A major Boeing (BA -0.30%) customer is speaking out about the company's woes and the need for an overhaul of the aerospace giant. Investors are understandably alarmed, sending Boeing shares down nearly 5% on Thursday afternoon.
Boeing has had a difficult run over the past few years. The company's 737 MAX, at one point expected to be the best-selling commercial airplane of all time, spent 18 months grounded after a pair of fatal accidents. The investigation into what went wrong exposed a lot of embarrassing details about the company's culture, and led to safety regulators taking a fresh look at a range of Boeing planes.
The company's 787 Dreamliner remains under scrutiny due to concerns about its design, and a new version of the 777 widebody is years behind schedule.
All the delays mean it is hard for airlines and other plane buyers to rely on Boeing right now. On Thursday, that led to a rare public rebuke of the aerospace giant. Dómhnal Slattery, CEO of aircraft leasing firm Avolon, in comments at an industry conference said that Boeing had "lost its way" and that the company culture had become "totally warped."
Slattery, in comments first reported by Reuters, said a leadership overhaul might be needed to fix Boeing.
Slattery did add he has "faith they will figure it out," but the comments laid bare the feelings of a lot of key decision-makers in the aviation business. In 2021, the CEO of Emirates airline warned Boeing needed to get its house in order following delays to the 777. The issue is that, as Slattery notes, the problems seem to go well beyond a simple design flaw and that it appears a broader rethink of the business is needed.
Boeing made new on Thursday as well, announcing it will move its headquarters from Chicago to the Washington, D.C. suburbs. It is a small move that is well short of the revamp that some are pushing for. But perhaps it could be the start of a period of change at Boeing.
The bull case for Boeing is pretty straightforward. The company is half of a global duopoly with Airbus, and with global air travel demand expected to rise by more than 3% annually over the next 20 years, the world is going to need a lot of new airplanes. There should be ample opportunities up ahead for Boeing to grow sales.
Alas, that opportunity has been well known for some time now, and it hasn't stopped Boeing shares from falling by more than 35% over the past year. Investors interested in buying in should be warned that, as Slattery says, Boeing faces a lot of internal headwinds right now. There's no quick fix to what ails this aerospace giant.