Dividends and Boeing scrambles to clear backlog of grounded Max jets

In 2019 two planes crashed and the problem was determined to be in the software which helps fly the plane. All over the world, aviation regulators grounded the Boeing Max 737 and Boeing spent over a year not only fixing the problem but gaining the regulators trust to fly the planes again. It is long process and illustrates what happens when major problems happen and the effort to fix it again.

The backstory is Boeing and Airbus have a duopoly in the passenger airline market – if you fly you were on one of the 2 planes. Most airlines have both planes in their fleets, although some carriers like one or the other a little better. For Boeing the Max 737 was going to be their cash cow for the next 10 years plus as the airline met a number of requirements the airlines were looking for. Less cost to operate, higher fuel efficiency, easy to clean for quick turnaround flights and relaxing to fly for the passengers.

In an article by Eric M Johnson of Reuters, at Grant County International Airport in the Seattle area, 240 jets are being rolled in for maintenance and upgrades of software and systems as mandated by the US Federal Aviation Administration (FAA). The inventory according to a report by the investment firm Jefferies is worth more than $16 billion.

The work at the airport is the cornerstone of a global logistical and financial strategy under way at Boeing to clear a backlog of more than 800 mothballed 737 Max jets. Around the globe, Boeing people are working on delivery schedules and financial terms with airlines that had to scale back schedules and fly old aircraft because they lacked the aircraft to meet strong demand as the Max grounding took longer than expected. Now the marketplace is not good, but hopes for 2021 are better. Airlines are looking to 2022 for major deliveries.

It takes about 2 weeks to ready each plane. Boeing is in discussion with all the airlines around the world.

Linking to dividend paying stocks, the Boeing example of Max 737 is a great example of how logistics runs a company and to be successful means the company has to get it correct on a daily basis. The only good news is Boeing had the ability to weather the crisis through its other product lines and government help, but the special circumstances is not going to happen every year. When you examine your investments, how do they do the logistics?

There are more questions than answers, till the next time – to raising questions.

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