This piece explains why Boeing is in trouble. The author says Boeing's 1997 merger with McDonnell Douglas shifted its culture from engineering to finance, causing the 737 MAX crisis and supply chain issues. He warns Boeing and Airbus face bigger threats from themselves than from newcomers like COMAC. Key holdings: Boeing (737 MAX once made 42/month, but revenue fell from over $100B to ~$60B), Airbus (backlog ~6000-7000 planes, but supply chain challenges), COMAC (C919 only 2 in service, no overseas certification).
Boeing, founded in 1916, together with Airbus forms the world's most prominent duopoly. Its business is divided into three segments: commercial, defense, and services, with the commercial segment accounting for nearly 40% of last year's revenue. This episode focuses on the high costs and complexity
Jon Ostrower (Founder and Editor-in-Chief of The Air Current) dissects Boeing: Commercial aircraft manufacturing is "the most complex industrial task undertaken by humanity," and Boeing's 1997 merger with McDonnell Douglas fundamentally altered the company's culture—shifting from an engineering-driven focus to a financial one. This cultural mutation is the root cause of a cascade of subsequent problems, including the 737 MAX crisis and supply chain breakdowns. Ostrower's core thesis is that the greatest threat to Boeing and Airbus does not come from new entrants like COMAC, but from within—a series of compounding missteps are eroding their fundamental capability as "national strategic assets."
Ostrower believes that the complexity of commercial aircraft manufacturing far exceeds public imagination, and every link must operate flawlessly.
Ostrower explicitly identifies the 1997 merger between Boeing and McDonnell Douglas as a turning point in the company's fate, arguing that it fundamentally altered Boeing's corporate culture.
Ostrower argues that the MAX crisis exposed the systemic risks accumulated under Boeing's "faster, better, cheaper" logic, but the company's core strategy has not changed as a result.
Ostrower believes that the barriers to entry in the commercial aircraft manufacturing sector are extremely high, and that COMAC's rise will be slower than many expect, though geopolitical factors are reshaping the competitive landscape.
Ostrower believes the next 5–10 years will be the most exciting period for the aerospace industry in 50 years, but environmental pressure and technological change are challenging the entire industry's business models.
| Position | Analyst Stance | Key Data |
|---|---|---|
| Boeing | Risk Warning (cultural issues, supply chain challenges, geopolitical risks) | 737 MAX monthly production once reached 42 units; 787 development cost overrun of 300%-900% (original budget <$5 billion); peak revenue exceeded $100 billion, now approximately $60 billion |
| Airbus | Neutral (also faces supply chain challenges, but no post-MAX crisis legacy) | Order backlog of approximately 6,000-7,000 units; A320 entered service in 1987-88 |
| Spirit AeroSystems | Risk Warning (Boeing's largest supplier, facing financial difficulties) | Created after Boeing divested its Wichita/Tulsa plants in the early 2000s |
| COMAC | Neutral to Cautious (long-term threat, but slow progress) | Only 2 C919s in operation; not certified outside China |
| Bombardier | Failure Case (technologically superior but failed to gain market traction) | C Series absorbed by Airbus in 2018 |
| Mitsubishi | Failure Case (regional jet project shelved) | Project terminated |
| Wisk (Boeing's wholly-owned subsidiary) | Bullish (autonomous flight technology validation platform) | Boeing invested over $450 million |
| Jet Zero (Startup) | Under Observation (blended wing body design) | Headquarters in Long Beach |
1. Ostrower’s definition of aircraft manufacturing complexity: “This is the most difficult industrial task for humanity”—precision to one-thousandth of an inch, supply chains reaching 4-6 layers deep, hundreds of aircraft produced monthly, with every link required to function perfectly, yet profit margins are only in the single digits.
2. Ostrower’s characterization of the 1997 merger: “McDonnell Douglas leadership brought a Jack Welch-style financial mindset”—Boeing transformed from an engineering company into a “financial instrument,” divesting core manufacturing capabilities (creating Spirit AeroSystems). This cultural genetic mutation is the root cause of all subsequent problems.
3. Ostrower’s quantification of the 787 cost overrun: “The original budget was less than $5 billion, with final costs estimated between $14 billion and $60 billion”—an overrun of 300%-900%, directly leading Boeing to abandon a new single-aisle aircraft and instead modify the 737 (i.e., the MAX).
4. Ostrower’s attribution of the MAX crisis: “If MCAS did not exist, neither of these two accidents would have occurred”—the system relied on a single sensor, and the design flaw was the direct cause of the accidents, but the deeper cause was prioritizing speed under the “faster, better, cheaper” logic.
5. Ostrower’s assessment of the competitive landscape: “One of the hardest things about entering this market is the need for sovereign support”—the Bombardier C Series (technically superior but failed) and the Mitsubishi Regional Jet (now shelved) prove that challenging the duopoly is nearly impossible without sovereign backing.
6. Ostrower’s evaluation of COMAC: “China will become part of the duopoly over the coming decades, but at a slower pace than people imagine”—only 2 C919s are in operation, and it has not received certification outside China, but geopolitical factors (China being the first to ground the MAX and delaying its return by years) have already had a material impact on Boeing.
7. Ostrower’s interpretation of Boeing’s autonomous flight strategy: “Any next-generation new aircraft will have significant autonomous flight capabilities”—Boeing is validating unmanned technology through its wholly owned subsidiary Wisk (with over $450 million invested), and the core driver is the long-term trend of pilot shortages.
8. Ostrower’s ultimate judgment on the industry’s future: “By 2033, the face of air travel will not look like it does today”—sustainable aviation fuel (4-5 times more expensive than conventional jet fuel), new configuration demonstrators (first flight in 2028), open rotor engines, and other transformations are all happening simultaneously, and the cost of each technological leap is increasing.