Chapter 413: Purchase the 757 production line!
September 17th, 9:00 a.m. local time in the United States.
There is still half an hour before the U.S. stock market opens, and the New York Stock Exchange, which has been closed for a long time, is like a dormant volcano that is about to erupt with its most magnificent energy.
Today the sky is blue with only a few scattered clouds. The sun shines on the prosperous land of New York, especially the bull sculpture in the square in front of the New York Stock Exchange. Under the light, it reflects the metallic luster and reflects its explosive power.
This is the symbol of the New York Stock Exchange and also the symbol of greed of Wall Street as a whole.
There was no hustle and bustle in front of the New York Stock Exchange, with cars and people coming and going, as if it was no different than usual. Not far away, the Hudson River was rippling, and the cold and ruthless Statue of Liberty stood on Liberty Island, looking down on all living things, always maintaining the brilliance of its Western civilization.
Every day she greets countless people's devout gazes, but today, everything has changed. More people are watching the building at 18 Broadway with their naked eyes or through the media.
Although many people expect that there will be a wave of declines after the U.S. stock market reopens, how much it will fall is of great significance.
Because there has never been a similar attack on the local market before, it is hard to tell how much impact this incident will have on the confidence of the capital market, so many people are still waiting and watching. If the market does not fall much on the first day, it means that the impact is controllable, and the centrists who are waiting and watching may be able to hold on. But if there is a big drop on the first day, it is likely to cause a chain avalanche effect, and the subsequent drops will be even more exaggerated.
Not to mention Black Monday in 1987, just over a year ago, the bursting of the US Internet economic bubble also triggered a wave of decline in US stocks. Until today, US stocks have been sluggish for a long time.
Unexpectedly, before waiting for the opportunity of recovery, the US stock market was hit hard again, which shows whether it can withstand it.
In Boeing's New York office building, just five blocks away from the New York Stock Exchange , Boeing President Lance Tamir looks out the window of his office at Wall Street, which exudes the atmosphere of money and luxury.
It seems that this is just a matter of the U.S. stock market. In fact, the performance of the U.S. stock market today also has a great impact on Boeing. Even Lance Tamir left the headquarters and sat in New York.
There is no trace of his former calmness on his face, but rather confusion and loss about the future.
Not to mention that he was a businessman, even the bigwigs on Wall Street who manipulated the financial market all day long couldn't understand it. Lance Tamir was very unsure.
Moreover, Boeing is now facing a huge trouble, the source of which comes from the collision on September 11.
The reason is simple: the two planes are Boeing 767s.
Suddenly, the office door was pushed open and Chief Information Officer Ferris Hayes walked in.
Lance Tamir heard the noise, slowly turned around and looked at Ferris Hayes: "What's the situation?"
"The safety review has been completed, and fortunately there are no major problems. However, we will still accept irregular spot checks in the next two years. If everything is normal within two years, the review will be completely completed." Freese Hayes added: "This is the most generous condition we can strive for."
Lance Tamir rubbed his forehead, and he could feel the nerves in his temples throbbing. Although it had passed the test temporarily, the two-year inspection period was a real pain for Boeing, and would greatly affect its development.
However, according to Ferris Hayes, this is the best outcome.
Ferris Hayes is still trustworthy in his judgment of the incident.
Lance Tamir did not ask any more about the possibility of shortening the supervision period, but called Ferris Hayes over and they both sat down.
“I heard some flights were cancelled?”
As soon as the two sat down, Lance Tamir began to ask questions with an extremely serious expression.
This is a very bad sign, indicating that some airlines are losing their traditional trust in Boeing.
Frith Hayes nodded. "It affects a lot of models, but the most serious one is the 777. So far, 17 777s have been canceled, including 7 200 models and 10 300 models. In addition, some 777 orders are in a state of uncertainty, and the possibility of being saved is not very high. The market analysis department expects that the number of 777 cancellations will be around 23."
"Twenty-three?" Lance Tamir's mouth twitched. Considering the unit price of 777, the total price of these twenty-three aircraft is close to the total amount of the large order of one hundred 737s.
Moreover, the profit margin of Boeing 777 is higher than that of 737. In other words, the profit loss from this wave of cancellations is simply incalculable, which is painful for a giant company like Boeing, especially when Boeing is experiencing a trough.
To add insult to injury, that's all.
"Yes, this cancellation number is relatively conservative, and the number is likely to be higher than this. In addition, a considerable number of 767 orders have also been canceled. However, the number of 767 orders is small to begin with, so the impact is not that big. Relatively speaking, the 737 and 747 are the least affected."
