July 31, 2024, © Leeham News: The Boeing Co. today named Kelly Ortberg president and CEO, effective Aug. 8. He succeeds David Calhoun, who retires then. Calhoun was named president and CEO of Boeing in January 2020.
Boeing also announced 2Q2024 and 1H2024 earnings. The company reported 15% lower revenues for the second quarter compared with 2023, a net loss of $1.4bn vs a net loss of $149m last year, and negative operating cash flow of $3.9bn vs positive cash flow of $2.875bn in 2Q2023.
For the half, revenues were $33.4bn vs $37.67bn last year. The net loss was $1.794bn vs a loss of $574m. There was a negative operating cash for the first half this year of $7.285bn vs a positive flow of $2.557bn last year.
Ortberg is 64 years old, much older than previous CEOs when named. He’s been in aerospace for 35 years, most recently as CEO of Rockwell Collins. He led the integration of Rockwell’s merger with United Technologies (now RTX), retiring in 2021. Ortberg began his career as an engineer with Texas Instruments and served as a program manager during his ascent up the corporate ladder.
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Boeing’s poorer financial results are due to losses on fixed-price military programs and lower commercial airplanes deliveries, the company said.
“Despite a challenging quarter, we are making substantial progress strengthening our quality management system and positioning our company for the future,” said Calhoun. “We are executing on our comprehensive safety and quality plan and have reached an agreement to acquire Spirit AeroSystems. While we have more work ahead, the steps we’re taking will help stabilize our operations and ensure Boeing is the company the world needs it to be. We are making important progress in our recovery and will continue to build trust through action and transparency.”
Boeing’s cash and marketable securities increased to $12.6bn from $7.5bn on the issuance of $10bn in new debt. Debt increased to $57.9bn from $47.9bn from March 31 this year.
Airplane deliveries declined to 92 in the second quarter compared with 136 year-over-year. Boeing maintains a goal of increasing new production of 737s to 38 per month by year-end and to five 787s per month by year-end. Each is about a year behind schedule.
The Defense unit also reported a wider loss due to increased costs on fixed-price contracts. The KC-46A albatross recorded another loss of $391m.
The Global Services unit reported a quarterly profit of $870m, up slightly from $856m a year ago.
The earnings webcast at 10:30 EDT may be accessed here.
JP Morgan
We think he is a credible leader with good potential. We believe he is highly respected in the industry, he has important operational and engineering experience, and we think he has the potential to do some of the things Boeing needs most, including restoring relationships with customers, suppliers, regulators, and legislators. We could also see him as a positive presence within Boeing. Investors will recall some challenges for Rockwell Collins stock at times during his tenure as CEO there, though these may be less relevant for this role. Ortberg stepped down as head of Collins Aerospace in early 2020 and has been on RTX’s board since then. We’re not sure whether to read anything into the timing of his appointment, which is Aug 8, about a month before the Machinist contract expires and a potential strike. We wonder if mgmt and the board will seek to avoid a high-profile strike so early in the tenure of a new CEO who is intended to help Boeing turn over a new leaf.
RBC
We believe this is a strong, and safe pick. We can appreciate Ortberg’s age, 64, may be higher than some investors would have liked to see. However, we believe Ortberg’s reputation at Rockwell Collins and United Technologies/RTX is strong. Ortberg is taking over on August 8, which we also view as a positive considering the urgency of the issues he will face. Ortberg has really just surfaced lately as a potential option, and we believe investors were still focused on Pat Shanahan. The focus will be on the team Ortberg puts in place, and the extent to which he re-sets the mid and long-term guidance once he has settled into the position. However, we view this hire as a positive for the stock and the company. We believe the most important issues Ortberg will face include near term production stability and quality, improving relationships with customers and regulators, improving the balance sheet, potential portfolio re-structuring, and the eventual launch of a clean sheet aircraft.
Vertical Research
We doubt if Boeing’s pretty awful 2Q results will get that much attention today, with all the focus being on the CEO news. In our view, Kelly Ortberg is very good hire by Boeing. While he may not be as well known as say Larry Culp (GE) or Dave Gitlin (Carrier), in our experience Kelly was an excellent CEO of Rockwell Collins. What he brings to the party is not only a wealth of A&D experience, but also a track record of running a company with an excellent corporate culture. Clearly there are a massive number of problems at Boeing, but with Kelly as CEO we think there is at least a chance of fixing them.
