Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: Hello and welcome to another episode of the All Thoughts podcast.
Speaker 2: I'm Tracy Allaway.
Speaker 3: And I'm Joe Wisenthal Boeing.
Speaker 2: Have you Boeing?
Speaker 3: Keep that in?
Speaker 2: Don't keep that in?
Speaker 3: No, keep that in? Now, you gotta keep it in.
Speaker 2: I've said before I have a soft spot for Boeing,
Speaker 2: So that's why I'm mixing Boeing and Joe up. Okay, Joe,
Speaker 2: have you seen Boeing shares recently?
Speaker 3: Actually, I haven't looked at a while, except, you know,
Speaker 3: like we did an episode on Boeing about three or
Speaker 3: four weeks ago, so not good. Yeah, and they have
Speaker 3: not recovered much, so not good.
Speaker 2: So shares are down twenty percent since the start of
Speaker 2: the year, which is never a good sign when you
Speaker 2: lose a fifth of your market value in about six weeks.
Speaker 2: But probably one of the more damning things that has
Speaker 2: happened recently in terms of the share price is do
Speaker 2: you remember when the company announced it was pausing seven
Speaker 2: thirty seven production for a day and the shares went
Speaker 2: up like six percent. That seems bad when the market
Speaker 2: is rewarding you for not making your signature product.
Speaker 3: There's two funny things to me again. Funny you know
Speaker 3: all the caveats that that tells. It's funny that Boeing
Speaker 3: has the reputation of being the company that's obsessed with
Speaker 3: its share price and pleasing shareholders. Airbus doesn't. And of
Speaker 3: course air Bus is a much better share performance than Boeing.
Speaker 3: It's done phenomenally well over the years. And it's also
Speaker 3: just kind of crazy, sitting aside competition, that Boeing is
Speaker 3: still nowhere near its peak in twenty nineteen, despite what
Speaker 3: we know to be like a booming global market for aviation,
Speaker 3: Like that's one thing we know, like pre pandemic, post pandemic,
Speaker 3: just absolute boom. You always hear about this expansion of
Speaker 3: new airlines in the Middle East and Asia and et cetera.
Speaker 3: And so we know that there's this huge general bull
Speaker 3: market going on and Boeing doesn't seem to have capitalized
Speaker 3: on any of it.
Speaker 2: Well, not just a booming market in commercial aircraft, which
Speaker 2: you're totally correct, as you observe, it has been a
Speaker 2: busy few years, but also we've had so much defense spending,
Speaker 2: that's right, and things like the IRA and things like that,
Speaker 2: and even with that happening in the background, America's premier
Speaker 2: aerospace and defense company just doesn't seem to have benefited
Speaker 2: from it. The share price has basically been flat for
Speaker 2: the last three years.
Speaker 3: Kind of amazing, and I think it's worrisome, right because
Speaker 3: you know, setting aside, you know the concerns of Boeing shareholders,
Speaker 3: and they're probably pretty unhappy, Like if US wants to
Speaker 3: be a big manufacturing powerhouse and again or be able
Speaker 3: to build more complex stuff domestically, it's really a bad
Speaker 3: sign that the sort of premier you domestic manufacturer for
Speaker 3: global markets, one of only two companies that basically controls
Speaker 3: the commercial jet industry, is getting worse at building plans.
Speaker 2: Yes, absolutely so. We have previously recorded an episode on
Speaker 2: Boeing with our Bloomberg colleague Peter Robinson. He's also the
Speaker 2: author of Flying Blind, The seven thirty seven Max Tragedy
Speaker 2: and the Fall of Boeing, and we talked about what
Speaker 2: the Alaska Airlines door blowout actually meant for the company,
Speaker 2: and also the emphasis that Boeing seemed to place on
Speaker 2: financial performance and ironically its stock price versus a culture
Speaker 2: of safety and engineering. But I feel like there is
Speaker 2: so much more we can say about this topic and
Speaker 2: so much more to dig into, and I'm really happy
Speaker 2: that we do, in fact have the perfect guest for
Speaker 2: today's episode. This is the guy, the aerospace guy. Back
Speaker 2: when I was covering airlines and aerospace in like two
Speaker 2: thousand and six, he was the expert back then, and
Speaker 2: in twenty twenty four, almost two decades, he is still
Speaker 2: the guy to talk to on aerospace. So I'm very
Speaker 2: happy to say that we're going to be speaking with
Speaker 2: Richard Aboulafia again, a longtime aerospace analyst and managing director
Speaker 2: at Aerodynamic Advisory. So Richard, thank you so much for
Speaker 2: coming on all thoughts, It's good to talk to you again.
Speaker 4: Yeah, same here, Tracy, thanks so much for having me on.
Speaker 4: Thrilled to be here.
Speaker 2: You know, I should say, in addition to being the
Speaker 2: aerospace guy and just an all round expert on this industry,
Speaker 2: you also have a reputation for telling it like it is,
Speaker 2: and I think at this point a lot of the
Speaker 2: cultural changes at Boeing are probably well known, but you
Speaker 2: point into a pretty interesting development that I will confess
Speaker 2: I hadn't even noticed it happened late last year where
Speaker 2: the current Boeing CEO David Calhoun basically dissolved the company's
Speaker 2: strategy department. What was that about.
Speaker 4: Yeah, I mean that's a mystery, but like all good mysteries,
Speaker 4: it just sort of lends itself to theorizing and indeed
Speaker 4: conspiracy theorizing, and the most obvious statement was we don't
Speaker 4: have a future. Not only was it the dissolution of
Speaker 4: the company wide strategy department, but there was a wholesale
Speaker 4: gutting of a lot of the business unit strategy department.
Speaker 4: So it wasn't a devolution story. It was we don't
Speaker 4: care story, which was of course as baffling as it gets.
Speaker 4: It sort of fits in with this nagging feeling in
Speaker 4: the back of my mind that the really awful performance
Speaker 4: is kind of okay to the folks at the top,
Speaker 4: because ultimately their playbook is well about as deep as
Speaker 4: the jackwelch Ge playbook, which is, if things go to hell,
Speaker 4: you simply break up the company, and in that case,
Speaker 4: you know, performance doesn't matter the future and strategy doesn't matter.
Speaker 4: You simply think you know. And indeed, maybe maybe the
Speaker 4: bad performance is kind of a plaus in as strange
Speaker 4: way to regulators in every body, involved, customers, whatever. It
Speaker 4: almost becomes a relief when the company has broken up. That's,
Speaker 4: of course an extreme departure scenario, but I can't think
Speaker 4: of any other explanations for doing that.