Lance Tamir's blood pressure gradually rose as Frith Hayes spoke. The 767 was in a slightly better situation than the 757, but it was also in a state of decline. Boeing had originally hoped that the 767 would last for another decade or so, squeezing out the last bit of value. Now it seems that the last bit of market life of the 767 in the United States, not to mention overseas, will be greatly reduced.
The United States is now the world's second largest market, and domestic airlines have the largest number of 767s, all of which are approaching retirement. The 9/11 incident may be the reason for airlines to retire a large number of 767s.
After the 767 capacity gap appears, airlines may not necessarily place new orders with Boeing, which will result in customer loss.
At Boeing, civil aviation is not the only business, but it accounts for a high proportion. If civil aviation can no longer hold on, it will still be disastrous for Boeing.
"Do you think it would be helpful if we invited representatives from all the major airlines to hold a symposium?" This was the first time Lance Tamir had encountered such a serious crisis since taking over Boeing. To be honest, he was really a little panicked.
Ferris Hayes could sense what Lance Tamir was thinking, but he had no good solution.
To be honest, the cancellation issue is serious, but there is another huge problem waiting for them. Half an hour later, the U.S. stock market reopened. Boeing's stock should be the worst hit except for insurance stocks, right?
We are in trouble both internally and externally!
"In the final analysis, airlines believe that the world's civil aviation will face a downturn of at least three years in the future. If the current capacity is sufficient during the downturn, or if the service life of some aircraft is extended to make up for the small capacity loss, it would be too extravagant to buy new aircraft such as the 777. It will take at least four or five years for the impact of the collision to completely disappear. By then, they can just buy the 787 directly."
Lance Tamir's lips trembled. "They are ignoring the 777? Skipping the 777? What about the money we invested in the 777?"
Previously, with the launch of the 787 project, the market was extremely optimistic about this dream plane. However, it was still many years before the 787 was officially launched. Therefore, the 777 became a transitional model for the 787 to cope with the growing capacity, especially the demand for ocean-going capacity.
However, once the collision occurs, the world's civil aviation will probably fall into a slump for several years, and the increase in capacity demand will not be obvious.
As such, there is basically no need to purchase 777s to make up for the growth in demand for capacity, and the existing fleet can barely last until the 787 after life extension.
The operating cost of the 787 is much lower than that of the 777, but the price is not much different from that of the 777, so you can just skip the 777 and switch to the 787.
This is certainly a situation that airlines are happy to accept, but for Boeing, it is a bolt from the blue.
Little did they know that Airbus had suffered a setback with the A380. Although the investment in the Boeing 777 was not as large as that in the A380, it was still the largest single investment in Boeing's history. If airlines collectively decided to skip the 777, Boeing would suffer huge losses.
In fact, the airlines did not feel anything special about the fact that the plane involved in the collision was a 767. It was not a 767 that crashed into the aircraft using automatic navigation. The 767 was just a tool. What really made the airlines make changes was the pessimistic expectations for the future development of civil aviation.
Therefore, no matter how much you talk, nothing will change.
"Lance, there's one more thing." Ferris Hayes coughed twice. He didn't want to report so much unpleasant news at once, but there was really no other way.
Lance Tamir's face was as dark as the bottom of a pot: "Anything else?"
"I told you before that the parts supplier asked to dismantle the 757 parts production line..."
"Didn't I tell them to wait a little longer?"
"We can't wait any longer." Freese Hayes gritted his teeth. "There are a total of 38 first-tier suppliers for the 757. 23 of them have clearly stated that the headquarters must terminate the production of the 757 within this month. Otherwise, they will reconsider their cooperation with us. They include Mitsubishi Heavy Industries and Spirit."
Mitsubishi Heavy Industries and Spirit Corporation of the United States are important parts partners of Boeing. Mitsubishi Heavy Industries is responsible for 12 wing sections, 11 center wing box sections and 13 fuselage sections, while Spirit Corporation of the United States is responsible for 43 fuselage sections.
These two companies are not just small parts suppliers, their opinions must be taken into consideration.
Boeing adopts a global procurement strategy. These suppliers are the best solution under various conditions. Once the cooperation stops, it is not easy to find a replacement. Even if you find one, the cost will increase.
If it were normal times, Lance Tamir would have to have a good talk with these parts suppliers about what is primary and secondary. But now Boeing is in trouble, so he is not very confident when he speaks.
Lance Tamir said bitterly: "They really know how to pick the right time."
"They also expect the aircraft market to be relatively sluggish in the future, so they started to shrink their business and manage costs. The 757 production line is a pure burden for them. From the perspective of cost control, closing the production line is also a normal demand."
