Boeing 737 MAX Crisis Costs US$21B - Boeing Could Have Bought The Whole Bombardier CSeries and Its Aerospace Division!
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January 9, 2020 - by Dhierin Bechai
- Most optimistic scenario, one that will slide quickly, would put total crisis costs in excess of $20B.
- To date, Boeing has only put their MAX liabilities at $5.6B.
- With additional problems to fix and training requirements, schedule could slip even further.
As an analyst dedicated to the aerospace industry and more particularly the commercial aircraft part of that industry, I have been covering many aircraft programs.
The Boeing (BA) 737 MAX is no exception, and since the crashes with the Boeing 737 MAX, that coverage has only intensified as it put Boeing in a deep crisis. Since October 2019, we've been analyzing the MAX extensively covering various parts of the crisis
In this report, we start by looking at our cost estimate for the grounding, the associated delivery stop, and production halt.
In this first analysis, we will have a look at what we think would be the best case scenario in terms of the grounding duration and we will outline the various cost components for that scenario translating it to share price levels and in a separate analysis we will have a look at what happens if the schedule slips even further.
In total there will be three reports, each scenario will have one varying variable to research the sensitivity of that variable to the grounding costs and implied share price.
- The cost associated with a 12-month grounding (excludes one-off items associated with the production stop).
- The cost associated with extended grounding duration for recertification (excludes one-off items associated with the production stop).
- The Boeing 737 MAX grounding costs when assuming "more modest" airline profit margins.
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