Speaker 3: Well, maybe what is a strategy department and what is it?
Speaker 3: So they said, I think, I guess it was in
Speaker 3: November that their strategy boss was leaving, that the strategy
Speaker 3: teams would be folded into the business units that they support.
Speaker 3: What do these words actually mean in practice? Is what
Speaker 3: are strategy teams? I thought everyone did strategy.
Speaker 4: Business, Yeah, everyone does, right, It's kind of impossible to
Speaker 4: imagine a large corporation not having a strategy function. What
Speaker 4: is the strategy? Is about the future. A strategy is
Speaker 4: about allocating capital for future technology development, for future acquisitions,
Speaker 4: for allocating people, for developing people and their skills and capabilities. Basically,
Speaker 4: it coordinates resources across business units and within the business units.
Speaker 4: Of course, it thinks about new products to develop. Their
Speaker 4: competitors are and are likely to be, and what key
Speaker 4: enabling technology is You're needed to compete in the future.
Speaker 2: One of the reasons we wanted to talk to you
Speaker 2: is because you are well connected in this industry in
Speaker 2: addition to being an expert on it, But can you describe,
Speaker 2: like the mood at Boeing at the moment, or how
Speaker 2: people within aerospace and defense actually feel about this company.
Speaker 4: After thirty five years. I've never seen anything like it,
Speaker 4: and it kind of resembles that common trope and horror films.
Speaker 4: Very often the call comes from inside the house, you know.
Speaker 4: I mean, I spent last week in Seattle, and you know,
Speaker 4: it's nothing short of horrifying. But it also sort of
Speaker 4: illustrates one of the strange aspects of this the so
Speaker 4: called crisis, which is that the problem is purely at
Speaker 4: the top. There are a lot of really good people
Speaker 4: at Boeing, and a lot of really good products and
Speaker 4: a lot of really good technologies. You just have some
Speaker 4: people who are really, really bad at their job at
Speaker 4: the top. So as you can imagine people within the company,
Speaker 4: and there are and many good ones are often mortified
Speaker 4: by what's happening.
Speaker 3: Well, so I understand in the abstract we could say
Speaker 3: things like, oh, the bean counters took over and they
Speaker 3: don't have a as much of an engineering culture or
Speaker 3: safety culture, or they just worry about the stock price,
Speaker 3: and I get all like, why that's all bad, and
Speaker 3: I guess on a sort of theoretical level, it sounds
Speaker 3: very bad. But why do we talk concrete? If you're
Speaker 3: an engineer at Boeing today working on something, how is
Speaker 3: your life different than it was, say, twenty years ago?
Speaker 4: Well, there's no future, right, And you know the astonishing
Speaker 4: thing like what do you.
Speaker 3: Like day to day? Like? Like what what?
Speaker 4: Like?
Speaker 3: What is some some boss, some boss three levels up
Speaker 3: has made decisions and various properties have changed. So how
Speaker 3: does like how does it like manifest itself on a
Speaker 3: sort of day to day basis or quarter to quarter basis,
Speaker 3: where it's not as a compelling of a place to work,
Speaker 3: like what has changed about the nature of the job.
Speaker 4: You need something to dream for, you need something that
Speaker 4: represents the future. And you know, Dave Calhoun, the CEO
Speaker 4: at the top of the heap, said about oh, a
Speaker 4: year and four months ago that don't worry, we won't
Speaker 4: be launching anything new for at least another decade. Other
Speaker 4: than sheer demoralization and encouraging the competition. I mean, the
Speaker 4: only way to explain it is that he's the best
Speaker 4: CEO Airbus could ask for. But from the standpoint of
Speaker 4: being an engine you're getting the heart of your question, Joe.
Speaker 4: If you're an engineer, you hear that what are you
Speaker 4: working for exactly? You're coming up with work packages on
Speaker 4: the basis of I don't know, minor tweaks of existing products,
Speaker 4: stuff that's already in the pipeline. You know, it's a
Speaker 4: tight market for technical labor. You're probably going to be
Speaker 4: pretty interested in going to work for somebody else. So
Speaker 4: you might also notice that the demographics are changing because
Speaker 4: the young and enthusiastic folks who have a future are
Speaker 4: leaving or not joining, and that too, of course, is
Speaker 4: a significant change in the fabric of your workplace.
Speaker 2: So you mentioned launching something new, and this kind of
Speaker 2: goes to the heart of you know, I guess the
Speaker 2: current crisis within Boeing, but also the origins of the
Speaker 2: safety issues and the idea that instead of doing a
Speaker 2: clean sheet aircraft as it's called, Boeing decided to make
Speaker 2: amendments to its existing seven thirty seven model, and that
Speaker 2: resulted in the seven thirty seven Max and its stablemates,
Speaker 2: and then that led to the crashes which claimed I
Speaker 2: think almost three hundred and fifty lives and the resulting
Speaker 2: controversy over Boeing and what we're basically discussing now. But
Speaker 2: just to back up, could you maybe talk about what
Speaker 2: are the decisions or the factors that go into whether
Speaker 2: or not to design a completely new aircraft.
Speaker 4: Well, I'm afraid I must disagree with that narrative. I
Speaker 4: thought the Max was the right decision at the time.
Speaker 4: There were few enabling technologies for a new jet in
Speaker 4: that class except turbine, so put a new engine in it.
Speaker 4: We didn't know then the sheer popularity of the middle market.
Speaker 4: Even if we did, I'm not so sure that would
Speaker 4: have changed anything. What was important is that the Max
Speaker 4: go ahead and then the company do what it does
Speaker 4: every decade, launch a new product, and in that case,
Speaker 4: that product would have been a notch above the Max.
Speaker 4: You know. As for the development of the Max, there
Speaker 4: were cultural problems at play that led to the mcast
Speaker 4: problems and the tragedies that resulted. But it wasn't economics.
Speaker 4: I mean, the economic difference between mcast done right and
Speaker 4: mcast done poorly is zero zilch. This was purely a
Speaker 4: cultural driver that led to these tragedies. Now, if you've
Speaker 4: got the Max out of the you know, okay, it
Speaker 4: was the right thing to do. It should have been
Speaker 4: done different, but it was the right thing to do.
Speaker 4: What should have happened next is they should have said, okay,
Speaker 4: look back in the past, we had this other aircraft
Speaker 4: in that middle segment, the seven to five seven. It's dead.
Speaker 4: We need to think about a replacement. And they were
Speaker 4: thinking about a replacement, and that was the first thing
Speaker 4: Dave Calhoun killed when he came in.
Speaker 3: How would you characterize the cultural failings that led to
Speaker 3: those tragedies?
