Trump administration’s largesse may buoy Boeing (NYSE: BA)

Boeing (NYSE: BA) has seemingly done nothing but screw up over the last 10 years. But now the Trump administration may be helping to pull the aerospace giant out of the muck.

It chose Boeing to build the Air Force’s new jet fighter – the F-47, perhaps referring to Donald Trump, the nation’s 47th president. A price wasn’t revealed for the contract, but it could top $50 billion, The Wall Street Journal reports. 

The deal also guarantees Boeing a profit through the project’s development stage. So Boeing stands to take home a major chunk of change. Defense, space and security account for 36% of Boeing’s revenue, commercial aircraft account for 34% and global services 30%.

The company may get another big favor from the Trump administration as well. The Justice Department could help Boeing withdraw from an agreement to plead guilty to deceiving regulators, according to The Journal. The alleged deception took place prior to crashes of Boeing’s 737 Max that killed 346 people in 2018-19.

Boeing certainly can use the help. It has suffered problems with a wide variety of commercial, defense and space vehicles in recent years. The stock has tanked, dropping 34% in total over the last five years.

‘If it’s not Boeing, I’m not going’

For decades, Boeing was prized for the quality and safety of its planes. There was a popular saying: “If it’s not Boeing, I’m not going.” The question, then, is what caused the meltdown. It seems to be a classic case of a company losing its way as its corporate culture went south.

The culture shifted away from Boeing’s focus on engineering quality toward a focus exclusively on short-term profits. The shift came after the company bought competitor McDonnell Douglas in 1997. That company’s executives took control of the company, and they implemented the change.

Harry Stonecipher, a former McDonnell Douglas CEO who led Boeing from 2003-2005, famously said: “When people say I changed the culture of Boeing, that was the intent, so that it’s run like a business rather than a great engineering firm.”

But it was being a great engineering firm that made Boeing a great business. So the de-emphasis of top-shelf design and commitment to safety sent the company into a nose-dive. The whole idea was to turbocharge the stock. But since the beginning of 1998 it has gained 283%, compared to 489% for the S&P 500.

The company’s current CEO Kelly Ortberg has acknowledged Boeing’s lapse in corporate culture and vowed to make reforms. Whether he can bring the culture back to what it was remains to be seen, but the helping hand of the Trump administration may give Boeing a boost.