Eh, hoping for tha best in regards to the new CEO pick, i guess one positive he doesn’t appeared to have ever worked at GE or for Jack Welch. This may be the first time in a long time that we have had that outside of Muilenburg. Hope he actually gets Boeing steered in the right direction, might be too late.
Ironically, that was the same thing about GE before its turnaround with Culp
You have to believe that he is not intended as a long term CEO. 5 years at a guess while a future CEO is picked and brought into the Exec ranks
I saw his name pop up yesterday, clearly he is not a run it into the ground type.
He has a lot to work with though a lot of problems as we all are aware as well.
The board gave him an exemption until 2031 so I believe at this moment they know it takes more than five years to finish the job.
“Free Cash Flow was -$4.33 billion compared to -$3.93 billion in the previous quarter
Sales Volumes fell 32.4% year on year (12.4% in the same quarter last year)”
So, that’s $8.26B burned off in just 6 months — impressive.
As expected, the loss of $2.90 per share was much worse than analyst estimates (it always is).
—
Looking forward to hearing what Mr. Ortberg has to say in his first comments as CEO…get your “bullsh#t bingo” cards ready, because there’ll probably be a ton of meaningless waffle.
Jesus you have a lot of free time. When I come back to this website you’re always in the comment section criticising Boeing for one thing or another.
I actually applaud that dedication
Boeing made a good choice for their new President and CEO Let’s see if they start getting more orders Wonder what Sir Timothy Clark of the Emirates thinks of the selection.
Timeline 3-5 years to straighten out the commercial issues….he will be 69 then, who will groomed to take over (aka succession plan…remember those back in the old days) to launch the 737 replacement
I think it will be much more important to hear how Ortberg plans to climb out of the financial black hole in which BA finds itself.
BoA estimates that line rates on the 737MAX and 787 are currently at 18 and 3, respectively — which is much too low to generate meaningful revenue. In the meantime, cash is burning off at a rate of (more than) $1B per month. And all of this at a time of significant cancellations and meager orders.
I think we know what new name Bryce is using.
Two thumbs up!!!
Interesting conjecture that criticism of Boeing can only derive from a particular source.
From where I am today, the whole aviation/financial press is giving unsalted commentary on BA’s Q2 results — in English.
Perhaps “Bryce” is an editor at dozens of news outlets?
Boeing’s Financials suck this quarter and will for the rest of the year.
I am referring to your stunning editorials all things Boeing.
@ Williams
Who cares. The stonk is up.
williams,
Yeah, I’ve been detecting a distinct Bryce vibe as well.
Hey guys, I don’t think its Bryce, just Bryce like.
A couple of others along that line. Its a shame, there are good discussion to be had on Aviation.
Not an easy job. New union contract coming with risk for strikes, Charleston quality-cost and volume, 737 quality-volumes with certification of -10, 777-X certification, military problems and a F-18 line getting close to end of production. Where to start? I guess heavy investment in automation on newer fully 3D CAD designed aircrafts and reducing manhrs to build them. Getting volumes up of F-15EX convincing everybody that flies F-35 that you need a heavy gun as well as the F-35 is a slow and fat. Sell off space to Northrop-Grumman, get the Navy to buy a navalized T-7 and design a light/cheap fighter from it by “borrow” from the JAS-39E radar/forebody to kill off the old F-16. Find new talent to update Boeings design/certification/automation skills and design a new durable light short range 400seat widebody that replaces 2ea 737’s that can use more efficient engines as they are certified to increase payload/range. Don’t start too heavy/expensive.
Navalized T-7 is way out there, unless its carrier capable to start with its very costly.
That said no one else makes a naval trainer either. That is going to be interesting.
The F-15EX was produced in various forms, Saudi and Israel Primarily. It was the on shore of the nose that caused problems (assume it has to do with all US made or large percentage). they had lost that capability as the USAF was not buying any of the FBW variant.
But yea, dump Space Division. Same with Rockets (which are space) all NASA stuff.
Imagining Ortberg’s first news conference:
Reporter: “So how long do you think it will take to turn this thing around?”
Ortberg: “Well, I really think we should have $10b in free cash flow by 2025….”
