Boeing has been on a buying spree lately, quietly acquiring many of the component manufacturers for seats and other key elements that have been creating bottlenecks, reasoning that only it has the money and organisation to make the process work quickly enough.
The decision to boost production isn’t however about delivering more airliners because airlines want them faster.
Adding two per month making it 14 from the current 12, which will happen in January 2019, has a miraculous effect on senior managers bonuses. Not because they’re delivering aircraft. That’s nothing to do with it.
By adding two, it cuts the backlog and means that the date the company can declare its met its costs on the project is much closer – three years closer. By 2022 there will be no accounting for project costs and development. That means the 787 enters a period where other than meet its actual manufacturing cost, it’s making pure profit.
That means the company will make $2.2 billion more per year and that means the stock price rises, and when the stock price rises, Boeing’s C-suite managers make a nice big bonus and pick up more of that valuable stock for themselves.
Boeing’s stock price has been through the roof of late and many think its overly high, but all the time defence contracts keep coming its way and it it can find ways of boosting stock prices, nothing’s going to change – until the inevitable Wall Street crash that’s fast approaching with the US deficit racing to $1 trillion dollars a year and ten times its annual income by 2025.