"Damn it, the 757 final assembly line at our headquarters hasn't even been shut down, and they don't even want to maintain the parts production line?" Lance Tamir roared.
Ferris Hayes did not respond.
Everyone has a low opinion of future trends, so they have to tighten their belts. In the eyes of parts suppliers, the 757 is already a completely dead model, and it is absolutely unacceptable for them to lose money every day to maintain the production line just because the final decision has been delayed at the board meeting, especially when times are tough.
Twenty-three of the thirty-eight first-tier suppliers collectively forced Boeing headquarters to make a decision to shut down 757 production as soon as possible, which is a normal move to seek benefits and avoid harm.
After Lance Tamir calmed down a bit, Ferris Hayes whispered, "Why don't you tell the board that there's no need to make things too awkward with suppliers at this time? The board will seriously consider this matter at this special moment. As for the 757, the outcome was already determined. If it's announced a little earlier, it won't have such a big impact."
The muscles on Lance Tamir's cheeks twitched a few times. He was obviously very angry. When had he ever been forced like this? It was a naked challenge to his authority.
"I..." Lance Tamir was about to speak when there was a knock on the door, followed by the secretary's voice: "Mr. Tamir, Miss Qin from Spring Airlines wants to talk to you, but she doesn't have an appointment."
"Spring Airlines?" Lance Tamir was stunned for a moment, but soon thought of something and blurted out: "Xu Cang?"
Freese Hayes next to him confirmed: "Yes, the surname of one of Xu Cang's female companions is... Qin."
Lance Tamir thought for a moment and said to the door: "Let her in."
Soon, the door was pushed open, and under the guidance of the secretary, Qin Xin entered the office, followed by Xiao Lingyun and Lu Yao. She arrived in New York at two o'clock in the morning last night, and only rested for a few hours before starting to work formally. It was quite tiring.
However, there was no sign of fatigue on Qin Xin's face. On the contrary, she looked excited with a dazzling light flashing in her eyes.
Lance Tamir was quite polite to Qin Xin. Generally, he would not meet anyone without an appointment. Lance Tamir had no interest in Qin Xin's identity, except Xu Cang.
"Ms. Qin, where is Mr. Xu Cang? He said he would come here to sign a contract with me." Lance Tamir raised a finger: "The contract for Cross 777."
Since Xu Cang's incident almost completely overlapped with 9/11, Lance Tamir was so busy recently that he had no time to pay attention to the situation in Japan. However, Lance Tamir also knew that there was an air accident in Tokyo, Japan, but it seemed that a girl had handled the matter and did not associate it with Xu Cang at all.
"Xu Cang is ill, so I'll be here to sign the contract on his behalf."
Qin Xin's voice fell, and Lu Yao beside him showed Lance Tamir and the others a document: "This is Mr. Xu Cang's letter of authorization. Miss Qin Xin can exercise the signing power on his behalf."
Freese Hayes took the letter of authorization and glanced at it: "It seems to be true. I will ask the legal department to verify it later."
"Yes." Lance Tamir nodded and asked his men to do the verification. He immediately put on a smile. After all, she was a client, so he had to be more polite. "Ms. Qin, do you want to talk somewhere else? We have prepared the contract. It will take some time for both parties to confirm the contract. This place is still a bit shabby."
Contracts are often dozens of pages long, so they are definitely not read by the boss. Their professional staff will go through them one by one in advance, so Qin Xin brought Lu Yao and two other consultants to specifically review the contracts.
Once the contract is confirmed, representatives of both parties will be responsible for signing it.
Contract review does take some time, and it's really inappropriate to just stay in this cramped office.
However, Qin Xin obviously didn't care about these. She paused and said, "Mr. Tamil, first of all, I need to express my apologies. Just now, when I was waiting outside the door, I heard some of your words."
Lance Tamir was stunned and looked a little embarrassed. He had indeed spoken loudly just now, and this office was indeed rather simple and the sound insulation was not very good.
"It's okay. It has nothing to do with Miss Qin. I didn't pay attention." Lance Tamir recalled that no important secrets seemed to be mentioned just now, so he didn't take it too seriously.
However, Qin Xin took a step forward, with a dazzling light in her eyes: "Mr. Tamil, many airlines are canceling 777, right? We can help you with this matter."
Lance Tamir was stunned: "Ms. Qin, you..."
However, Qin Xin's voice gradually became solemn: "Is the production of 757 going to be stopped? We can help you with this matter!"
Lance Tamir and Freese Hayes beside him looked at each other, and then heard Qin Xin's last words: "However, these two things are tied together and are one."
