If it happens it's their own fault. Over the last decade their leadership have spent ~96% of their free cash flow on stock buybacks. Boeing itself while not the bankruptcy target of this article has spent 74%. Stock buybacks are designed to simply prop up the share price to allow the leadership teams to hit their bonus targets. If they had simply done what individuals are expected to do and save money they would likely be fine. This collapse is a reminder that we need to fundamentally change the way corporations are structured and start encouraging more focus on the business as a whole, especially its employees rather that obsess over stock price and executive compensation. 2008 was a reminder as well but we ignored it, just as I am sure we will ignore this one. In the meantime they get massive bailouts while letting employees go.
> This collapse is a reminder that we need to fundamentally change the way corporations are structured and start encouraging more focus on the business as a whole
Not only that. The current economic system is fundamentally flawed due to the fact that it is based on usury (aka interest). We have known for thousands of years that interest is evil, yet people still engage in it. Then we complain about wealth gaps and how people lower on the economic-ladder are slaves, completely bypassing the fact that interest plays a direct role in keeping the cycle going.
No non-trivial company can reasonably be expected to stay in business when 100% of their client base is literally prevented from doing any significant business for months and likely to go bankrupt themselves.
The stock buyback thing is just idiotic. It's just dividends by another name.
Boeing/Airbus are not responsible for the current crisis, unlike the banks in 2008.
What I want to see is antitrust action against them. Split them into 2 entities, commercial and military. If you're too big to fail, then perhaps you're too big to exist.
Having those two entities under one roof certainly creates some problems (subsidising the civil through the military). But either of the two entities would still be strategically important on its own and wouldn't allowed to go bust.
You probably won't. The aerospace industry has one of the highest barriers of entry in cost, know-how, regulations and political connections.
Both Boeing and Airbus received a lot of government funding to get started and grow and still do to this day.
What will happen most likely is that the US and France/EU will just bail them out since they're not only vital for jobs but for defense and national security as well as their execs having strong ties to politicians in their respective regions who can push for a bailout package.
Unlikely. There are no other players making planes at this scales. Even China, who is dipping its toe into commercial planes, is still at the commuter/regional size jet. They aren’t anywhere near ready to announcing plans for an ETOPS, widebody plane.
Thanks for pointing this out, I think for most people bankruptcy is thought of as the event horizon of a black hole, where in reality it’s a debt restructuring that really only affects the CEO/board, who, you know, are supposed to take the blame for mismanagement.
It will be interesting how this changes up the regulatory environment. If all the established interests are diminished or gone, will we start seeing more innovation and investment into other forms of travel? The US is spending only about $150 billion dollars on science and technology funding.
I wonder what could be done with interstate travel using another $25 billion that is being used to bail out airlines. High speed rail? Hyper loop? Gravity powered gliders? Then again, California has managed to spend nearly twice that on a not so high speed train that probably won't exist...
This comment represents, unfortunately, what's wrong with capitalism and, at the same time, what makes it work.
Bankruptcy is used by companies to get rid of debt and refocus their business, which is good. In the case of Boeing, an eventual bankruptcy comes as a consequence of a decade of buybacks to fill investor targets and lousy engineering in the case of the 737 Max.
But hey, with infinite FED money, Boeing is not going down that easily.
If the virus disappears tomorrow, the airline industry would take many months to return to its previous patterns and volumes.
But the virus will not disappear tomorrow. It will be with us for at least a year, probably two. Other pathogens will follow. Passengers and airfreight will not return to 2019 volumes in the foreseeable future.
That means fewer flights, smaller planes, point-to-point instead of hub-and-spoke. Short hops will fall even more than long-haul as people trade flying for driving.
The airline industry is inherently mal-configured for this new world, and cannot be profitable with even 20% less volume.
So the airline industry cannot, and should not, survive in its present form. But Boeing and the dinosaur carriers can't manage the re-configuration on their own because they'll keep trying to re-invent the past.
We'll trade a few massive, lethargic, inefficient and customer-hostile megacorps for many more small, nimble, innovative, clever and customer-focused niche players.
Bankruptcy, liquidation, and reorganization of the underlying assets by new entrants is the only way.