The Rest of the World: “Doh! Here we go again!”
I don’t really expect Ortberg to say this. I certainly hope not.
No…but he’ll probably say meaningless crap along the lines of “we can do better than this”… “we need to refocus on quality”… “we need to work together to achieve excellence”…and other such hot air.
The man is inheriting a sub-par workforce, multiple sub-par products, and a cataclysmic balance sheet. How is he realistically going to fix that, with daunting time, finance and regulation constraints?
Ortberg has a fine line to walk between talking up the stock or telling the truth and crash the stock.
777X certified by 2025?
Both the MAX 7 & MAX 10 certified by 1H 2025?
When to achieve the $10 billion FCF target?
Can BA have a new labor contract without breaking the bank?
To turnaround BA won’t be good for the stock price in both the short and medium term, US investors and analysts have little patience. Take a look at the mess INTC is in.
Yes, the analogy to Intel is striking!
Another one-great US company that is now an utter shambles, and that seems to be adept at tripping over itself.
Brought low by arrogance, ignorance and incompetence — and being kept that way by management that is completely disconnected from reality.
And what’s the cure? Is there even a cure? Can it ever reclaim the market share that it’s lost to others?
A good start might be to cut out the meaningless waffle and squarely admit the mess the company is in.
Oops. I changed my mind.
Ortberg should tank the stock and blame his predecessor. Don’t be the next Gelsinger.
That’s why an incoming US President’s dream is to engineer a recession on day 1, turnaround the economy within 12 months and start working on re-election bid. 😂
@ Pedro
Does this remind you of another company currently occupying a prominent spot in the news? 🫣
“Intel’s massive job cuts come after it received $8.5 billion in taxpayer money”
“Months after the federal government gave Intel $8.5 billion in grants to help bring back chipmaking to the U.S., the company said it is cutting 15% of its workforce, which translates to around 17,000 jobs.”
https://finance.yahoo.com/news/intel-massive-job-cuts-come-021511283.html
—
BA has received almost $90B in state and federal grants, tax breaks and loans since 1994: where did it all go, and what did it achieve?
https://goodjobsfirst.org/
Maybe the Intel job reductions are offshore…
I guess US Inc knows where their high-paying jobs are.
I see “over-capacity” funded by USG as Intel lost market share, missed out the AI frenzy, has nothing for the phone & tablet market. To turnaround, they have to offer competitive products.
https://pbs.twimg.com/media/GUGkReubgAAXGqD?format=jpg&name=small
“Boeing’s defense and space division suffered its worst quarter since mid-2023 as costs ballooned to convert a pair of Boeing 747 jumbo jets into the next presidential Air Force One fleet. The company said it recorded $1 billion of losses on fixed-price contracts, including a $391 million loss on the KC-46 tanker program.”
Best of all:
“Calhoun will continue to serve as special adviser until March next year, Boeing said.”
https://www.bloomberg.com/news/articles/2024-07-31/boeing-names-kelly-ortberg-ceo-to-succeed-dave-calhoun/
Bit of an oxymoron here: if “Kelly is an experienced leader who is deeply respected in the aerospace industry”, then why does he need “Disaster Dave” to assist him as “special adviser”…?
“Ortberg was the rare executive to openly criticize a Boeing at a time when the US planemaker held huge sway over its subcontractors. Ortberg called out the manufacturer as “delinquent” in 2016, after it abruptly switched payment terms from 30 days to as long as four months, squeezing working capital for its suppliers.”
“Ortberg’s appointment is the best news for Boeing in a long time,” said Nick Cunningham, an aviation analyst at Agency Partners in London. “Right now, Boeing needs a company doctor to come in, turn over every stone, tell everyone the bad news, take the charges needed and then bring about an effective turnaround.”
Forbes has a nice to-do list for Mr. Ortberg.
https://www.forbes.com/sites/jerroldlundquist/2024/07/31/the-agenda-for-the-new-ceo-of-boeing/
Daunting under any circumstances — but even worse when time isn’t on his side.
😂
“Detail that didn’t make it in the profile: Ortberg loves to cook, and years ago he roasted a pig in his backyard. The spit broke, the pig caught on fire, and dinner was only saved when he doused the whole thing with a hose.
https://t.co/4q3jEAn9tC
https://x.com/Claire_Bushey/status/1819019529042682145
Did the pig have lipstick on? 🤭
stuffed with lipstick 🙂
The GE/Jack Welch thing is getting old. GE at its heyday with Welch at the helm was dominant.
