. It explains why Muilenburg was consistently overly optimistic, some might say arrogant, when it came to the Max. It’s why he initially blamed the crashes on a “chain of events,” of which the Boeing software system that triggered the planes’ nosedives was just one. And tragically, it’s how 346 people lost their lives when they boarded Max jets.It’s hard to envision a better human realization of this melding of cultural dynasties than the current Boeing CEO, David Calhoun. He spent nearly three decades at GE, mostly under Jack Welch, and was thought by some to be a CEO contender, but lost the top job there to Jeff Immelt. He was also reportedly in the running for the Boeing CEO job years ago, but that went instead to Muilenburg’s predecessor Jim McNerney, another Welch protege. A Boeing board member since 2009, Calhoun blessed many of the decisions that led the company into the mess that he’s now being handsomely paid to fix. GE also tried to remedy its problems with an insider in John Flannery; it didn’t work. Whatever you think of GE’s longer-term prospects, it’s clear that the worst is behind that company and that’s largely to the credit of Culp and a much-revamped board. If Boeing’s crisis has parallels to GE’s woes, perhaps its path toward recovery can as well.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 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/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Boeing plans to carry out the first test flight of its delayed 777X airplane later this week, said two people familiar with the matter on Tuesday. A source close to one of the wide-body jet's nine firm customers said the flight would take place on Thursday or Friday at Boeing's commercial base outside Seattle, depending on weather. Boeing could not immediately be reached for comment.
Iran admitted early Saturday to shooting down a Boeing 737 that crashed in Tehran after earlier blaming it on mechanical problems.
BEIJING/PARIS (Reuters) - Development of China’s C919 single-aisle plane, already at least five years behind schedule, is going slower than expected, a dozen people familiar with the programme told Reuters, as the state-owned Commercial Aircraft Corporation (COMAC) struggles with a range of technical issues that have severely restricted test flights. Delays are common in complex aerospace programmes, but the especially slow progress is a potential embarrassment for China, which has invested heavily in its first serious attempt to break the hold of Boeing and Airbus on the global jet market. COMAC engineers miscalculated the forces that would be placed on the plane's twin engines in flight - known in the industry as loads - and sent inaccurate data to the engine manufacturer, CFM International, four people familiar with the matter told Reuters.
BEIJING/PARIS (Reuters) - Development of China’s C919 single-aisle plane, already at least five years behind schedule, is going slower than expected, a dozen people familiar with the program told Reuters, as the state-owned Commercial Aircraft Corporation (COMAC) struggles with a range of technical issues that have severely restricted test flights. Delays are common in complex aerospace programs, but the especially slow progress is a potential embarrassment for China, which has invested heavily in its first serious attempt to break the hold of Boeing and Airbus on the global jet market. COMAC engineers miscalculated the forces that would be placed on the plane's twin engines in flight - known in the industry as loads - and sent inaccurate data to the engine manufacturer, CFM International, four people familiar with the matter told Reuters.