Transferring even more billions of borrowed government money to the dinosaurs only delays the inevitable.
This is what should happen. Unfortunately, state parasites will probably say they're "too big to fail" and bail them out, sending money from everyone their way.
Here's the thing: I'm very aware of the fact that our climate is going to shit, and I try to conciously help however I can, but airplanes is one thing where I can't seem to figure out how to replace.
It is extremely practical and at times without alternative (e.g. long distance flights, think 12 hours). I am however not anywhere near the field, so I'm pretty sure I'm ignorant in regards to alternatives.
Do you happen to know any alternatives ? Or maybe some strategies, new fuels, or anything that can help with emissions in regards to airplanes ? I'd love to read more about that stuff.
The Boring Company's Hyperloop in time will replace a lot of flight, otherwise either Elon or someone else will hopefully come up with a viable electric long-distance plane.
During the Bronze Age Collapse [0], we lost the ability to write in many civilizations around the Mediterranean. Literacy rates could have been as low as 10% in these places, and so when systems collapsed, literacy couldn't be sustained. To this day, we have not yet recovered the ability to read languages like Linear A [2] and the Byblos script [3]. Not every civilization lost writing, and eventually the Phoenician family of scripts flourished and everybody switched to alphabets and abjads.
Could we be on the verge of losing the ability to fly? We would still have airplanes, and some parts of the world might retain the ability, but without Boeing, we could see a dramatic reduction in the amount of airplanes, flying, airports, and tourism.
> Could we be on the verge of losing the ability to fly?
No, why? Aribus and Boeing make a lot of the big planes. But they are far from the only game in town for making planes at all.
Even fewer planes isn't much of a problem. There were much fewer planes in eg the 1950s than today. But no one thought that would mean humanity would forget how to make planes.
Also bankruptcy isn't the end of the world. In some sense, it just means that the creditors take over control of the company from the shareholders. All the factories and engineers are still there.
I’m really sorry you got voted down for this prescient comment. It is spot on that in times of societal distress we often lose progress and knowledge that was obtained before, often on purpose.
Think of the dark ages, or many of the populist revolutions of the 20th century (I personally am not for/against populism, but like other ideologies it holds many dangers when applied badly).
I don't think it would be due to lack of knowledge that we would lose the ability to fly. It would sooner be economic. Though I see your angle, it's important to note that most of the information we need to know how to fly is in the public domain or in the patent office. I'm not sure there are many secrets in aviation.
[+] [-] wonderwonder|5 years ago|reply
[+] [-] apta|5 years ago|reply
Not only that. The current economic system is fundamentally flawed due to the fact that it is based on usury (aka interest). We have known for thousands of years that interest is evil, yet people still engage in it. Then we complain about wealth gaps and how people lower on the economic-ladder are slaves, completely bypassing the fact that interest plays a direct role in keeping the cycle going.
[+] [-] himinlomax|5 years ago|reply
The stock buyback thing is just idiotic. It's just dividends by another name.
Boeing/Airbus are not responsible for the current crisis, unlike the banks in 2008.
[+] [-] jdhn|5 years ago|reply
[+] [-] cm2187|5 years ago|reply
[+] [-] op03|5 years ago|reply
[+] [-] mateuszserafin|5 years ago|reply
[+] [-] ChuckNorris89|5 years ago|reply
Both Boeing and Airbus received a lot of government funding to get started and grow and still do to this day.
What will happen most likely is that the US and France/EU will just bail them out since they're not only vital for jobs but for defense and national security as well as their execs having strong ties to politicians in their respective regions who can push for a bailout package.
[+] [-] yardie|5 years ago|reply
[+] [-] owenmarshall|5 years ago|reply
I suspect we’d see the opposite: consolidation in the industry.
[+] [-] generalpass|5 years ago|reply
It corrects the price of the assets to match current market.
It transfers assets to more efficient owners.
Bankruptcy is not: a vaporization gun.
The assets remain in the physically existent universe, as do the employees and even the entire industry, even if it is diminished.
