Question

I would like each student to report to the class a current event pertaining to the subject matter they studied in the course. The news will be posted by the student in the discussion forum section. You can find related topics in any business section of a national newspaper, in one of the many financial publications, or on the internet. The Wall Street Journal, The Financial Times, Fortune, Time, and Newsweek are some other sources for information. Please provide the link to the news item, why you found it interesting, and how it relates to a concept you studied in this course. (anything to do with financial accounting, such as bank of canada exploring digital currency or the financial crsis at boeing. ) - Has to be recent and please provide a source! ----So basically find a financial news source such as facebook opening libra, and write why its interesting and how it relates to financial accounting

Answer 1

Selected Topic – Boeing Financial Disaster

Boeing Financial Disaster and Impact on US Economy

In the wake of two disastrous commercial Airline crashes , this has put tremendous pressure on Airline . Boeing’s reduced MAX output is further hurting US export and durable good order , which is drag down $ 2 billion dip in sales of civilian aircraft and spares . First 5 Months of 2019, US exports of commercial aircraft fell 12% vs the same period last year .

In the near term 787 orders the company expected from Chinese Airline have failed to materialize amid the US Trade war with China

As per current scenario , Boeing going to cut nearly 20% production unit . The crisis puts at risk a MAX order book initially valued at $ 600 Mio

If Boeing is unable to recommence deliveries then it will badly impact Domestic and foreign airlines . they have to reduced routes and capacity growth , delay in hiring . This will arrest tremendous financial damage and suspended profit .

MAX was grounded in March . The Chicago based plane maker is now struggling with bad name in global market as well as tremendous blow in financial number .

Boeing take a $ 6.9 Billion financial hit from its 737 MAX crisis .

Quarter Financial Performance + Cash flow Position

Boeing , the US aerospace manufacturer , slippage to its biggest ever Quarterly loss. Revenue of second Quarter down to $ 15.7 billion from $ 24.5 billion It recorded EPS( Earning per Share) loss ( very alarming for Investor) $5.21 as compared with $ 3.73 ( of LY same Quarter) . Overall cash flow position also badly impacted ., which money Boeing generates from operation after subtracting capital Investment .( Impacted cash flow almost $ 1 Billion . According to various analyst , they are expecting more grounded will create more cash flow loss

Reason for Accident

Investigation is still going on relates to on what basis Aviation Administration given green light to the jet – a more fuel efficient version of Boeing workhorse aircraft that has been flying since 1960’s without disclosure to Pilots about new anti stall system , which has been implicated in the two air crash in less than a 5 months time   

Other Airline also equally losing their revenue. Like Southwest Airline , which has 34 Boeing 737 MAX jets in the fleet of about 750 planes , said grounded jets contributed $ 200 Million in lost revenue during Quarter . American Airlines also highlighted that 24 Maxes has cancelled at least 15000 flights , which adversely impact revenue loss of $ 350 Mio

Boeing product cut will create negative impact on US growth ( GDP ) rate .

Tremendous fear factor spread among customer .they are not willing to do journey with Max for extended period of time . Majority of customer is saying they are want to chose different aircraft if given the choice .

Lost ground – Recourse plan :

Boeing still can not say how long it will take to fully implement a fix for the automatic flight control software , to get fix approved by respective Aviation Authority.

Boeing said that it had conducted a dry run of a certification test flight for the 737 MAX .Looks like it will take several more weeks to finish assessing pilot work load and determine training requirement . Market expectation , if no more fresh issue arise then most probably aviation Body will to fly before end of year .