Wednesday, January 27, 2016

Debbie Downer Boeing Stock Report

After sticking my neck out by saying Boeing will go North of 762 frames this year, they do a "Crazy Ivan and go South with a 740-745 prediction number for 2016.

This becomes a story of "The Good, The Bad, and The Ugly". Starting with ugly to get it over with and then moving forward until reaching Good. I will explain my own thoughts on the matter. The Ugly was announced earlier when it was announced the 747-8i reduces production downward to 6 a year. A sign and a symbol the 747 has reached a final death spiral only to be saved by a weakened freight market even if it revives itself for making new orders. The Boeing hope and plan is to maintain 747 production long enough for freight to come back. This is getting ugly for the 747-8 concept.

The bad is found in the weak spot of Boeing's aspirations, it is in transition with two new models.  A production blemish will occur in 2016 and possibly lagging into 2017. Both the 737 Max and 777X family of aircraft are emerging, but the former aircraft, the 737 NG and the 777-300-ER have to keep churning out the door. They can't maintain the pace it has set from the optimal production days of the last five years. Until the 777X swings to delivery mode and the Max goes to market in 18 months, the Boeing production juggernaut is at a production dock for refurbishing. The year 2018 should bring Boeing production numbers back greater than 2015's numbers. No alarm is sounded on the production floor only the sounds of installing, implementing and improving production capability for new aircraft.  

The good well is just very good, the production lag for the transition of going to the best airplane manufacturer of the single aisle, and its large wide-body, the 777X. The Max first flight is for this Friday, January 29, 2016, and it will beckon the single aisle era forward with the best of the show. The "Transition" period slows production, but the 787 will make Boeing's day going forward. The Boeing story in 2016 will be about sales (regard to BBY). It is a constant unknown until the year ends. No prediction can made except by Blogging hopefuls and watchers of the aviation world. We only have production to measure with during the year. But Airbus can't make the production run yet meeting Boeing's diminished prediction of 740-745. Boeing will be the largest Aircraft manufacturer for another year in a row.