Reference News website reported on May 17 that Bloomberg News website published an article titled "Boeing's problem is to fulfill orders, not to win orders" on May 15. The author of the article is Thomas Black, a columnist for Bloomberg News舆情 Department. The content is compiled as follows:

As we all know, U.S. President Donald Trump has always loved grandeur and exaggerated expressions.

Therefore, it was no surprise when Trump personally attended Qatar Airways' press conference announcing a record-breaking purchase of 160 Boeing wide-body aircraft (including 50 optional orders) on the 14th. This is just another example of other countries or enterprises going to great lengths to provide Trump with bragging capital. The White House claimed that the deal was worth $96 billion, but the actual amount will be significantly reduced according to regular large customer discounts.

However, Boeing's problem lies in increasing production, not in winning new orders. The company has accumulated 5,643 planes to manufacture, valued at about $460 billion. Boeing is struggling to increase the production speed of its most popular 737 MAX model to the limit set by the Federal Aviation Administration (FAA), which is 38 per month. At this rate, Boeing will need 9 years to manufacture the backlog of 4,287 737 planes. Boeing is expected to request the FAA to allow it to increase production to 42 per month later this year, but production still needs to increase.

For Trump, the details don't matter as long as people credit him for reaching huge deals. In a signing photo, Trump sat in the center of a long table, with Boeing CEO Kelly Ortberg on his right. The Saudi sovereign wealth fund also ordered 30 Boeing single-aisle aircraft, adding another victory to Trump's trip. Previously, British Airways' parent company announced last week the purchase of 32 Boeing aircraft.

Confirming orders usually requires down payments, followed by installment payments according to progress. Therefore, such huge contracts can improve cash flow. Details determine success or failure. Given Boeing's backlog of orders and well-known production difficulties, customers may be unwilling to pay high advance payments.

For Boeing investors and airline customers, the good news is that Kelly Ortberg's plan to solve Boeing's production problems seems to be working, but increasing production while instilling a new work culture takes time. After two fatal accidents in 2018 and 2019 led to the grounding of the Boeing 737 MAX model, and during the COVID-19 pandemic, thousands of experienced workers left during the temporary slowdown in flight demand, causing disruptions in the aerospace supply chain, leaving Boeing in trouble.

Lack of parts and poor quality seriously disrupted the normal operation of the aircraft assembly line, ultimately leading Boeing into a state of "disorderly production," which damaged product quality and forced the company to establish so-called "shadow factories" to repair incomplete aircraft. The chaos in these factories became evident in January last year when a new Boeing 737 passenger plane of Alaska Airlines exploded its door during a flight, fortunately without casualties. The investigation revealed that workers had forgotten to install bolts to fix the door. The Federal Aviation Administration was forced to intervene in production processes and develop a quality improvement plan. Former Boeing CEO Dave Calhoun eventually resigned over the issue.

To make matters worse for Boeing, workers in the Seattle area went on strike at the end of last year, causing production to stall for nearly two months. Newly appointed CEO Kelly Ottberge skillfully used this downtime to eliminate disorderly production, close shadow factories, and promote a new quality management culture widely accepted by workers in the workshops.

Despite the backlog of orders, production chaos caused Boeing to lose $1.4 billion in cash last year. Cash losses continued this year, but are expected to turn around in the second half of the year as production increases.

Huge aircraft orders and astonishing dollar values may grab headlines and satisfy the president's vanity, but the arduous task of increasing monthly aircraft production is the key to Boeing's profitability. (Compiled/translated by Lu Di)

Boeing once faced strikes due to compensation issues. As shown in the picture, people held signboards supporting the strike in front of the Boeing 737 MAX aircraft. (Associated Press)

Original article: https://www.toutiao.com/article/7505313785645646387/

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