It went off the rails with his poorly groomed successors.
As regards the new Boeing CEO, don’t expect him to say much, he better not, because he needs to get a grip of the problems first before giving extensive interviews.
Would like to know what vitamins he is using, looks young for a 64 year old.
Jack Welch was a disaster for GE and corporate America, he single handed ruined through his Shareholder value crap GE and many other fine companies vua his disciples. Jack Welch should never be considered a good CEO, ever.
“Shareholder value” is just a nice phrase for boni. Most boni are linked to stock performance. So a CEO just has to push stock value by neglecting R&D. Works fine for a while and after a while the CEO will leave. This is not in the long term interest of shareholders.
Jack Welsh was dominant for Jack Welsh and his ex-wife. And he was an inspiration for all the hedge fund fellas, the Bain Capitals, the Milkins. Let us not forget that the GE boys at Boeing with their share buyback programs and their avoidance of a new narrow body replacement for the former cash cow, the 737, got the stock up to hover around $400. That dominant position was great for their bonuses. Geniuses. They’ll all have libraries named after them at their favorite Business School.
I dare to say Milton Friedman’s doctrine of maximization of returns to shareholders and the popularization of Jack Welch management style contributed significantly to today’s de-industrialization.
Uncle Milty and Ayn Rand and their trickle down economics was just what the rich and powerful glommed onto to persuade the ignorant masses to vote for their lackey politicians. And it worked and it is still paying dividends.
williams:
Agreed that GE/JW is a repeat but he left a legacy of ruin behind him, Boeing being one of the victims. I accept its a repeat but I think its a valid one as sad as it is.
I do concur that some jump on all things Boeing as the worlds evil rather than a reflection of other issues in American business. Other than a handful of non US companies I am not versed in other general practices.
Ortberg looks like a good choice of successful operations and looking to the future not sucking the money out of RC.
No its not going to be easy but its not at all possible unless they over turn what has been going on and this looks like the board did.
I will say that I have seen actions that were non US business allowed that I found stunning. I won’t go into details due to the off topic nature though I think context is important. Rather than a discussion it gets into a fight and Scott has to step in so best stay away from it other than general reference.
The Boeing emplyees did not choose where this has gone, its been inflicted on them.
yeah, no.
he singlehandedly destroyed the social compact between employee and employer. in his view, at all times 10% of your employees were stealing from you and needed to be fired, even immediately after you just fired the 10% you thought were stealing from you.
his whole business ethic was short term stock price uber alles.
you can make a company look very good for 5 or 10 years doing that, but eventually you are left with a hollow shell of yes man managers who know nothing other than how to make the metrics look good on slideware and a gutted manufacturing capability.
he and his disciples have done more damage to the american economy and the american worker than any other factor.
I would say it was equal to the ones who offshored at any price.
The Extra tough rubber boots (rubber go to footwear for fisher, hunter recreation people, been through 5 pairs over the years.
Bought out, over seas and quality dropped seriously and the price stayed the same.
and that is a small industry example. Bigger industry and worse for much of the economy.
Any noticeable changes in quality for Apple computers?
Forgot to mention the quality of BA aircraft in recent years:
Feb 2019
https://www.seattletimes.com/business/boeing-aerospace/boeing-tanker-jets-grounded-due-to-tools-and-debris-left-during-manufacturing/
Apr 2019
https://www.cnn.com/2019/04/02/politics/air-force-boeing-kc-46-delivery/index.html
2020
https://www.theguardian.com/business/2020/feb/19/boeing-737-max-debris-found-in-fuel-tanks-of-grounded-planes
Debris found in fuel tanks of 70% of inspected 737 Max jets
https://apnews.com/article/us-news-business-84be1490f98bbefca9e8efa7b05ccff2
2014
In a new documentary, Broken Dreams: The Boeing 787, current and retired Boeing employees discuss their worries about quality control with Al Jazeera’s Investigative Unit.
https://www.aljazeera.com/economy/2014/9/8/exclusive-safety-concerns-dog-boeing-787
Who are you going to blame now??
