Recorded in October 2023
This is Zack Fuss, an investor at Irenic Capital, and today we’re breaking down Boeing. Founded in Seattle in 1916 by William Boeing, the company has produced thousands of commercial and military aircraft over the past century. It is an important national and global asset and one-half of arguably the most famous duopoly in business, alongside Airbus.
To break down Boeing, I’m joined by Jon Ostrower, founder and editor-in-chief of The Air Current. You can split Boeing’s business into three segments: commercial, defense, and services. For this discussion, we focus mostly on Boeing’s commercial business, which accounted for nearly 40% of its revenues last year. We talk about the cost and complexity of building new airplanes, how the 737 MAX disaster changed the business, and why the future of commercial planes may look radically different. Please enjoy this business breakdown of Boeing.
Show Notes
(00:00:00) – Introduction
(00:02:38) – (First question) – An introduction to the aerospace industry and Boeing’s role in it
(00:05:41) – Boeing’s business model today
(00:09:52) – How the aerospace industry settled into a duopoly
(00:12:30) – Costs associated with airplane manufacturing
(00:14:02) – The life expectancy of an aircraft
(00:14:46) – Dealing with the supply coordination problem
(00:17:39) – The Boeing and McDonnell Douglas merger
(00:20:51) – Problems Boeing has faced over the past five years
(00:25:44) – How leadership turnover has permeated through Boeing
(00:28:03) – Competitive headwinds Boeing can face
(00:33:10) – How Boeing will grow in the aerospace industry
(00:37:39) – Boeing’s eVTOL strategy
(00:41:42) – What is impacting the profitability of the business
(00:43:38) – The biggest challenge facing the aerospace industry
(00:44:57) – Lessons learned from studying Boeing