Motley Fool Money Episode Summary: "Boeing Cruising to New Altitudes?"
Release Date: June 26, 2025
Hosts: Dylan Lewis, Ricky Mulvey, and Mary Long
Episode Title: Boeing Cruising to New Altitudes?
1. Introduction & Market Highlights
Tim Byers kicks off the episode by discussing significant market movements and policy developments. One of the major headlines is the speculation surrounding President Trump's potential nomination to replace Federal Reserve Chairman Jerome Powell. According to Tim, "The President could announce his choice for a successor as early as this summer," despite Powell having 11 months left in his term (00:28).
Transitioning to corporate earnings, Tim highlights Micron's impressive Q3 performance. The company reported a 15.5% sequential and 36.6% year-over-year revenue increase, reaching $9.3 billion. Pre-market trading saw Micron's stock rise by approximately 1.5%, with projections suggesting a revenue of $10.5 billion for the next quarter. "AI is a thing and is still a thing," Tim remarks, emphasizing the ongoing relevance of artificial intelligence in driving growth (01:20).
2. AI Advancements and Corporate Moves
Lou Whiteman comments on the competitive landscape in the AI sector, particularly the rivalry between Meta and OpenAI. Tim shares news about Palantir partnering to develop AI software for nuclear plant operations, introducing the Nuclear Operating System (NAS). Lou humorously references the acronym, saying, "When I hear NAS, I think like cars going really, really fast," suggesting a dynamic shift in AI applications (02:14).
In a notable move, Mark Zuckerberg continues to bolster Meta's AI capabilities by recruiting three former OpenAI researchers: Lucas Beyer, Alexander Kolestikov, and Xiao Zhai. Lou expresses enthusiasm for this development: "These are the Lakers and Celtics of the AI world. Meta versus OpenAI. We love it," underscoring the excitement around this high-stakes competition (02:28).
3. Innovations from the Paris Air Show
The discussion shifts to the recent Paris Air Show, where several groundbreaking technologies were unveiled.
a. CFM Rise Engine
Tim introduces the CFM Rise engine, describing it as a hybrid between a prop engine and a jet, boasting a 20% fuel efficiency improvement. Intrigued by the innovative design, he asks Lou if this engine could be a game-changer for the airline industry (03:08).
Lou acknowledges the engine's potential but notes the challenges ahead: "The idea has been around for decades... composite materials are better. We've made other advancements. So it is getting towards realistic," he explains. He highlights the need for rethinking aircraft design to incorporate such technologies, pointing out safety and weight considerations. While Pratt and Whitney opts for enhancing existing turbofan efficiencies, CFM, a joint venture between GE Aerospace and Safran, aims to commercialize the Rise engine by the early 2030s. "But it's really cool looking. So I'm with you. I'd love to see it on an airplane," Lou concludes (03:08).
b. Rolls Royce in Commercial Aviation
Tim brings up Rolls Royce's involvement with Riyadh Airlines, which has selected their engines for its Airbus A350 fleet. Reflecting on his childhood memories of flying on DC3 aircraft powered by Rolls Royce engines, Tim inquires about the company's current standing in the commercial air market (04:34).
Lou provides a realistic outlook, stating, "They're a decent third, but they are definitely third. GE Aerospace has more than half of the market... Pratt and Whitney is also ahead of Rolls Royce." He elaborates that Rolls Royce focuses on large widebody aircraft like the A350 and 777, which constitute less than 40% of the global fleet and are experiencing slower growth. Despite limited spare parts sales and servicing revenue, Lou recognizes Rolls Royce as a quality manufacturer poised to benefit from ongoing aviation needs. "European aerospace stocks have gotten a lot of attention for good reasons. It's a double right now. I don't know if I'd be jumping in right now," he advises, noting the company’s favorable positioning for future performance (04:34).
c. Textron and the Beechcraft King Air
Shifting focus to Textron, Tim discusses the introduction of a new multi-mission version of the Beechcraft King Air. Enthusiastic about its versatility for inter-island flights, Tim wonders if Textron (Ticker: TXT) deserves more attention from investors (06:13).