“The GE/Jack Welch thing is getting old. GE at its heyday with Welch at the helm was dominant”
I remember discussing this with my colleagues in the 1993 – 1995 period. They all thought it was wonderful and GE and Jack Welch’s style was something to be admired and emulated. I however was suspicious. I thought the regularity of the earnings increases was unrealistic. I don’t believe that any company can be so well managed that it never has any setback.
Later on it became clear that GE capital was the piggy bank where excess profits could be held and magically brought back when needed. Later on it was providing questionable contributions which ultimately led to everything crashing.
The other major problem which I think hollowed out the company was the thought that any asset which could not be put on the balance sheet was not worth having. Expertise, knowledge, fundamental research were all sold off or eliminated.
Yes, Welch was manipulating the books so that every quarter they miraculously beat their previous guidance by 1 cent per share. GE was fined by the SEC for their shenanigans, but of course, it was just a slap on the wrist that didn’t seriously tarnish the Welch $$$ halo of the time.
“The GE/Jack Welch thing is getting old. GE at its heyday with Welch at the helm was dominant.”
A theory:
Jack Welch’s domaninance appeared shining as it was the beginning of converting GE accumulated value ( of any kind ) into cash.
GE’ real achievements happened before the era Welch.
By observation the same constellation describes the trajectory for Boeing.
True??
“BA at its heyday with [Muilenburg] at the helm was dominant”
“Muilenburg”
Nahh!
Look to Shrontz as CEO or before that.
( under Shrontz the 777 was on time but on double the budget )
But but but.. the stonk shot above $400 and BA became one of the top 25 compamies by market cap in US IIRC.
What will the stonk be in 25 years from Feb/March 2019?
“Intel stock is now lower than it was in 1997.
Back then, it had the 3rd highest market cap of any US company. Today, it’s not in the top 100.”
Industrial policy is not about throw $$$ away blindly.
People who know Ortberg personally are positive about him, saying Boeing is lucky to have him.
Ortberg has to hit the ground running to reset BA’s relationship with labour.
BA’s new CEO has to sooth its customers, … a new CFO, clean up the books … the to do list is looong.
Pedro:
Thank you for pointing that out, none of us would have guessed Boeing had a long list.
“Loose” of control:
“Boeing in its quarterly report says Starliner’s “return to Earth was delayed to allow time to perform further testing of propulsion system anomalies” and that those delays have cost the company $125 million so far.”
https://x.com/joroulette/status/1818713785139605844
If one removes the “saving grace” effect of BGS, one sees the following *negative* operating margins:
BCA: -11.9% (Q2), -17.4% (H1)
BDS: -15.2% (Q2), -5.9% (H1).
Debt interest has gone up:
$673M (Q2) [was $621M in Q1]
https://boeing.mediaroom.com/2024-07-31-Boeing-Reports-Second-Quarter-Results
Clever of BA to use today to announce the new CEO appointment…deflects attention from the reality on the ground.
I wonder where Mr. Ortberg was in BA’s list of preferred choices.
Not at all surpised they announced this today, to take a little
attention off of their dismal numbers.
..and with that, Let the Spin Begin!
Seems like someone had the washer on 1000 rpm spin already.
No matter what Boeing does, including what looks to be a stellar pick, its all about cover up.
It does not matter how he was ranked. He looks to have solid credentials.
I am sure Boeing would have liked a younger CEO, but having one who can start the process and stabilize the situation over time is a massive plus.
I am just getting the sense of sour grapes that Boeing might start back on the right path.
“I wonder where Mr. Ortberg was in BA’s list of preferred choices.”
Excellent question.
We know that several others didn’t want the job.
I’m reminded of the old saying:
“Fools rush in, where angels fear to tread.”
Looking forward to his first comments — we’ll know soon enough whether he just “talks” or actually “says”…yet alone “does”.
– Q3 will require more free cash than anticipated, but will improve in time as deliveries ramp up. Brian West again doesn’t rule sourcing more capital when required.
– BoeingAirplanes had 35 pre-2023 787s in inventory that need rework. The shadow line will close by year end.
– there were 90 pre-2023 MAX in inventory,
– 777X: another $800mln is pumped into the program that is related to preparing for EIS.