Speaker 4: Very simply a disconnect between the people at the top
Speaker 4: and the people who are focused on the core business
Speaker 4: of the company, which is of course designing and building aircraft.
Speaker 4: You know, the folks at the top. And this started
Speaker 4: under Jim mcnernee back in the late two thousand, you know,
Speaker 4: first decade of the two thousands. He decided that the
Speaker 4: supplier base and the workforce were mere disposable commodities that
Speaker 4: should be crunched. They should be regarded as one giant
Speaker 4: atm you take money out of them, there's no consequences.
Speaker 4: People will always want to work there, and people will
Speaker 4: always want to be suppliers our way or the highway.
Speaker 4: This was bound to have consequences, and it just got
Speaker 4: worse and worse through the twenty tens, and as a consequence,
Speaker 4: you had a badly demoralized workforce. Now as part of
Speaker 4: his strategy, of course, McNerney back in the twenty tens,
Speaker 4: it became necessary to replace people on the board with
Speaker 4: people who had no technical degrees. They were one step
Speaker 4: away from being complete randos who sold accordions. And you know,
Speaker 4: the most farcical moment was Nicki Haley was on it
Speaker 4: and she left because she didn't think the company should
Speaker 4: be taking government money. It's a defense contractor, She's like, seriously,
Speaker 4: So it was. It was a bizarre organization designed to
Speaker 4: rubber stamp and not much more. It's gotten a little
Speaker 4: bit better in the aftermath of the Mcast tragedies, but
Speaker 4: oh boy, that terrible culture of bad governance and that
Speaker 4: complete disconnect with the people who were charged with actually
Speaker 4: doing their jobs, a complete lack of redress and inability
Speaker 4: to push bad information. You know, I remember very well
Speaker 4: on seven eight h seven when the seven eighty seven Dreamliner,
Speaker 4: their last clean sheet designed, was rolled in and I
Speaker 4: was talking to McNerney and he told me, like, this
Speaker 4: plan's going to fly in September, well maybe October. No,
Speaker 4: I didn't say that, and it took someone, It took
Speaker 4: someone completely outside, a way lower down on the organization
Speaker 4: chart to say, actually, Richard, that plane is filled with sand.
Speaker 4: It's not flying for another year, which was correct, and
Speaker 4: he's not going to be caught in a lie. He
Speaker 4: simply had no way of knowing, and there was no
Speaker 4: mechanism with which to transmit bad information up the food channel.
Speaker 2: On the topic of culture, the other thing that tends
Speaker 2: to come up is the acquisition of McDonald douglas and
Speaker 2: the idea that well, you brought in these new executives
Speaker 2: and they had much more of a numbers based focus.
Speaker 2: And I'm always kind of curious is that true? First
Speaker 2: of all? And then secondly, why did they seem to
Speaker 2: wield so much influence within Boeing given that they were
Speaker 2: the company being acquired, like presumably they were, you know,
Speaker 2: in terms of social hierarchy on a lower rung.
Speaker 4: Yeah, it's a complicated one. And of course the bitter
Speaker 4: joke told it Boeing is that, you know, McDonald douglas
Speaker 4: used Boeing's money to buy Boeing. You know, a bizarre
Speaker 4: chain of events. There were all sorts of interpersonal reasons,
Speaker 4: minor scandals and whatever else that resulted in a decapitation
Speaker 4: of some of the key Boeing executives, and as a consequence,
Speaker 4: McDonald douglas folks were there to fill the void because
Speaker 4: they were kind of squeaky clean, until they too were toppled.
Speaker 4: A couple of them were toppled by scandals too. It
Speaker 4: was a bizarre chain of events, now, is it true? Well,
Speaker 4: you know, there's no question McDonald douglas was far more
Speaker 4: financially focused. It had been on a thirty year glide
Speaker 4: path towards irrelevant because of this focus on you know,
Speaker 4: finance and nothing more between, you know, the creation of
Speaker 4: McDonald douglas in nineteen sixty seven and it's absorption into Boeing.
Speaker 4: It was pretty clear the way things were going all
Speaker 4: those years. Having said that, it was still an aerospace company, right,
Speaker 4: What happened in the mid two thousands with Jim McNerney
Speaker 4: and now Dave Calhoun is that jack welch ge culture,
Speaker 4: which has nothing to do whatsoever with aerospace. They might
Speaker 4: as well be hedge fund managers or somebody who's merely
Speaker 4: concerned with numbers, and has no knowledge of the industry
Speaker 4: whatsoever came to rule. So, yes, you can put some
Speaker 4: of the blame in McDonald douglas people, but really it's
Speaker 4: more that Jack Welch influence or that exposed heritage of
Speaker 4: Jack Welch influence about seven or eight years later.
Speaker 3: Jumping back towards the present, So you mentioned the comment
Speaker 3: from the CEO last year where they're like, we're not
Speaker 3: we're not in any rush to introduce a new clean
Speaker 3: sheet plane. I assume that that's kind of the thing
Speaker 3: shareholders like to hear because it means, you know, you're
Speaker 3: not going to have a big upfront budget, that you
Speaker 3: have a lot of no pun intended runways still left
Speaker 3: with the existing product set. What are how do they
Speaker 3: what are the costs of launching a brand new product?
Speaker 3: And how do companies think about the cost benefits of
Speaker 3: like when to launch one versus when to just try to,
Speaker 3: you know, get more out of the existing product.
Speaker 4: Yeah, that's that's, you know, a contentcious issue, an important
Speaker 4: area of discussion. I'm kind of an outlier. I don't
Speaker 4: think it would have mattered at all to investors, and indeed,
Speaker 4: there would have been more positives than negatives. And you know,
Speaker 4: if you look at it, this is a company now
Speaker 4: with forty billion a net debt, down from forty five
Speaker 4: or so a couple of years ago. So to start
Speaker 4: a new program would be maybe two billion incremental per
Speaker 4: year in independent research and development funding for you know,
Speaker 4: probably about six years seven years with over could go higher.
Speaker 4: Now that's obviously a drag on shareholder returns, but put
Speaker 4: it in another way. We're now in a situation where
Speaker 4: Airbus is competing, jets are getting hundreds thousands of orders.
Speaker 4: They're losing market share at Boeing, wouldn't Some investors have
Speaker 4: been galvanized by the site of Boeing getting those orders
Speaker 4: with its new jet and said, what a great place
Speaker 4: to park my cash because this is a long term
Speaker 4: growth story. I'm not concerned with dividends and buybacks. I
Speaker 4: just really like the idea. In a land where there's
Speaker 4: plenty of capital available, not a lot of good ideas
Speaker 4: out there, this is a safe bed.
