Good morning, MBA readers,
Boeing weathered one of its worst years on record in 2019. Following two fatal crashes, agencies around the world grounded the company’s best-selling jet, forcing Boeing’s biggest airline clients to cancel hundreds of flights. Throughout the year, the company continued to push back its timeline for getting the 737 Max reinstated. To rectify its relationship with the airlines, Boeing paid nearly $5 billion in compensation for their financial losses. After all that, the company posted a loss of $636 million for 2019, its first annual loss since 1997 and a dramatic drop from 2018, when Boeing turned a profit of $10.5 billion.
And yet any light at the end of this tunnel could still be months away. On Tuesday, Boeing reported zero new orders for January, the first time that’s happened in 58 years. Plus, the company has continued to accumulate billions of dollars of debt, which is projected to swell to at least $32 billion this year. For now, Boeing will hope to ride out the storm as it awaits the 737 Max’s return to the air — which federal regulators recently said could happen before mid-year.
Scroll down for more on Boeing’s woes and other top business stories of the day.
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Bullard optimistic about 2020 economy
The president of the Federal Reserve Bank of St. Louis said the economy should avoid a recession this year in an optimistic speech Tuesday. He said the main questions of the year revolve around how global manufacturing will respond to trade policy, how interest-sensitive sectors will respond to 2019 central bank policy changes and whether the coronavirus is contained. (St. Louis Business Journal)
Business groups push for Medicaid expansion
Kansas City’s Chamber of Commerce, Civic Council and United Way all spoke Tuesday in support of Medicaid expansion in Missouri, claiming it will help the state grow. The three groups said expansion would bring health care to over 230,000 Missourians working in jobs without health insurance. (WDAF)
Monsanto blames fungal disease for peach farmer’s problems
Monsanto lawyers said during trial Monday that the irritant that killed trees on Missouri’s largest peach farm wasn’t the herbicide dicamba drifting from a neighboring farm, but rather was a fungal disease. Experts retained by Monsanto agreed. Last week, experts retained by the farm’s counsel said the damage was caused by dicamba. (Midwest Center for Investigative Reporting)
AdventHealth cuts ties with Cerner
AdventHealth, one of the nation’s largest health systems, dropped Cerner’s electronic health record and revenue cycle management system to switch to a rival. The 80,000-employee nonprofit has used Cerner’s system since 2002. It is unclear how the departure will affect Cerner’s earnings. (Kansas City Business Journal)
Missouri bill would ban in-state tuition for some students
Missouri senators debated a bill Tuesday that would ban students who are living in the state without documentation from receiving in-state tuition. A total of 17 states have adopted laws allowing in-state tuition for such students, while at least three have banned the practice. (Associated Press)
Developers ask for millions in subsidies for SLU campus project
Cullinan Properties is seeking $71 million in subsidies to help finance a $327 million complex it plans to develop on 14 acres between St. Louis University’s north and south campuses. The plans call for office, restaurant, apartment and hotel space. (St. Louis Post-Dispatch)
St. Louis County to pay gay police officer over $10 million to settle discrimination lawsuit
Lt. Keith Wildhaber sued in 2017, saying he had been passed over for promotions because he is gay. He later claimed retaliation for the first suit. The county will pay the $10.25 million settlement through its general revenue, County Executive Sam Page said. (KSDK)
California geospatial company partners with SLU
California-based geospatial information company Esri announced a partnership with St. Louis University on Tuesday in what officials say is an opportunity to form tighter links between the two and the National Geospatial-Intelligence Agency. SLU launched its geospatial institute, GeoSLU, last year. (St. Louis Business Journal)
Capital Innovators moves to bigger office, plans new investments
The St. Louis-based startup accelerator has relocated to a new 2,500-square-foot office in Downtown West, up from around 750 square feet it occupied in the Cortex innovation district. Capital Innovators is also raising a new fund to provide Series A investments between $500,000 and $1 million. The new headquarters will provide new portfolio companies space to work. (St. Louis Business Journal)
New York retiring last St. Louis-built subway cars
New York City’s Metropolitan Transit Authority will retire the system’s last remaining subway cars made in St. Louis. The city bought around 400 cars from St. Louis Car Co. in 1969, retiring most around 2006. The company was one of the largest in the St. Louis area in the 1950s, closing in 1973. (St. Louis Post-Dispatch)
Say that again
“Adjudication of antitrust disputes virtually turns the judge into a fortuneteller. In the final analysis, at the point of sharpest focus and highest clarity and reliability, the adversaries’ toil and trouble reduces to imprecise and somewhat suspect aids: competing crystal balls.”
That’s U.S. District Judge Victor Marrero, who on Tuesday ruled in favor of Sprint and T-Mobile’s proposed $26 billion merger in an antitrust case brought by 14 attorneys general, the Kansas City Business Journal reports. In his filing, Marrero articulated his role as a “judicial reading of the future,” adding that he could not predict whether the merger would end up boosting or hurting competition in an already tightly held telecommunications industry. Therefore, Marrero said, his ruling was less based on “mathematical equations, analytical modeling and the technical data offered by litigants” and more focused on a judgment that “weighs conflicting action of human conduct.”
That was Boeing’s tally of new orders — or lack thereof — last month, marking the first time the aircraft maker has come up empty-handed in a month since 1962, Reuters reports. During the same period last year, the company booked 45 orders after cancellations and delivered 46 planes. Much of that decline came from Boeing’s inability to sell its once best-selling jet, the 737 Max, which remains grounded after two fatal crashes. Airlines have been forced to pull the plane from their flight schedules, and Boeing’s debt doubled to $27.3 billion last year. Fitch Ratings expects that figure to peak between $32 billion and $34 billion after a continued rise in the first half of 2020. These trends could change for the better once Boeing is able to get federal approval for the plane to fly again, which regulators say could happen before mid-year.
Ohhhhhhh this T-Mobile / Sprint decision is embarrassingly bad
— nilay patel (@reckless) February 11, 2020
That’s Nilay Patel, editor-in-chief of technology news site The Verge, offering his take on Tuesday’s court blessing for Sprint and T-Mobile’s proposed union. Patel joined a chorus of commentators criticizing Judge Victor Marrero’s ruling that he could not “endorse” either side’s argument on the net effect of the merger. “Faced with text messages and emails between TMobile and Sprint executives saying the merger will help raise prices, the judge says he has decided those messages are not really important,” Patel wrote in a follow-up tweet. On the other hand, T-Mobile CEO John Legere took to Twitter proclaiming victory and vowing that “The new Supercharged Un-carrier will provide benefits to ALL customers & drive competition!” In a later tweet, the colorful executive highlighted the combined firm’s commitment to providing nationwide 5G service, “better service and prices” for consumers and 11,000-plus new jobs by 2024.
Hello, my name is
The troubled rising star in fast food still plans to open two new restaurants in the Kansas City area this year, the Kansas City Business Journal reports. BurgerIM made waves in 2018 when it was named the fastest-growing burger chain in 2018 by Franchise Times. At that point, the California-based company had just 80 locations, but that number rocketed to about 200 by 2019. However, in December BurgerIM told its franchisees that it hired an insolvency counsel and was considering filing for Chapter 11 bankruptcy. Since then, it has closed 100 locations. Yet BurgerIM is moving forward with two locations in the Kansas City area, according to two local realty groups. Founded in Israel, BurgerIM is known for its gourmet mini-burgers, and it offers patties made from eight different types of meat.
It’s been a pleasure doing business with you this morning.