Does Boeing still have a place in the Dow Jones index?
The Dow Jones Industrial Average is an icon of the financial world, representing 30 companies that are considered the backbone of the American economy. These companies are supposed to be stable, profitable and fiercely competitive. But in recent years, that characteristic has clearly not been true for Boeing. This raises the question: Does Boeing still belong in this prestigious index?
The answer seems increasingly obvious - no.
The history and evolution of Boeing $BA in the DJIA
Boeing became part of the Dow Jones index in 1987, 90 years after the index was created. For a long time, Boeing was considered an icon of American industry, with a significant position in the global aircraft manufacturing market. But developments in recent years, particularly the problems surrounding the 737 Max, have left a big dent in the company's reputation. Since the Max crashes in 2018 and 2019, the company has been posting long-term financial losses, its profitability is at a low, and investor and customer confidence has been severely shaken.
Financial problems and loss of confidence
Since 2018, Boeing has not recorded an annual profit and cumulative operating losses have reached more than $30 billion. In addition, the company is facing challenges in aircraft production and delivery. After a series of accidents beyond the 737 Max, including a door problem on an Alaska Airlines plane in 2023, Boeing has been the focus of a government investigation and several whistleblowers have called attention to a poor quality management culture.
But the problems don't stop at safety. Boeing is on the verge of having its credit rating downgraded to "junk bond" status, meaning investors consider its bonds to be high-risk. No other company in the DJIA is in a similar situation, which only confirms that Boeing no longer fits the characteristics of a "blue chip", i.e. a strong and stable company.
Competition and the future
Given Boeing's growing difficulties, the question arises as to whether the company should be replaced in the index by a firm that better reflects current trends in the US economy. Lockheed Martin or GE Aerospace are two examples of aerospace firms that have higher profits and a stable market position. In addition, the DJIA's increasing focus on technology firms shows that traditional industrial firms may no longer have a place in the index, as seen, for example, in 2020 when ExxonMobil was replaced by tech giant Salesforce.
Boeing in the economy.
Despite all the problems, Boeing continues to play a key role in the US economy. It is America's largest exporter and employs nearly 150,000 people in the United States. The company estimates that its activities support 1.6 million jobs throughout the supply chain. Boeing is also a key player in the aerospace industry, which is essential to the functioning of global trade and tourism.
Conclusion.
Although Boeing will remain a major player in the aerospace industry, the question of its staying in the DJIA is a valid one. Its current financial situation and shaky reputation do not meet the standards that a company in this index should meet. Given that other major industrial companies such as General Electric have been removed from the index in the past, it is possible that Boeing will soon follow suit. Perhaps it is time for Boeing to be replaced by a company that better reflects the current state and direction of the U.S. economy.
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