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Boeing (BA) Investment Risks

Investment Risk Boeing is heavily dependent on commercial airlines and their financial stability. As airlines earn more profits they expand their network and fleets, replace older planes with newer ones resulting in more orders for Boeing. does run the risk of failing to satisfy The company performance or reliability requirements. Recently, the 787 made headlines due to a lot of negative publicity and finally when it was grounded on FAA directives on January 16, 2013. On April 19, 2013 FAA allowed Boeing to resume deliveries of the 787 after they had fixed its battery problems. Changes in level of US govt. defense spending or overall acquisition priorities could negatively impact Boeing. Defense spending will be reduced by $54 billion in 2014. Further sequestration will cut down around $1 trillion from the defense budget in the next 10 years. What to cut? Department of Defence Spending, $bn (constont 2013 dollors) Includin BCA caps and sequester, $bn Active duty troops, m 800 F'CAST 3 600 400 200 1948 60 70 80 90 2000 10 21 Sources: Department of Defence; Congressional Budget Office; Centre for Strategic and International Studies US government contracts accounted for 33% of revenue in 2012. New procurement regulations, or changes to existing requirements, could increase BA's compliance costs or otherwise have a material impact on the operating margins of BA's BDS business. 70% of BDS revenue in 2012 from fixed-price contracts which could be subject to losses due to cost overruns as selling price is decided at the time of order. Raw materials used in the production of planes such as aluminum, titanium and composites face the risk of supply shortages or interruptions since there is only a single source for these for Boeing. BIDNESS SOURCES: Company Data, SEC filings, Bloomberg Professional Services Etc. DISCLAIMER: Bidness Etc(TM) and related marks are owned by Bidness Etc. Any other trademarks appearing on this website are the property of their respective owners, and are not used to indicate the origin of goods or services offered or provided by Bidness Etc herein or to suggest approval for or affiliation with Bidness Etc.

Boeing (BA) Investment Risks

shared by jodinajospeh on Apr 17
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Boeing depends heavily on the outlook and performance of the commercial airline industry and government military spending across the world. As such, the company faces the risk of declining commercial ...

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