Boeing HQ
Yesterday was a huge news day for Boeing. Today’s key story is Boeing’s hiring of a new CEO, Kelly Ortberg, who was formerly CEO of Rockwell Collins. He came out of retirement to take on the challenge of turning Boeing around, and has several positive things going for him.. First, he is an outsider and isn’t steeped in the sacred cows of the Boeing culture, which he fully understands must change.
Second, he has strong industry knowledge having run a major avionics company dealing with the same customers as well as understanding the airframe OEMs and their competitiveness. Third, he built a strong and positive culture at Rockwell Collins, which should help his efforts to change Boeing’s culture. Fourth, he has decided to move his office back to Seattle, where the majority of Boeing engineers and employees work. He understands that you can’t change a company by splitting the CEOs time between locations on the opposite coast.
All signs are pointing to a strong choice for Boeing, and renewed hope that the company can be turned around.
At the same time, the only profitable element of Boeing’s business is MRO of older Boeing airplanes, as the company continues to bleed cash and lose money on the MAX, 787, and the 777X still under development. The defense business is suffering from poor contracting with fixed price contracts that are now overrun on many programs, and also needs to be turned around. Fortunately, Collins avionics were also on military aircraft, and Boeing’s new CEO is also familiar with defense.
In the other keystory, Boeing reported another financial disaster in the second quarter, as the company lost $1.4 billion, and burned through $4.3 billion in negative cash flow. The company is burning cash at an alarming rate, and needs to ramp-up production and deliveries to generate additional cash over the second half of 2024.
It is interesting that Boeing announced their financial results and new CEO at the same time, as each was clearly worthy of a separate event. Perhaps the company felt that the appointment of a new CEO would minimize analysis and reporting of the miserable financial results for the quarter by announcing both events simultaneously. That would fit with their current culture.
In other news, Boeing is making progress on the engine nacelle issue for the MAX 7 and 10, which it will also need to retrofit to MAX 8 and 9 models already in service, per the company’s agreement with the FAA. That appears to be the major outstanding issue preventing certification of the two new MAX variants.
Finally, in an analysis of the Boeing financials, the services division is the only profitable group within the company. This begs the question as to whether Boeing should divest its military businesses moving forward to generate both cash and new opportunities for existing and planned projects.
Links to today’s key stories follow:
- Boeing names aerospace veteran Kelly Ortberg as its new CEO and President – Entrepreneur
- Boeing chief coming home: New CEO will be based in Seattle – Seattle Times
- New Boeing CEO faces long to-do list at troubled planemarker – Bloomberg Law
- Boeing’s Q2 loss exceeds expectations – FXEmpire
- Boeing CEO sees path to certificating MAX 7 and 10 in first half of 2025 – Flight Global
- Boeing’s only profitable business right now is fixing Boeing plnes – Quartz
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