25 Jun Ready for Take-Off
For me, an airplane is more than a piece of metal with wings. It represents perfection and freedom, allowing both men and women to feel like superheroes. Operating an airplane is very empowering, and that is why I personally connect with the story of Boeing.
Three years may seem like a blip on the timeline of the capital markets, but for Boeing, those three years have felt like an eternity. These were the years that saw the company move from the brink of disaster to an unprecedented boom.
In 2019, the aviation industry was rocked by two tragic 737 MAX crashes. These tragedies resulted in the grounding of the 737 MAX fleet worldwide, marking the beginning of Boeing’s darkest hour. The situation was further escalated by the global COVID-19 pandemic, which brought the world to a standstill. An estimated 10,000 planes were grounded, never to return to service, including models such as the Boeing 757, 747, Airbus 340, and McDonnell Douglas MD-80. We thank them for their service.
Enter David Calhoun, a man who, at first glance, seemed more like an accountant than a fearless leader. Yet, it was perhaps this cool-headed, pragmatic approach that Boeing needed most. Drawing from his wealth of experience leading Nielsen, Blackstone, and GE, Calhoun’s hands-off approach has proven to be the antidote to Boeing’s challenges.
The grounding of so many planes presented an unexpected opportunity. Airlines worldwide were faced with an urgent need to update and replenish their fleets. This was a massive task, and there were only two giants equipped to handle it: Boeing and Airbus. The complexity of producing an aircraft is astounding, with close to 500,000 parts in a Boeing 737 alone. It’s this complexity that has allowed just two global companies, Boeing, and Airbus, to carve out a duopoly in the industry.
Today, the airline industry finds itself in a golden era as flight demand soars. As one of the two major players in the industry, Boeing is perfectly positioned to capitalize on this surge in demand. In times of such a strong tailwind, it’s not about being the best but about being present and ready to seize the opportunity. As we look at Boeing’s journey from crisis to resurgence, one thing is clear: under Calhoun’s leadership, the company has managed to weather the storm and chart a course back to success. Fasten your seatbelts as we continue to track Boeing’s comeback.
As a pilot in the Air Force, I was taught to look ahead and strategize accordingly, and I have been applying this concept to my investments as well. As of 2023, Boeing has a total backlog worth $411 billion, consisting of over 5,000 airplanes. So, until Elon Musk comes up with an electric plane, Boeing remains a reliable bet.
If I may quote Bobby Axelrod from “Billions,” in the end, everything is personal. Even in the most impersonal of settings, there is always a human element involved. Dedicated to my brother-in-law and my sister; thanks to them, I became a pilot.
Michael (Miki) Jakoby is the Managing Partner of Defender Funds, a hedge fund investing in U.S markets.