Boeing: 'Day one priority' must be manufacturing and accountability
Shares of Boeing (BA) have declined over 30% in 2024 as the company has experienced a tumultuous few months, starting with a mid-air incident aboard a Boeing 737 MAX. The event provoked a Federal Aviation Administration (FAA) audit, which revealed multiple failures to comply with manufacturing quality control requirements.
Boyd Group International President Mike Boyd joins Yahoo Finance to discuss how Boeing will fare in competition with Airbus (AIR.PA) and what the acquisition of Spirit Aerosystems will mean for the manufacturer.
Boyd outlines key priorities for Boeing's new leadership: "The day one priority has to clean upwhat's gone on in manufacturing. Look, as I pointed out, in an airline, if you fix an airplane, the mechanic has to fix it. You have to know who it is. He signs off...Then an inspector comes in and signs off. What we found out now is that is not what Boeing was doing. They can't tell you who worked on that airplane that Alaska (ALK) had the problem with. That is outrageous. An airline would get shut down for that. So what we have to have is now some really strong oversight, and the people at the top have to be held accountable."
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Editor's note: This article was written by Nicholas Jacobino
Video Transcript
SEANA SMITH: Now with regulators, airlines, and passengers, all in the eye of the storm, where does Boeing go next? I want to take a look at the stock price reaction here because Boeing clearly under a bit of pressure with shares off just about 30% since the start of the year. You can see the movement to the downside here. Today trading just above $182 a share.
So we want to bring in Mike Boyd, Boyd Group International president. And Mike, where does Boeing go from here? We talk about the fact that the stock has been under tremendous amount of pressure off 30%. Do you see more downside risk here in the near term for Boeing?
MIKE BOYD: Absolutely. Boeing has relegated itself into a second place, a distant second place behind Airbus with this entire fiasco with the Max. This has been going on now for, what, four years, five years now.
And again, a lot of it is oversight. We haven't had FAA oversight. So this has to come into the program, but right now Airbus probably is going to end up with about 350 to 400 more airplanes they wouldn't have had before simply because Boeing can't produce and Boeing can't really maintain the confidence of the airline industry anymore.
There has to be a complete change at the top of that organization. Because right now, I mean, Airbus, I guarantee you, they're looking at taking that 70 acres they got down in Mobile and expanding their factory. Because over the next five to six years, those Dash 10s that aren't going to airlines, they're going to be A321s. They're going to need that production capacity.
BRAD SMITH: Mike, Boeing kicking the tires on an acquisition of Spirit AeroSystems. Will that remediate any of the near term problems and at least bring some of the production in house fully for Boeing after they had essentially split out that group and it became its own entity years back?
MIKE BOYD: Well, who cares really who owns the stock in Spirit? The fact is Boeing is its major-- not only, but its major customer. Boeing should have been on top of that regardless of whether they owned the entity or not. So this is just like a placebo.
The fact is we've got to stop kicking tires here and we've got to recognize that Boeing's problems are more than just one company. This is our biggest exporter. And right now today it is relegating itself to a distant second behind the only other game in town which is Airbus.
So if they buy AeroSystems or not, it doesn't make any difference. We have to fix that plus we have to fix the oversight. The FAA was on site this entire time so they're not particularly clean on this either. And they have to move their game up as well.
BRAD SMITH: And thanks so much for comprehending my typo in spoken form there in airlines versus aero systems. Two different Spirits there, Mike, so appreciate that. You know, what is the new Max head that steps into this role, what should be the day one priority for them?
MIKE BOYD: The day one priority has to clean up what's gone on in manufacturing. Look, as I pointed out, at an airline, if you fix an airplane, the mechanic has to fix it. You have to know who it is he signs off or she signs off. Then an inspector comes in and signs off.
What we found out now is that's not what Boeing was doing. They can't tell you who worked on that airplane that Alaska had the problem with. That is outrageous. An airline would get shut down for that.
So what we have to have is now some really strong oversight and the people at the top have to be held accountable. And that has not really been done yet. Throwing a guy under the bus doesn't fix the problem.
