Yes, that's what the president-elect tweeted yesterday about the order to purchase the new $4 billion Air Force One from Boeing. His concern, a way out of line price. Makes sense, since a show room floor 747 costs between $300-400 million. That's a lot of upgrades.
Since then, there has been a lot of dispute about what is behind his belief that the plane is going to be overpriced. We know that the transition was briefed, but "experts" say that it is way too soon to tell.
Anyway, as everyone looks at this, they should not lose sight of the fact that recently Boeing completed an aggressive 3-year $19 billion stock buyback, virtually all of their free cash flow.
The WSJ headline said in part:
"Plane maker’s plans raises concerns about cash flow for future buybacks and R&D"
http://www.wsj.com/articles/boeings-buyback-spending-makes-some-analysts-jittery-1462920092
http://www.wsj.com/articles/boeings-buyback-spending-makes-some-analysts-jittery-1462920092
So, when I saw this I started to wonder:
What if that $19 Billion had been used for R&D investment. Would Boeing be able to produce the new Air Force One more efficiently and save the taxpayers some money? Would be really unfortunate if what was really going on here was a taxpayer funding of distributions to shareholders through higher procurement costs.
And I bet $19 billion of R&D would go a long way to making Boeing more competitive against Airbus.
Just some thoughts.
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