Speaker 3: Well, is there some part of the market, so like, theoretically,
Speaker 3: is there some part of the market that right now
Speaker 3: Boeing would be competing better in if it had a
Speaker 3: different product, or like I mean, I don't know. I
Speaker 3: don't know what the end buyer is. But if you're
Speaker 3: sort of dreaming what they or imagining what that next
Speaker 3: plane would look like, what is the end buyer that
Speaker 3: they're not tapping into that maybe going to Airbus.
Speaker 4: This has been apparent for at least a decade. Basically,
Speaker 4: there's this middle market of about two hundred to two
Speaker 4: hundred and thirty seats, about five thousand nautical miles. It's
Speaker 4: a fragmentation machine. It allows people to bypass crowded hubs
Speaker 4: and fly point to point where they want to go.
Speaker 4: Now right now, Airbus has a license to mint money
Speaker 4: with the A three twenty one Neo. It's not very
Speaker 4: good at that frankly, that mid market, but it's the
Speaker 4: one product you can buy if you're an airline. So
Speaker 4: guess what everyone is buying it. The order book for
Speaker 4: the three twenty one Neo is now about the same
Speaker 4: as the order book for all variants of the seven
Speaker 4: thirty seven Max family. And last year, after Dave Calhoun
Speaker 4: said don't worry, we won't compete in that class, they
Speaker 4: sold a record thirteen hundred of those jets. And what's
Speaker 4: frustrating is it's not a very good jet. You could
Speaker 4: defeat it the way Boeing has always defeated the Boeing
Speaker 4: has had a second mover philosophy. Seven sixty seven, Triple seven,
Speaker 4: seven eighty seven, Triple seven, three hundred R all of
Speaker 4: them were responses, and they all did somewhere between five
Speaker 4: and ten percent better than the jets they went against.
Speaker 4: They won. That's how the company conquered the universe.
Speaker 2: This just reminds me it's kind of ancient history. But
Speaker 2: wasn't there an argument that when Airbus actually started developing
Speaker 2: the eight three twenties, I guess it would have been
Speaker 2: in the nineteen eighties that Boeing could have and probably
Speaker 2: should have, in retrospect, just like immediately killed it and
Speaker 2: gone head to head by developing a new aircraft.
Speaker 4: Yeah. I don't believe that, because the three twenty is
Speaker 4: a good plane, but you know, the response to it
Speaker 4: basically well, it was right in the middle of the
Speaker 4: seven thirty seven, three four, five hundred series, which continued
Speaker 4: to do pretty well, and they replaced it with the
Speaker 4: NG it did amazing. So I'm just you know, this
Speaker 4: is clearly the Max is clearly the last stop on
Speaker 4: the seven thirty seven line, no question of that, and
Speaker 4: it really is having a hard time scaling it up
Speaker 4: to be that middle market machine. Matter of fact, it's impossible,
Speaker 4: so there are limits. But the seven thirty seven intes
Speaker 4: of itself, I think is actually a pretty good product.
Speaker 4: It's how it was executed that's the problem.
Speaker 2: So this was actually going to be my next question,
Speaker 2: but Calhoun says they're not going to develop anything for
Speaker 2: ten years, which could mean that they don't have a
Speaker 2: clean sheet aircraft flying like until twenty forty or something
Speaker 2: like that. And at the same time, Airbus is taking
Speaker 2: massive amounts of market share. The two used to be
Speaker 2: Boeing and Airbus used to be fairly evenly match. That
Speaker 2: is definitely no longer the case. But A, what does
Speaker 2: Boeing do in this situation to catch up? And then
Speaker 2: I guess B is there actually a desire to catch up?
Speaker 4: This looks like a glide slope towards oblivion, because remember
Speaker 4: it's not just the loss of market share, it's also
Speaker 4: the demographics. You know, engineering workforces have that muscle memory
Speaker 4: that needs to be maintained. And it's been since two
Speaker 4: thousand and four that they've launched, since they've last launched
Speaker 4: a clean sheet design. They've done some good work since.
Speaker 4: But again you're talking about an aging engineering workforce that's
Speaker 4: not attracting new people. Well, they have the kind of
Speaker 4: core skills needed to create a new jet in the
Speaker 4: twenty thirties. I have no idea.
Speaker 3: That is such a fascinating point that. I mean, we
Speaker 3: talk about it in some context, this idea of like
Speaker 3: internal no how, but I hadn't thought about this idea.
Speaker 3: If you have nobody, or if it's been decades since
Speaker 3: you've done you've started a plane from scratch, do you
Speaker 3: still have anyone there? What makes a good plane? I
Speaker 3: have no idea. I fly. I don't really pay much attention.
Speaker 3: I never know what kind of aircraft amounta. You know,
Speaker 3: if it gets me there, that's fine. When you say
Speaker 3: it's a good plan or it's not a very good plane.
Speaker 3: When you're talking about the newest airbust one, what makes
Speaker 3: a good plane?
Speaker 4: Well, you know, obviously safety is table stakes get that
Speaker 4: out of the way. But the most important thing is
Speaker 4: to acknowledge that your customers, and you need to talk
Speaker 4: with at least fifteen or twenty of them before launching
Speaker 4: a jet, have incredibly narrow profit margins, which means if
Speaker 4: you can do specific routes for them, that's you know,
Speaker 4: five or ten percent better, you win. That's what happens.
Speaker 3: This is it's about fuel efficiency, the cost of like
Speaker 3: a McCant, like how much repair they need, like.
Speaker 4: Your total operating costs. You know, it's a function of
Speaker 4: fuel efficiency and of course maintainability, but really fuel efficiency. Now,
Speaker 4: revenue two is important, so things like belly cargo, the
Speaker 4: ability to put revenue producing cargo under the hold of
Speaker 4: the jet. Obviously, getting passenger configuration right, that's absolutely key.
Speaker 4: And then there's the extraneous stuff like you know, little frills,
Speaker 4: passenger comfort, you know, blue lights, whatever. That matters a
Speaker 4: whole heck of a lot less than the importance. The
Speaker 4: three twenty one neo is, you know, the latest development
Speaker 4: of that nineteen eighties era a three twenty family. It
Speaker 4: should have bigger wings to do longer routes, and more
Speaker 4: powerful engines. It should have, you know, basically, it should
Speaker 4: be more of a proper mid market jet rather than
Speaker 4: a scaled up one hundred and fifty seater that's trying
Speaker 4: to do the job. Is it catastrophic? No, That's why
Speaker 4: everyone wants it. You know, it's it's good enough. But
Speaker 4: the point is that in an industry where everyone has
Speaker 4: two percent profit margins, if they're super lucky and super good, yes,
Speaker 4: you can beat that by five or ten percent in efficiency,
Speaker 4: probably more like fifteen or twenty I'm thinking at the stage.
