This year, the S. and P. 500 is up nearly 30 percent, and too many companies are up, making it hard to judge u.S. companies of the year. But the title of the worst company of the year in 2019, the two companies deserve it: Boeing and WeWork.
Worst listed company: Boeing
The crash of Lion Air Flight 610 in Indonesia on October 29, 2018, which led to regulatory problems and airline suspensions, began a difficult year for Boeing.
At the beginning of the year, the company had expected the software update to be announced in January, but a report in February said discussions about more training and cockpit alarms had stalled repair efforts.
For whatever reason, both regulators and Boeing have underestimated the danger. On March 10, another Boeing 737 MAX from Ethiopian Airlines crashed, killing 157 people. Eventually, the plane was grounded around the world.
Since then, rumours of mismanagement and inadequate regulation have been swirling. The black box data shows that the anti-stall system MCAS has a problem. Pilots are mostly unaware of and unfamiliar with the new stall-proof system.
The crash has shaken the international aviation community’s trust in Boeing and the Federal Aviation Administration (FAA), and reports of job-stealing cuts have further exacerbated the negative impact.
After several production cuts, Boeing announced on December 16th that it would stop production of the 737 Max. Boeing had expected the plane to fly into the sky by the end of the year, but it now seems a long way off. For Boeing, that has cost about $8 billion so far, and that number is likely to continue to climb. On the other hand, Boeing’s stock has stagnated in a year when the Standard and Poor’s 500 index has risen more than 25 percent.
Now, with 737 Max discontinued and the credit rating downgraded by Standard and Poor’s, it is on the verge of ending the year in trouble. The current suspension could have a long-term impact on Boeing’s profitability and reputation.
An indefinite shutdown of the Boeing 737 MAX will also have a greater macroeconomic impact by 2020, according to a JPMorgan report. “We estimate that Boeing’s recent announcement to suspend production of the 737 MAX indefinitely from January will reduce real GDP growth by about 0.5% in the second quarter of 2020,” one analyst wrote. ”
Worst Private Company: WeWork
Although Boeing has had a rough year this year, another company is even more disgraceful, telling the story of an “emperor’s new dress”.
WeWork has had a bad start to the year, with Sun’s SoftBank investment smaller than planned. The company quickly drew attention to its quirky sideline, ambitions and other projects that seemed to distract attention from the main problem, namely that the company was running out of money.
Adam Neumann, WeWork’s founder and chief executive, has raised a host of questions about his actions, including apparent self-dealing. Neumann’s absolute control of the company’s board of directors allowed him to carry out a series of non-standard financial operations, which many believe are in fact at odds with the company’s interests.
The company had a valuation of about $36bn at the start of 2019, but cut it to $20bn in early September before canceling its IPO. A month after the initial prospectus was filed, WeWork has undergone a roller-coaster ride from star-studded companies to valuations and the downfall of its founders.
Mr Neumann was sacked on September 17th, and the company’s image took a bigger hit in the shadow of mass job cuts. In the end, SoftBank saved WeWork with a rescue package, but it also brought WeWork’s valuation down to $8 billion, just a fraction of its once-glorious glory days.
Although WeWork has replaced its chief executive under SoftBank’s leadership, the financial problems it faces remain severe, and how to raise capital and survive remains the biggest problem.