Companies should not have life-spans.  There is no rational reason why a company should become physically or mentally less capable, like an animal or plant.  A business cannot suffer organ failures.

And yet, companies can seem to become archaic, out-of-date, antiques of a bygone age.

As an investor, of course, owning stock in such companies in their declining years means watching your wealth dwindle as the price of such a company’s stock reflects that decline; i.e., as investors sell their stock in such a company for whatever they can get, and reinvest in what their research shows is a more growth-oriented company.

One such company demonstrating that withering-away decline is the Boeing Company (stock symbol “BA”).  

On October 29th, 2018, a Boeing 737 MAX crashed in Indonesia.  Boeing’s stock price that Monday fell to 335.15, from 363.77 the Friday before. If that had been the only incident, the stock could have been expected to recover.  In fact, by that November 11th, less than two weeks later, the stock reached 370.77.

But then disaster struck a second time, on March 10th, 2019: a second 737 MAX crashed in Ethiopia.  

On March 8th, a Friday, BA stock had closed at 422.54.  

That Monday, March 11th, the stock fell to 400.01.  Notably, China grounded its entire fleet of 737s, and by the 12th, every 737 MAX on Earth was grounded.  

BA stock fell to 375.41.  

The needed repair to make the 737 MAX once again airworthy was estimated to be ready first in March, then in April, then in September.  

Late in December of 2019, Boeing’s CEO was (finally) fired.  

In January of 2020, production of the 737 MAX was halted.

That halt had a negative impact on Boeing’s parts suppliers – Boeing’s “supply chain” – putting them in a bind that resulted in layoffs and financial instability.  

By late March, 2020, BA stock was selling for less than $100 per share.  

By late June of 2021, it was back up to $250 per share.  

On March 1st, 2022, it again fell below $200 per share, and remained there through January 3rd, 2023.

The stock fell back below $200 on March 8th, and now trades in the $170-$180 price range.

Is Boeing running on empty?

In 2022 Boeing had its first loss in twenty years, and Airbus out-sold Boeing for the first time.

Emails of Boeing employees were revealed that January which seem to indicate a systemic (company-wide) problem.  "This airplane is designed by clowns who in turn are supervised by monkeys," one employee wrote.

Foreign object debris (“FOD”) found in 400 stored 737 MAX airplanes – a quality control problem, and more evidence of a systemic problem.

For two years, all 737 MAX airplanes remained grounded.

Although the 737 MAX is flying again, inspections, lawsuits, and hearings are expected to last for years.  No company should consider this “business as usual”.  

Similarly, Boeing’s newest flagship, the 787, had an all-too-familiar sounding problem:  the first 960 787s built had “nonconforming gaps” between fuselage sections.  

How can 960 airplanes be delivered before anyone notices a problem that requires repair and rework?

In January of 2024, a further, unrelated incident showed that Boeing indeed had a “systemic problem”:  a door plug blew out in flight.  

Back in the 1990s, process definition and control and Continuous Quality Improvement (CQI) were of high importance at Boeing.  Those of us who attended their CQI classes were strongly influenced by CQI techniques and practices, and many of us still have the classroom manuals from that training.

Clearly, Boeing management’s current generation has a different attitude.  Overall operational strategies have changed under the more recent leadership.  Process control and quality measurements are clearly no longer in vogue.  Instead of “get it right the first time” the attitudes of everyone from management on down seems to be, “Fix it if somebody notices it.”  

That attitude leads to crashes and grounded airplanes.  

One source stated that Boeing is no longer an engineering-based company, but is now a business:  evaluate that any way you like; Boeing has been in business for a hundred years.  Could it mean that cost-cutting accounting as a means to lower the cost of airplanes has replaced the focus on building good airplanes that people would want to buy – and fly in – as the Boeing mantra?

As an investor, these are questions you must answer when evaluating a company before buying its stock.

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