[+] [-] c54|5 years ago|reply
[+] [-] foxyv|5 years ago|reply
I wonder what could be done with interstate travel using another $25 billion that is being used to bail out airlines. High speed rail? Hyper loop? Gravity powered gliders? Then again, California has managed to spend nearly twice that on a not so high speed train that probably won't exist...
[+] [-] nunorbatista|5 years ago|reply
This comment represents, unfortunately, what's wrong with capitalism and, at the same time, what makes it work. Bankruptcy is used by companies to get rid of debt and refocus their business, which is good. In the case of Boeing, an eventual bankruptcy comes as a consequence of a decade of buybacks to fill investor targets and lousy engineering in the case of the 737 Max. But hey, with infinite FED money, Boeing is not going down that easily.
[+] [-] panarky|5 years ago|reply
But the virus will not disappear tomorrow. It will be with us for at least a year, probably two. Other pathogens will follow. Passengers and airfreight will not return to 2019 volumes in the foreseeable future.
That means fewer flights, smaller planes, point-to-point instead of hub-and-spoke. Short hops will fall even more than long-haul as people trade flying for driving.
The airline industry is inherently mal-configured for this new world, and cannot be profitable with even 20% less volume.
So the airline industry cannot, and should not, survive in its present form. But Boeing and the dinosaur carriers can't manage the re-configuration on their own because they'll keep trying to re-invent the past.
We'll trade a few massive, lethargic, inefficient and customer-hostile megacorps for many more small, nimble, innovative, clever and customer-focused niche players.
Bankruptcy, liquidation, and reorganization of the underlying assets by new entrants is the only way.
Transferring even more billions of borrowed government money to the dinosaurs only delays the inevitable.
[+] [-] Shared404|5 years ago|reply
And costs tax money.
[+] [-] jbverschoor|5 years ago|reply
[+] [-] henvic|5 years ago|reply
[+] [-] Krasnol|5 years ago|reply
[+] [-] unknown|5 years ago|reply
[deleted]
[+] [-] zurn|5 years ago|reply
[+] [-] aneutron|5 years ago|reply
It is extremely practical and at times without alternative (e.g. long distance flights, think 12 hours). I am however not anywhere near the field, so I'm pretty sure I'm ignorant in regards to alternatives.
Do you happen to know any alternatives ? Or maybe some strategies, new fuels, or anything that can help with emissions in regards to airplanes ? I'd love to read more about that stuff.
[+] [-] loceng|5 years ago|reply
[+] [-] throwaway55554|5 years ago|reply
Edit: Hmm... I guess not. Wow.
[+] [-] me_me_me|5 years ago|reply
[+] [-] eru|5 years ago|reply
[+] [-] lidHanteyk|5 years ago|reply
Could we be on the verge of losing the ability to fly? We would still have airplanes, and some parts of the world might retain the ability, but without Boeing, we could see a dramatic reduction in the amount of airplanes, flying, airports, and tourism.
[0] https://en.wikipedia.org/wiki/Late_Bronze_Age_collapse
[2] https://en.wikipedia.org/wiki/Linear_A
[3] https://en.wikipedia.org/wiki/Byblos_syllabary
[+] [-] romanovcode|5 years ago|reply
Without Boeing other companies will emerge. There is no way in this day and age (globalization) tourism/traveling will cease to exist.
[+] [-] eru|5 years ago|reply
No, why? Aribus and Boeing make a lot of the big planes. But they are far from the only game in town for making planes at all.
Even fewer planes isn't much of a problem. There were much fewer planes in eg the 1950s than today. But no one thought that would mean humanity would forget how to make planes.
Also bankruptcy isn't the end of the world. In some sense, it just means that the creditors take over control of the company from the shareholders. All the factories and engineers are still there.
For example, airlines go bankrupt all the time.
[+] [-] nikhizzle|5 years ago|reply
Think of the dark ages, or many of the populist revolutions of the 20th century (I personally am not for/against populism, but like other ideologies it holds many dangers when applied badly).
[+] [-] ehnto|5 years ago|reply
[+] [-] redis_mlc|5 years ago|reply
Oh, kind of like how the US outsourced mask production to China, and became so deindustrialized that they couldn't make their own when needed?