Lou agrees that Textron merits consideration but cautions that the company has faced challenges: "Textron has made themselves a tough company to love in recent years. Every quarter it seemed inevitably one of those businesses just laid off and earnings followed," he explains. However, he notes recent improvements, especially with the potential revival in business jets as companies replace aging fleets. Lou also mentions Bell Helicopter's recent success in securing a competition to replace the Blackhawk helicopter, further tying back to Rolls Royce engines. "Textron, they traded a discount to most big aerospace names. I think they are set up well for at least some of their most important businesses like Bell and Cessna to outperform," Lou concludes, suggesting a cautiously optimistic outlook (06:13).
4. Boeing vs. Airbus: Paris Air Show Performance
A central theme of the episode is the comparative performance of Boeing and Airbus at the Paris Air Show.
Tim sets the stage by reflecting on Boeing's turbulent past few years, including the recent Air India 787 Dreamliner crash. He contrasts this with Airbus, emphasizing the longstanding duopoly in the commercial aircraft market (08:23).
Lou provides insightful analysis, stating, "Boeing's actually outperforming Airbus for the year and they may be on track for a thousand or so orders," despite the ongoing challenges such as regulatory restrictions stemming from the 737 Max issues and mounting debt. He highlights the unprecedented commercial aircraft cycle, with a backlog of nearly 13,000 planes extending into the 2020s and 2030s. "If you are patient and you do believe that the worst is behind it, there's a pretty compelling case for Boeing to make gains as the balance sheet heals and as they just get back to normal in the face of all this demand," Lou advises (09:07).
Tim probes further into Boeing's response to the tragedy and its long-term design capabilities. Lou acknowledges the necessary time to investigate the crash but expresses concerns about Boeing's future: "One of my biggest fears about Boeing long term is that's their last clean sheet design. They have not sat down a group of engineers in a room and designed a plane since the Dreamliner," he warns, emphasizing the importance of innovative design for sustained competitiveness (12:22).
5. Airline Trivia and Air Traffic Control Modernization
Transitioning to a lighter segment, Tim introduces an airline trivia game focusing on the number of towers guiding aircraft across U.S. airspace. Lou confidently estimates the figure, but Tim reveals the correct number is 648, slightly over Lou's estimate of 550 (14:52).
Wrapping up the episode, Tim and Lou delve into the long-term investment opportunities in modernizing the U.S. air traffic control system. Lou elaborates on the outdated technology still in use, such as "Windows 95 and in some cases DOS systems," and the complexities involved in overhauling the system. He points out the involvement of multiple contractors and the slow, expensive nature of such projects, while recognizing the significant funding requirements (16:17).
Lou remains optimistic, stating, "We will get there. It's just really hard," suggesting that the modernization presents a potential investment opportunity once advancements are realized (16:17).
6. Closing Remarks
Tim thanks Lou for his valuable insights and wraps up the episode, reminding listeners to stay informed and patient regarding long-term investments in the aviation sector.
Key Quotes from the Episode
- Tim Byers on Micron's AI impact: "AI is a thing and is still a thing." (01:20)
- Lou Whiteman on AI rivalry: "These are the Lakers and Celtics of the AI world. Meta versus OpenAI. We love it." (02:28)
- Lou Whiteman on the CFM Rise engine: "We need to rethink aircraft design. There's a lot of safety considerations, weight considerations." (03:08)
- Lou Whiteman on Rolls Royce: "Rolls Royce is a quality manufacturer, but they are limited. They only make engines for these big widebody like the A350 and the Dreamliner, the 777, that's a small part of the overall market." (04:34)
- Lou Whiteman on Textron: "Textron has made themselves a tough company to love in recent years." (06:13)
- Lou Whiteman on Boeing's backlog: "This is maybe the greatest commercial aircraft cycle we have ever seen in the history of the business." (09:07)
- Lou Whiteman on Boeing's future designs: "One of my biggest fears about Boeing long term is that's their last clean sheet design." (12:22)
- Lou Whiteman on air traffic control modernization: "We are using Windows 95 and in some cases DOS systems... It's just a really complicated problem." (16:17)
Conclusion
In this episode of Motley Fool Money, Tim Byers and Lou Whiteman provide a comprehensive analysis of the current state and future prospects of the aviation industry, emphasizing innovations from the Paris Air Show, the competitive dynamics between Boeing and Airbus, and the critical need for modernization in air traffic control systems. The discussion intertwines market news, technological advancements, and strategic corporate moves, offering listeners a nuanced understanding of the factors influencing investment opportunities in the aerospace sector.