Speaker 4: So there's no reason not to build it. And when
Speaker 4: Dave Calhoun said we're not going to do anything new,
Speaker 4: he said, well, we need at least a thirty percent improvement,
Speaker 4: which is complete nonsense in the context of how this
Speaker 4: business actually operates.
Speaker 2: I just I suddenly had a sort of blast from
Speaker 2: the past where I remembered wasn't there a moment in
Speaker 2: I guess it would have been like two thousand and
Speaker 2: seven or two thousand and eight when easy Jet designed
Speaker 2: its own aircraft or said it was going to design
Speaker 2: its own aircraft and it had like little propellers on
Speaker 2: the wings, but like weird propellers. It was the jet
Speaker 2: but also propellers. Am I like completely misremembering that? No?
Speaker 4: And you know, just for comic relief, there's always that
Speaker 4: moment when a discount carrier pretends to actually have engineers,
Speaker 4: which is always adorable.
Speaker 3: Just real quickly when you say the seven thirty seven
Speaker 3: Max family can't really be a great middle market jet.
Speaker 3: What is the constraint there?
Speaker 4: You know it gets this is arcane. But you know
Speaker 4: the clearance under a seven thirty seven wing allows for
Speaker 4: about sixty nine inches of fin.
Speaker 3: We like ourcane. So these details about clearance under the wing,
Speaker 3: this is catnip for us. So good, Oh, go on,
Speaker 3: go okay, these are the details we live for, So
Speaker 3: explain that.
Speaker 4: Ultimately, you know, an engine's fuel efficiency is a function
Speaker 4: of its bypass ratio, the amount of air that goes
Speaker 4: around the core rather than through the core. You want
Speaker 4: a nice big fan and the A three twenty you
Speaker 4: can accommodate eighty one inches of fan. Seven thirty seven
Speaker 4: Max is out if you will hahaha at sixty nine
Speaker 4: and change.
Speaker 2: So I'm conscious. We've been talking a lot about the
Speaker 2: commercial aircraft sign up Boeing, but obviously defense and military
Speaker 2: applications are a huge part of the business. Are we
Speaker 2: hearing anything from I guess the government and specifically the
Speaker 2: depart of Defense about recent travis at Boeing and what
Speaker 2: they could actually mean for US security?
Speaker 4: We should be God, we should be, are we? No?
Speaker 4: It's the strangest thing. You know. Obviously, the Air Force
Speaker 4: in particular has had serious issues with the cost overruns
Speaker 4: and delays on the next generation tanker, the next generation trainer,
Speaker 4: Air Force one, whatever else. But in terms of a
Speaker 4: holistic look at what this means for the US defense
Speaker 4: industrial base in national security, there's been a shocking absence
Speaker 4: of interest.
Speaker 3: Speaking of defense and speaking of the military purposes this.
Speaker 3: Maybe this is like a little tangent, but I think
Speaker 3: it relates to some other things. I've been reading through
Speaker 3: some of your notes in preparation for this conversation. One
Speaker 3: of the things that I did not realize previously is
Speaker 3: how many countries have at some point tried to establish
Speaker 3: a domestic fighter jet operation, and quite a few. I
Speaker 3: don't know how many succeeded. Why has there been so
Speaker 3: much of a proliferation of homegrown attempts to build a
Speaker 3: fighter jet? And then like, why do we still see
Speaker 3: so few companies around the world making inroads at all
Speaker 3: in the commercial space?
Speaker 4: Yeah, great question, Probably because the definition of good enough
Speaker 4: in defense is very different from the definition of good wondering,
Speaker 4: you know, I mean, if you build a good enough
Speaker 4: jet that's for your own you know, well, we can't.
Speaker 4: We have to provide some kind of fallback plan and
Speaker 4: the event we're cut off you know, where there's an
Speaker 4: embargo or what have you, or we just want jobs
Speaker 4: and we're you know, willing to take a few higher
Speaker 4: casualties as a consequence, Yes, the casual you know, there
Speaker 4: could be a problem with higher casualties in the event
Speaker 4: of an actual war. That's why, you know, we look
Speaker 4: at these new emerging players and often say, basically, it's
Speaker 4: the folks in the lab coats battling with the folks
Speaker 4: in the flight jackets. And the folks in the flight
Speaker 4: jack gets want best value for money and the folks
Speaker 4: in the lab codes want to do something cool in country.
Speaker 4: The commercial world is different. It's a global business, and
Speaker 4: if people have two percent margins, they're doing pretty good.
Speaker 4: So if they buy something that's six or seven percent
Speaker 4: worse than the other guy, they they might as well
Speaker 4: go and make children's confectionery or something. It's just totally pointless.
Speaker 2: So obviously Boeing gets money from the government in terms
Speaker 2: of defense contracts and things like that, although sometimes Boeing executives,
Speaker 2: as you pointed out earlier, don't seem to want to
Speaker 2: recognize that fact, But how would you characterize I guess
Speaker 2: the differences in public funding between I have to be
Speaker 2: careful how I phrase this question between Boeing and Airbus.
Speaker 4: Historically, air Bus got a lot more launchade, which enabled
Speaker 4: it to do some mightily stupid things, the A three
Speaker 4: eighty being perhaps the worst product launch in the history
Speaker 4: of the business and theoretically replayable launch. It wasn't what
Speaker 4: it sounded like. You know, yes, if you succeed, you
Speaker 4: repay it, but if you fail, you know, well, sucks
Speaker 4: to be U tax payer. End of story. Boeing didn't
Speaker 4: really get that. You know, there was some NASA technology
Speaker 4: development of funding, but that's pretty that's kind of ecumenical
Speaker 4: throughout the industry and just doesn't move the needle. Airbus
Speaker 4: would counter that Boeing of course had significant defense revenue,
Speaker 4: and Boeing, of course would counter that Airbus was not
Speaker 4: without its defense side, which is also true. So it
Speaker 4: became kind of he said, he said, you know, it's
Speaker 4: just I don't think you can draw any conclusions. It
Speaker 4: is pretty clear that Boeing to a certain extent, did
Speaker 4: best when it ignored the issue altogether. Air Bus got
Speaker 4: enormous subsidies to build a plane called the A three forty,
Speaker 4: which was also a piece of junk. Boeing said, yeah,
Speaker 4: we're just going to do the t and we're not
Speaker 4: going to get government subsidies, and they covered air Bus
Speaker 4: on that. So I think it is if you look
Speaker 4: at purely the numbers, an issue. But in the you know,
Speaker 4: the real world of actually building and launching new products,
Speaker 4: it's a It's a bit of a known issue.
