On Wednesday morning it was announced that Boeing Corporation lost something like $12 billion in 2020. The main blame for this catastrophe was placed, of course, on the pandemic, which has obviously taken a big bite out of the airline industry. The rest of the blame was placed on the extra money ($6.5 billion) Boeing spent to prevent its newest plane, the 777X, from becoming like its last newest plane, 737 Max.
Seattle Times' top aviation reporter, Dominic Gates, wasted no time presenting the loss from the perspective of the company's CEO, Dave Calhoun, who, in a "teleconference call with Wall Street analysts" predictably "called 2020 'a year like no other,'" and who described the business environment as one that presented “unprecedented challenges."
By the end of the day, it was announced that Boeing would move "all 787 Dreamliner production... to South Carolina in March 2021." Yes, that soon.
And so, the report about the biggest losses ever was followed by the confirmation of the Chicago-based company's plan to relocate a large part of its production from a high-wage state to a low-wage state.
The point I want to make in this post is that Boeing incurred its largest net loss not last year but in 2018, when Boeing execs authorized the loss of $20 billion in the form of a share buyback scheme.
Despite growing concerns that the global economy is slowing down, Boeing sent a big message to shareholders it remains upbeat about its business. The board voted Monday to raise its quarterly dividend 20 percent to $2.05 per share in 2019.
Additionally, the Dow component’s board approved a $20 billion stock buyback plan, replacing its prior authorization.
This company spent $20 billion buying back its stock in 2018 alone. $11.9 billion loss is chump change when compared to the sums that were vacuumed over the decade by stock manipulation. https://t.co/uJMpah2XZa
— Charles Mudede (@mudede) January 27, 2021
The argument for buybacks makes no sense. It goes something like this. The company makes some money. But this money has nothing to do. It's just hanging around with its hands in its pockets. To make it useful, the company decides to give it all to shareholders by raising dividends and increasing the company's share value by reducing the number of shares it has on the market.
That's it. Nothing more to it than it. Look behind this argument and you'll find nothing else is there, like a mirror. The reflection of a drifting cloud in a dream has more to it than this reasoning. And yet, in 2018 this flimsy reasoning was more than enough to send $20 billion from Boeing's books to the "grabbing hands" that never stop "grabbing all they can." Nineteen billion dollars also departed in this fashion between 2013 and 2016. These negative transfers were not registered or reported as losses.
But, retroactively, they can be reported as losses. What is so clear today is that Boeing's confidence in the future has the near-zero value of an illusion. In reality, there wasn't that much extra cash to give to "investors." It was, after all, much needed.
For one, the money would have cut the massive losses of 2019 by improving the design and production standards of a product that turned out to be so bad that it killed hundreds of people in Asia and Africa. Boeing also needed a lot of that lost cash simply because the future is often enough not like the past. The execs may want us to believe that good times can only last forever, but such certainty is not one bit compatible with common experience. The Sufi poets certainly knew as much: "This too shall pass."
And so, when the pandemic hit the whole world hard in 2020, a large part of the cash Boeing's executives designated as doing nothing back then (between 2013 and 2018) turned out to be something that's nothing today: a $40 billion loss. If you are familiar with Japanese ghost stories (kwaidan), you will not miss the connection between this sad state of affairs and that fantastic shape-shifting fox, Kitsune, who charms his victims with visions gold that, when the tricky animal vanishes, turns out to be just a bunch of useless straw. For the American public, this straw is lost jobs and tax-backed bailouts.