After spiraling from crisis to crisis over much of the past seven years, Boeing is stabilizing under CEO Kelly Ortberg\u2019s leadership.<\/p>\n
Ortberg, a longtime aerospace executive and an engineer whom the manufacturer plucked from retirement to fix the problem-addled company last year, is set this week to outline significant progress since he took the helm a year ago. Boeing reports quarterly results and gives its outlook on Tuesday.<\/p>\n
So far, investors are liking what they\u2019ve been seeing. Shares of the company are up more than 30% so far this year.<\/p>\n
Wall Street analysts expect the aircraft manufacturer to halve its second-quarter losses from a year ago when it reports. Ortberg told investors in May that the manufacturer expects to generate cash in the second half of the year. Boeing\u2019s aircraft production has increased, and its airplane deliveries just hit the highest level in 18 months.<\/p>\n
It\u2019s a shift for Boeing, whose successive leaders missed targets on aircraft delivery schedules, certifications, financial goals and culture changes that frustrated investors and customers alike, while rival Airbus pulled ahead.<\/p>\n
\u201cThe general agreement is that the culture is changing after decades of self-inflicted knife wounds,\u201d said Richard Aboulafia, managing director at AeroDynamic Advisory, an aerospace consulting firm.<\/p>\n
Analysts expect the company to post its first annual profit since 2018 next year.<\/p>\n
\u201cWhen he got the job, I was not anywhere as near as optimistic as today,\u201d said Douglas Harned, senior aerospace and defense analyst at Bernstein.<\/p>\n
Ortberg\u2019s work was already cut out for him, but the challenges multiplied when he arrived.<\/p>\n
As the company hemorrhaged cash, Ortberg announced massive cost cuts, including laying off 10% of the company. Its machinists who make the majority of its airplanes went on strike for seven weeks until the company and the workers\u2019 union signed a new labor deal. Ortberg also oversaw a more than $20 billion capital raise last fall, replaced the head of the defense unit and sold off its Jeppesen navigation business.<\/p>\n
Ortberg bought a house in the Seattle area, where Boeing makes most of its planes, shortly after taking the job last August, <\/em>and his presence has been positive, aerospace analysts have said.<\/p>\n \u201cHe\u2019s showing up,\u201d Aboulafia said. \u201cYou show up, you talk to people.\u201d<\/p>\n Boeing declined to make Ortberg available for an interview.<\/p>\n Boeing\u2019s leaders hoped for a turnaround year in 2024. But five days in, a door-plug blew out of a nearly new Boeing 737 Max 9 as it climbed out of Portland. The almost-catastrophe brought Boeing a production slowdown, renewed Federal Aviation Administration scrutiny and billions in cash burn.<\/p>\n Key bolts were left off the plane before it was delivered to Alaska Airlines. It was the latest in a series of quality problems at Boeing, where other defects have required time-consuming reworking.<\/p>\n Boeing had already been reeling from two deadly Max crashes in 2018 and 2019 that sullied the reputation of America\u2019s largest exporter. The company in May reached an agreement with the Justice Department to avoid prosecution stemming from a battle over a previous criminal conspiracy charge tied to the crashes. Victims\u2019 family members slammed the deal when it was announced.<\/p>\n For years, executives at top Boeing airline customers complained publicly about the manufacturer and its leadership as they grappled with delays. Ryanair CEO Michael O\u2019Leary told investors in May 2022 that management needed a \u201creboot or boot up the arse.\u201d<\/p>\n Last week, O\u2019Leary had a different tune.<\/p>\n \u201cI continue to believe Kelly Ortberg, [and Boeing Commercial Airplane unit CEO] Stephanie Pope are doing a great job,\u201d he said on an earnings call. \u201cI mean, there is no doubt that the quality of what is being produced, the hulls in Wichita and the aircraft in Seattle has dramatically improved.\u201d<\/p>\n United Airlines CEO Scott Kirby cast doubt over the Boeing 737 Max 10 after the January 2024 door-plug accident, as the carrier prepared not to have that aircraft in its fleet plan. The plane is still not certified, but Kirby has said Boeing has been more predictability on airplane deliveries.<\/p>\n Still, delays for the Max 10, the largest of the Max family, and the yet-to-be certified Max 7, the smallest, are a headache for customers, especially since having too few or too many seats on a flight can determine profitability for airlines.<\/p>\n \u201cThey\u2019re working the right problems. The consistency of deliveries is much better,\u201d Southwest Airlines CEO Bob Jordan said in an interview last month. \u201cBut there\u2019s no update on the Max 7. We\u2019re assuming we are not flying it in 2026.\u201d<\/p>\n Boeing under Ortberg still has much to fix.<\/p>\n The FAA capped Boeing\u2019s production at 38 Maxes a month, a rate that it has reached. To go beyond that, to a target of 42, Boeing will need the FAA\u2019s blessing.<\/p>\n Ortberg said this year that the company is stabilizing to go beyond that rate. Manufacturers get paid when aircraft are delivered, so higher production is key.<\/p>\n