Speaker 3: So as long as we're talking about government support or
Speaker 3: state champion manufacturing companies, I have a very general question,
Speaker 3: which is how does Embra air exist? And I mean
Speaker 3: that in the sense that there aren't a lot of
Speaker 3: advanced manufacturing companies in Latin America. There really aren't very
Speaker 3: many commercial plane makers anywhere in the entire world. We
Speaker 3: know China has been working on it for a long time.
Speaker 3: How is there talk to Can you tell me? Just
Speaker 3: out of my own curiosity? At some point, I want
Speaker 3: to do an episode on this about how Brazil managed
Speaker 3: to produce as a reasonably successful jet making company.
Speaker 4: Oh, we need another episode. I mean I love this topic.
Speaker 2: I would be I would love to just you want
Speaker 2: to We've been talking about.
Speaker 3: A number story. But what is this sort of like
Speaker 3: you know, the short the tweet length version, the tweet.
Speaker 4: Length thro oh god, one and forty characters.
Speaker 2: If you pay, you can go longer.
Speaker 4: Okay, yes, right, certified X or whatever. You know. First
Speaker 4: of all, remember they did a bunch of incredibly smart
Speaker 4: things in the nineteen nineties, but for thirty years before that,
Speaker 4: they were a ridiculous playground for some fascist hunt I
Speaker 4: mean nothing more. They got a couple of right products,
Speaker 4: and then they privatized it became their own company, and
Speaker 4: they they they became just absolutely the best aircraft I
Speaker 4: think company on the on the planet, and by some metrics.
Speaker 4: You know. I always like to joke if this was
Speaker 4: a restaurant, this would be the restaurant where chefs from
Speaker 4: all the other restaurants would go and eat after there.
Speaker 4: You know, it's just has enormous respect and they tend
Speaker 4: to get products right. The other thing they did so
Speaker 4: that they're with that aspect of lock after many decades
Speaker 4: of trying and not doing so good. But then also
Speaker 4: they did the exact opposite of what China's doing. Now.
Speaker 4: What China is doing is saying you've got to transfer
Speaker 4: technology and we're giving you no intellectual property protection, so
Speaker 4: show up with your latest and best from I don't know,
Speaker 4: nineteen seventy nine. And as a result, they're producing perfectly
Speaker 4: crap airplanes. Embraer said, actually, we don't want you to
Speaker 4: transfer technology. We want to integrate what you've got kind
Speaker 4: of a Dell computer model, and you've got IP protection,
Speaker 4: and we're just out to build the best computers for
Speaker 4: a airplane we can. And it's worked brilliantly.
Speaker 2: I just remember the first time I ever went to
Speaker 2: Paris was to attend an embryor event. And it's funny
Speaker 2: you say it's well regarded, because I remember going there
Speaker 2: and they had like it was in a fancy building,
Speaker 2: just sort of being blown away by the optics around
Speaker 2: this particular company. But maybe talk to us about COMAC,
Speaker 2: because I'm conscious we're sort of hitting all these different nationalities,
Speaker 2: but we haven't yet spoken about China. China of course
Speaker 2: making a big push into this particular area in part
Speaker 2: for strategic and you know, security considerations as well.
Speaker 4: Yeah, I mean, in a lot of ways, COMAC is
Speaker 4: sort of an insurance policy against autarchy in the event
Speaker 4: of total decoupling between China and the West. At least
Speaker 4: they may be able to produce their own aircraft. The problem,
Speaker 4: of course, is that nobody had the conversation with President
Speaker 4: she that these aren't really Chinese aircraft. They're Western systems
Speaker 4: and engines and avionics all assembled with Chinese aluminum over them.
Speaker 4: So you know, if there is decoupling, these things die quickly.
Speaker 4: Maybe they'll rectify that by building their entire aerospace industry out.
Speaker 4: That'll take many decades and hundreds of millions of dollars.
Speaker 4: Good luck with that. The other problem with that comeback,
Speaker 4: of course, is it reflects President Cheese desired to basically
Speaker 4: turn the economy away from the private sector and towards
Speaker 4: data owned enterprises, the exact opposite of what Embre Air did.
Speaker 4: So there are so many and it's all right frustrating
Speaker 4: because you look at China, great market, great talent, and
Speaker 4: great resources. The only thing they could be doing to
Speaker 4: screw that up on the aircraft front is what they're doing.
Speaker 3: Wait, so they're bad plans, Oh, they're what's wrong with them?
Speaker 3: Because I will lead like I mean, I know they're
Speaker 3: selling a lot more, but of course they're selling to
Speaker 3: domestic Chinese airlines, so it doesn't say very much. Necessarily,
Speaker 3: they have put in applications. I think they do want
Speaker 3: to theoretically sell into the European market at some point.
Speaker 3: They're trying to get approval. But what is your assessment
Speaker 3: of where these plans fall short or why?
Speaker 4: First of all, selling is one thing, building is another.
Speaker 4: I mean they've been selling for about fifteen twenty years now.
Speaker 3: Okay, they do have some in the air now, so
Speaker 3: what is wrong?
Speaker 4: Yeah, they've they have delivered three see nine one nines
Speaker 4: and about a one hundred or so ARJ twenty one
Speaker 4: regional jets. The ARJ twenty one was the first produced
Speaker 4: mass produced aircraft in China. Jet liner aircraft produced in China,
Speaker 4: and it's massively heavier than where it should be and
Speaker 4: has systems that were introduced in Western jets back in
Speaker 4: the seventies. You know, again a reflection of people's skittishness
Speaker 4: about transferring intellectual property with no intellectual property protection. So
Speaker 4: they're bringing their latest invest from decades ago. Now the
Speaker 4: nine one nine looks a little better. We'll see if
Speaker 4: they build it in significant numbers. They have yet to
Speaker 4: establish the kind of massive global support apparatus which costs
Speaker 4: an awful lot of money. The nine one nine two
Speaker 4: is you know, same design parameters. Bring us your latest
Speaker 4: invest and know we won't protect your IP. So I'm
Speaker 4: having a hard time believing that it will be a
Speaker 4: whole lot better. But again, they could change it all tomorrow.
Speaker 4: They could say we're privatizing, we're giving up protection. All
Speaker 4: we want to do is be like embra or I'd
Speaker 4: be terrified they'd conquer the world.
Speaker 2: This is kind of an unfair question, but would you
Speaker 2: rather fly in a seven thirty seven Max or a
Speaker 2: C nine to one nine.
