Boeing’s new CEO, Kelly Ortberg, is facing a daunting challenge just months into his role. With the company grappling with significant losses and ongoing strikes, he remains optimistic about returning Boeing to its former glory as a leader in the aerospace industry.
The Current State of Boeing
Boeing’s recent financial report revealed a staggering loss of $6.17 billion in the last quarter alone. This marked a continued decline for the company, which reported revenues of $17.8 billion, slightly down from $18.1 billion the previous year. Ortberg, however, believes that with the right strategies in place, Boeing can bounce back.
Ongoing Struggles
Boeing is currently dealing with a strike involving 33,000 machinists, who are pushing for a 35% pay increase over the next four years. This strike has halted production of crucial aircraft models like the 737 and 777X, exacerbating delays in fulfilling existing orders. Additionally, the company has faced significant scrutiny from the Federal Aviation Administration (FAA) following incidents like a door plug flying off a 737 Max during a flight.
Boeing’s challenges extend beyond aircraft production; their space projects have also faced setbacks, including exploding satellites and stranded astronauts. Despite these hurdles, Ortberg is determined to steer Boeing back to success.
Ortberg’s Vision for Change
In a recent quarterly statement, Ortberg acknowledged that trust in Boeing has diminished and that the company has accumulated excessive debt—$11.5 billion is due by February 2026. He has laid out a comprehensive four-part plan aimed at revitalizing the company:
- Cultural Shift: Change the company culture to foster trust and accountability.
- Business Stabilization: Stabilize the core business operations.
- Project Execution: Improve the execution of projects to meet deadlines and quality standards.
- Future Building: Develop a vision for a new future for Boeing.
Ortberg expressed confidence in his approach, stating, “It will take time to return Boeing to its former legacy, but with the right focus and culture, we can be an iconic company and aerospace leader once again.”
Immediate Actions Taken
Ortberg has already made bold moves in his short tenure, signaling a willingness to take decisive action. He recently fired Ted Colbert, the president of Boeing’s defense, space, and security division, after that unit reported a loss of $913 million last quarter. Furthermore, the company announced plans to lay off around 17,000 employees—10% of its workforce—as part of its restructuring efforts.
To address financial challenges, Boeing is exploring options to raise $35 billion. This includes $25 billion through shares or debt and a $10 billion credit agreement with banks like Goldman Sachs and JPMorgan Chase. Additionally, Boeing has reached a deal to sell a subsidiary that produces surveillance technology for the U.S. military.
Emphasizing Leadership and Operations
Ortberg emphasized the need for leadership to be more involved in everyday operations. He stated, “We need to be on the factory floors, in the back shops, and in our engineering labs.” This hands-on approach is intended to improve understanding of both products and workforce morale.
When production resumes after the strike, Boeing is eager to ramp up aircraft production. The FAA has limited Boeing to producing only 38 737 Max planes per month since January, following safety and quality issues. Ortberg acknowledges the importance of regaining FAA trust, saying, “It’s much harder to turn this on than it is to turn it off. So it’s critical, absolutely critical, that we do this right.”
The Path Ahead
As Ortberg works to implement these changes, he faces a steep uphill battle. Restoring Boeing’s reputation and financial health will require not only overcoming current challenges but also rebuilding trust with consumers and regulators alike.
Boeing’s legacy is one of innovation, having played a significant role in shaping the aviation industry and even landing the first man on the moon. Ortberg is determined to tap into that legacy as he works toward a brighter future for the company.
Conclusion
With significant losses and operational challenges, Boeing stands at a crossroads. Under Kelly Ortberg’s leadership, the company is embarking on a transformative journey to reclaim its iconic status in aerospace. As production resumes and changes are implemented, all eyes will be on Boeing to see if it can indeed soar to new heights once again.
I am Aparna Sahu
Investment Specialist and Financial Writer
With 2 years of experience in the financial sector, Aparna brings a wealth of knowledge and insight to Investor Welcome. As an accomplished author and investment specialist, Aparna has a passion for demystifying complex financial concepts and empowering investors with actionable strategies. She has been featured in relevant publications, if any, and is dedicated to providing clear, evidence-based analysis that helps clients make informed investment decisions. Aparna holds a relevant degree or certification and is committed to staying ahead of market trends to deliver the most up-to-date advice.