Boeing: Turbulent Times - [Business Breakdowns, EP.129]

This is Zack Fuss, an investor at Irenic Capital, and today we’re breaking down Boeing. Founded in Seattle in 1916 by William Boeing, the company has produced thousands of commercial and military aircraft over the past century. It is an important national and global asset and one-half of arguably the most famous duopoly in business, alongside Airbus. To break down Boeing, I’m joined by Jon Ostrower, founder and editor-in-chief of The Air Current. You can split Boeing’s business into three segments: commercial, defense, and services. For this discussion, we focus mostly on Boeing’s commercial business, which accounted for nearly 40% of its revenues last year. We talk about the cost and complexity of building new airplanes, how the 737 MAX disaster changed the business, and why the future of commercial planes may look radically different. Please enjoy this business breakdown of Boeing. For the full show notes, transcript, and links to the best content to learn more, check out the episode page here. ----- This episode is brought to you by Tegus. Tegus is the modern research platform for leading investors, and provider of Canalyst. Tired of calculating fully-diluted shares outstanding? Access every publicly-reported datapoint and industry-specific KPI through their database of over 4,000 driveable global models handbuilt by a team of sector-focused analysts, 35+ industry comp sheets, and Excel add-ins that let you use their industry-leading data in your own spreadsheets. Tegus’ models automatically update each quarter, including hard to calculate KPIs like stock-based compensation and organic growth rates, empowering investors to bypass the friction of sourcing, building and updating models. Make efficiency your competitive advantage and take back your time today. As a listener, you can trial Canalyst by Tegus for free by visiting tegus.co/patrick. ----- Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt | @domcooke Show Notes (00:02:38) - (First question) - An introduction to the aerospace industry and Boeing's role in it (00:05:41) - Boeing's business model today (00:09:52) - How the aerospace industry settled into a duopoly (00:12:30) - Costs associated with airplane manufacturing (00:14:02) - The life expectancy of an aircraft (00:14:46) - Dealing with the supply coordination problem (00:17:39) - The Boeing and McDonnell Douglas merger (00:20:51) - Problems Boeing has faced over the past five years (00:25:44) - How leadership turnover has permeated through Boeing (00:28:03) - Competitive headwinds Boeing can face (00:33:10) - How Boeing will grow in the aerospace industry (00:37:39) - Boeing's eVTOL strategy (00:41:42) - What is impacting the profitability of the business (00:43:38) - The biggest challenge facing the aerospace industry (00:44:57) - Lessons learned from studying Boeing