Speaker 4: You know, at the end of the day, the safety
Speaker 4: of the Max is in the hands of the regulators,
Speaker 4: And yes, the regulators can be under resource, but they
Speaker 4: do their job. And that I think we simply have
Speaker 4: the safety system in the world that speaks to that reality.
Speaker 4: Our regulators do their job, you know. For comic relief
Speaker 4: in all of this, you've got these politicians like JD.
Speaker 4: Vans who've spent a lifetime trying to quote kill the
Speaker 4: government and now saying, what's government doing for me? Why
Speaker 4: isn't it keeping me safe here? When that's a problem. Right?
Speaker 4: They need more resources, pure and simple.
Speaker 2: Actually, this is exactly what I wanted to ask you,
Speaker 2: because we did speak about the FAA a little bit
Speaker 2: with our colleague Pete, but would more resources for the
Speaker 2: regulator help in this instance because there were also accusation
Speaker 2: that like maybe it wasn't understaffing, but maybe it was
Speaker 2: just a too cozy relationship with Boeing.
Speaker 4: You know, it could could easily be. But more resources
Speaker 4: give you more relative power, you know, to explain, Look,
Speaker 4: we're going to be making your life very difficult and
Speaker 4: coming up the works that unless you play a ball now,
Speaker 4: is there that coziness if so, that needs to be
Speaker 4: understood and rooted out. Maybe it's not a resource, Maybe
Speaker 4: it's a cultural thing there too. I don't see how
Speaker 4: more resources couldn't help real.
Speaker 3: Quickly on MBRER because I realized I didn't. I don't
Speaker 3: know this. It's still it's a really tiny company. Who
Speaker 3: is their market?
Speaker 4: Well, they produce what you might call somewhere in between
Speaker 4: regional jets and mainline jets. So you've got regional airlines
Speaker 4: like you know, SkyWest or whoever, and then you've got
Speaker 4: a few mainline carriers here and there that also used.
Speaker 4: It's kind of a no man's land of a market.
Speaker 4: But a really good jet. They also have a significant
Speaker 4: military side, and then they've got a really superb and
Speaker 4: successful business jets side. They decided years ago to get
Speaker 4: into that market and they've been doing really well there.
Speaker 3: On the C nine one nine do we have I
Speaker 3: mean we must, but from a sort of spec standpoint
Speaker 3: when it comes to fuel efficiency, maintenance needs per mile, whatever,
Speaker 3: whatever metric you like to use, do we have good
Speaker 3: data on that and do you have just like a
Speaker 3: sense on like on paper, how it stacks up?
Speaker 4: Not really, no, I mean it has Leap one C
Speaker 4: engines from General Electric working with Saffron under CFM, which
Speaker 4: should be too radically different from the Leap one a's
Speaker 4: on Airbus and Leap one b's on Boeings. But we
Speaker 4: don't know. There's just not enough data, maintainability, no idea whatsoever,
Speaker 4: and the fact that it's only in service an extremely
Speaker 4: small numbers two or three aircraft means we just can't
Speaker 4: for some time. And again it doesn't reflect the establishment
Speaker 4: of a giant support apparatus that they still need to do.
Speaker 4: So no no data whatsoever.
Speaker 3: So expanding through put must be difficult even for Airbus,
Speaker 3: even with a huge order book, because they're probably needs to.
Speaker 3: You know, even if everyone wanted to buy Airbus tomorrow
Speaker 3: and sort of depart Boeing. You know, there's always so
Speaker 3: much you can build it a given factory. How much
Speaker 3: of a constraint is that on sort of short term
Speaker 3: market share gains? And does that put a sort of
Speaker 3: floor under Boeing's market cap the fact that people need
Speaker 3: planes and it's not trivial to just sort of build
Speaker 3: new facilities to expand from an airbus.
Speaker 4: Perspective, absolutely, because remember it's not just the airbus facilities,
Speaker 4: is all their suppliers. Oh yeah, And they've had a
Speaker 4: rough time between you know, all the challenges in the
Speaker 4: industry in the COVID nineteen pandemic and everything else like that,
Speaker 4: so they're having a hard time gearing up. Seventy percent
Speaker 4: plus at the value of a plane comes from the suppliers,
Speaker 4: So it's it's now the cyndy can be yet again
Speaker 4: thinks that Boeing top management says, industry with high barriers
Speaker 4: to entry, high switching cost, real challenge and ramping up
Speaker 4: At Airbus, we've only got a three year time horizon
Speaker 4: from our own standpoint here, So who cares? Customers have
Speaker 4: nowhere else to go but to stay with us as
Speaker 4: we figure out how to ramp up. And when we
Speaker 4: get that, you know, operating cash flow resumed, we'll give
Speaker 4: it to investors. They'll reward us. We can then exit
Speaker 4: and worry about someone else cleaning up after us.
Speaker 2: Wait, how sticky is airline brand loyalty? Because of course
Speaker 2: you do have famous examples. Southwest obviously springs to mind,
Speaker 2: and it's entire fleet of seven thirty sevens. But how
Speaker 2: difficult would it actually be for someone like a Southwest
Speaker 2: to just say, you know what, we're going to move
Speaker 2: to a mixed fleet and we're going to have some
Speaker 2: a three twenties plus seven thirty sevens, or even we're
Speaker 2: going to transition our entire fleet eventually away from Boeing.
Speaker 4: There's no loyalty at all. It used to be that
Speaker 4: there were you know, sort of homogeneity virtues if you will,
Speaker 4: in fleet planning in terms of efficiency, right, efficiency, training, logistics.
Speaker 4: That's all out the window because airlines have realized that frankly,
Speaker 4: the ability to play off two suppliers against each other
Speaker 4: gives you advantages when it comes to negotiating price. So
Speaker 4: and that and the fact that very often airlines are
Speaker 4: virtual anyway, a lot of their maintenance provided by a
Speaker 4: third party player, and ditto for their training, means that, frankly,
Speaker 4: is just not that big a challenge to operate a
Speaker 4: heterogeneous fleet. And if you're like an airline like say Delta,
Speaker 4: that has an in house maintenance department, you're even using
Speaker 4: that as a virtue. You're basically establishing yourself as a
Speaker 4: kind of sustainment center of excellence for a whole variety
Speaker 4: of customers.
Speaker 2: In the business you mentioned price, and of course the
Speaker 2: actual price is paid for aircrafts by airlines tends to
Speaker 2: be a closely guarded secret. So you'll see headlines that say,
Speaker 2: like so and so orders x billion worth of aircraft,
Speaker 2: but that's at the list prices, and almost all those
Speaker 2: prices are adjusted or discounted. What are you hearing about
Speaker 2: discounts on Boeing planes right now? Is that something that's
Speaker 2: happening or could happen in the future.
