Summary
- Both Boeing and the new Raytheon are aerospace and defense titans.
- In the past, Boeing has been the No. 2 prime contractor for military aircraft.
- However, Raytheon, after the recent merger with United Technologies, seems likely to surpass Boeing in defense contracting.
- But does that make it the better buy?
- Looking for a helping hand in the market? Members of The Investor's Edge® get exclusive ideas and guidance to navigate any climate. Get started today »
Boeing (BA)
I wrote one of my recent articles about Boeing (BA) back on Jan. 27 titled “Why I Won't Be Buying Boeing.” I implied but should have ended the title with the words “For Now.” I have owned the company’s shares before and, if BA fixes its problems, I will be delighted to own it once again. But for now, I will still not be buying it. After my current analysis, I find the company today, as then, “in transition.”
For the sake of the nation and Boeing’s workforce I hope the company is successful. When I wrote the article Boeing was $316 a share. It closed today at $189.51.
In that article, I was not piling on to the negative news about Boeing’s much-publicized failure to exercise quality control with the 737 MAX aircraft. That has been the subject of incredulity and disdain for more than a year. I saw no reason to state what had previously been stated.
Instead, I pointed out that Boeing’s problems go deeper than the 737 MAX fiasco. I cannot read a single issue of my Defense News without seeing some new horror with the troubled KC-46 Pegasus program. This is the Air Force’s new tanker aircraft. Our nation’s jet fighters are worthless without fuel. Our nation’s airborne tankers are in desperate need of replacement. Once stalwart Boeing is now $4.6 billion in the red for delivering a product that was declared unsafe by the US Air Force.
In fact, in addition to FOD (Foreign Object Debris) like screwdrivers, wrenches, soda cans and candy wrappers inadvertently left behind in critical components, there have been three “Category 1” deficiencies. These are what the Air Force classifies as problems “which may cause death or severe injury; may cause loss or major damage to a weapon system; critically restricts the combat readiness capabilities of the using organization; or results in a production line stoppage.”
How could such a storied company for more than 100 years fail to exercise the same brilliant engineering and uncompromising quality control that had characterized Boeing for decades?