Speaker 4: We're kind of a poster child for deflation in this business.
Speaker 4: You know, you look at the price paid for an
Speaker 4: A three twenty or seven thirty seven. It's stayed shockingly
Speaker 4: consistent over the past couple decades. A few ups and downs,
Speaker 4: but pretty pretty flat, which means, of course every year
Speaker 4: we're losing a couple percent in inflation. That's not good.
Speaker 4: Now lately Airbus has gotten a bit more pricing power
Speaker 4: because of Boeing's problems, and Boeing has had to incentivize
Speaker 4: people for the massive delays, for the problems, the groundings, whatever.
Speaker 4: So yes, it's very clear that there's a divergence in
Speaker 4: pricing power, but it's in the context of an industry
Speaker 4: that's kind of gotten a bit deflationary over the years.
Speaker 2: So just to sum it all up, I realize we've
Speaker 2: covered a lot of ground in this conversation, but if
Speaker 2: you were to bet, what would you say Boeing's future is,
Speaker 2: how do you see this playing out?
Speaker 4: You know, to quote Joe Strummer, the future is unwritten
Speaker 4: at the end of the day. The biggest mystery here
Speaker 4: is why the board hasn't acted and done the right thing,
Speaker 4: or government or an activist investors or somebody and said, okay,
Speaker 4: people at the top, there are so many people counting
Speaker 4: on you. They're all really good and frankly, you're just
Speaker 4: not very good at your job. Please leave. Why hasn't
Speaker 4: that happened. If it happens tomorrow, they'll be on the
Speaker 4: long road back. We could be having a very different conversation.
Speaker 4: By the end of the decade. They can even return
Speaker 4: to market leadership. If it doesn't happen, they'll lurch from
Speaker 4: crisis to crisis, disaster to disaster, hopefully not fatal ones,
Speaker 4: and it won't be a pretty story in terms of
Speaker 4: revenue and market share.
Speaker 2: All right, Richard abou Lafia, it was so good to
Speaker 2: talk to you after so many years. It was great
Speaker 2: to catch up. Thank you for coming on all thoughts.
Speaker 4: Oh really, my pleasure. Good speaking with you too. Thanks,
Speaker 4: thank you, Richard.
Speaker 3: That was great, and we really at some point let's
Speaker 3: do Yeah, let's do the MBRA air episode because I'm
Speaker 3: like fascinated by that story. And so if you think
Speaker 3: there's a full episode you want to talk about, Okay,
Speaker 3: we'll make it happen.
Speaker 4: You should go there too.
Speaker 2: Yeah, let's go, Joe. I want to say that was
Speaker 2: a fun conversation, but actually it was in some respects,
Speaker 2: but it was also kind of depressing.
Speaker 3: Definitely depressing, but there was a lot in there that
Speaker 3: I found very interesting. Perhaps the most important thing that
Speaker 3: I hadn't really thought about, is the idea of getting
Speaker 3: out of practice of launching a new product. Yeah, because
Speaker 3: the idea that like, okay, internal know how we talk
Speaker 3: about that all the time in terms of just the
Speaker 3: day to day building. But then there's the separate thing
Speaker 3: of every once in a while, maybe once in a
Speaker 3: decade or something, you launch a new product which is
Speaker 3: a different skill, upfront, costs, r and D, all that.
Speaker 3: But if you go too long without doing that, then
Speaker 3: you have no one on the team moved on it.
Speaker 1: No.
Speaker 2: And also just the sheer length of the development cycle
Speaker 2: for aircraft, so you know, the last time Boeing launched
Speaker 2: something was literally decades ago. And now the idea that, well,
Speaker 2: if they don't launch anything in the next ten years,
Speaker 2: then it could actually be you know, you could have
Speaker 2: a whole generation of engineers that basically retire and are
Speaker 2: gone by twenty forty when this thing is actually in
Speaker 2: the air and flying. It's just it's kind of amazing
Speaker 2: the lead times and I guess how much the planemakers
Speaker 2: actually have to think on these super long time scales.
Speaker 2: The other thing I found interesting, obviously, the public funding
Speaker 2: debate has always been a hot topic issue and continues
Speaker 2: to be so. But the idea of well, even if
Speaker 2: there were cultural issues at the FAA, if you gave
Speaker 2: them more resources at a minimum, it might end up
Speaker 2: with like more power for that organization, I think was
Speaker 2: the word Rich used. I thought that was kind of interesting.
Speaker 3: Interesting. You was so negative on the on Comac. That
Speaker 3: was sort of interesting because you just think like all
Speaker 3: these like Chinese manufacturer companies are just gonna eat everyone's lunch.
Speaker 3: Maybe they're not.
Speaker 2: I think that's been a sort of long running question
Speaker 2: with planes for obvious reasons and the safety concerns there.
Speaker 2: But okay, well we definitely need to do an Emberer
Speaker 2: episode and I'm down to go to Brazil if you
Speaker 2: want to, Uh, let's do it. The other thing I
Speaker 2: thought was interesting was he pushed back slightly on the
Speaker 2: clean sheet idea for the Max and the notion that
Speaker 2: Boeing should have designed an entirely new aircraft, which I
Speaker 2: also thought was kind of interesting. And you don't hear
Speaker 2: that often. But in the meantime, shall we leave it there?
Speaker 3: Let's leave it there.
Speaker 2: This has been another episode of the Odd Blots podcast.
Speaker 2: I'm Tracy Alloway. You can follow me at Tracy alloway and.
Speaker 3: I'm Joe Wisenthal. You can follow me at the Stalwart.
Speaker 3: Follow our producers Kerman Rodriguez at Kerman Arman, dash Ol
Speaker 3: Bennett at Dashbot, Kilbrooks at cal Brooks. Thank you to
Speaker 3: our producer Moses onm. For more Odd Lots content, go
Speaker 3: to Bloomberg dot com slash odd Lot for your transcript
Speaker 3: blog in the newsletter and check out a discord Discord
Speaker 3: dot ggshlines.
Speaker 2: And if you enjoy odd Lots. If you find these
Speaker 2: aerospace episodes useful, then please leave us a positive review
Speaker 2: on your favorite podcast platform. And remember, if you are
Speaker 2: a Bloomberg subscriber, you can listen to all of our
Speaker 2: episodes absolutely ad free. All you need to do is
Speaker 2: connect your Bloomberg account to Apple Podcasts. Thanks for listening.