– 787 deliveries reached 6 in July and is stabilising towards rate 5/m by year-end.
https://x.com/rschuur_aero/status/1818660572180644076
Ding ding ding!
“safran says that it will allocate more @CFM_engines LEAP engines from its spare pool in HY2 to go to @Airbus to compensate for lower deliveries.
https://x.com/rschuur_aero/status/1818541187621364056
“Commenting further on the LEAP HPT issues at an unnamed casting supplier, @SAFRAN ’s Andries says that its yield significantly dropped in Q2. The issue doesn’t impact @BoeingAirplanes as much as @Airbus as BCA has LEAPs in inventory.
It’s a bad deal for investors…
The share count has increased to 617 million (up from 565 million in 2019) and its LT debt is at $53 billion; just on interest and debt expense, Boeing is basically paying the market cap of Embraer every two years.
We’re diluted, capital services interest expense (not new programs or us), and its liabilities exceed its assets.
I hope Mr. Ortberg is a better capital allocator than his predecessors.
All true, however some of the share count is:
Boeing was savvy enough to use some of these buybacks to fund pension requirements in 2020:
“In the fourth quarter of 2020, we contributed $3bn of our common stock to our pension fund. In the fourth quarter of 2020, we also began using our common stock in lieu of cash to fund Company contributions to our 401(k) plans for the foreseeable future, which we estimate will conserve approximately $1bn of cash over the next 12 months. “
https://leehamnews.com/2023/04/25/pontifications-a-contrarian-view-of-stock-buybacks/
They will also use the shares in the safe to fund the Spirit acquisition.
Its not a no cost pickup, but the cost of the acquisition is no cost. Money will have to be invested to get it back in sync with the rest of Boeing just as Airbus has had to pay out a lot in regards to the A220.
At least some good can come out of that horrid buy back practice.
I guess BA will have to assume roughly $4.5 billion of debts from SPR at the closing of the merger.
In response, BA will have to be more aggressive to grab orders to refill its piggy bank.
‘On June 30, 2024, we entered into an agreement to acquire Spirit in an all-stock transaction at an equity value of approximately $4.7 billion, or $37.25 per share of Spirit Class A Common Stock will include the assumption of Spirit’s net debt at closing.’
Better hope that Spirit doesn’t get into any further trouble, otherwise that number is headed north
Just break more shares out of the safe.
Boeing can float those share on the market and get cash.
So what if the stock goes down. If you need cash you break the piggy bank.
Becomes a penny stock? May be not, but like GE which once went down below 4 bucks?
https://www.morningstar.com/news/marketwatch/20240731314/boeing-names-new-ceo-as-it-posts-yet-another-quarterly-loss
“Explaining the supply chain impact on @lufthansa , CEO Carsten Spohr says that deliveries of 15 @BoeingAirplanes 787s planned for this year will all be pushed into 2025. With pilots already trained, this results in higher costs and unused human capacity
https://x.com/rschuur_aero/status/1818559486992261179
Good riddance to Calhoun and good luck to Ortberg. He’s got his work cut out for him. Should be interesting to watch how the tide turns, if it does with $58B in debt.
I’m wishing him all the success and I also hope he cleans house.
Great to see a person selected with an engineering background and leadership.
I am on board with the sentiments.
I think the engineer background helps but as we have seen, its leadership and ability to manage that counts.
Its Ortberg track record that speaks volumes. That is all very good from what I see. Investing in a company, growing it and not running it into the ground per Calhoun and his clown show.
Best of success to Mr. Ortberg and we are all happy that 15 years of DC come to an end. The destruction of capital and culture he was sitting in on and then presiding over was spectacular.
Boeing will need to stabilize the ship and then rally around a future project that will bring the best out of its engineers. I do hope that at one point in time in the not so distant future, Mr. Ortberg will rescind DCs view, to basically „bin“ airplane development until the mid-thirties. At the time some two years ago, this DC announcement had a devastating effect on Boeing staff and customers…
Well put
Does Boeing know how to play the market, or what?
195.80 USD
+8.81 (4.71%)today
Jul 31, 2:48 p.m
Just roll out the new guy and everyone forgets about the mess their in…
Relief at Calhoun is out, perhaps?
YES… and now awaiting significant board changes…
Mister Calhoun is still ‘Special Adviser’, and still on the Board.
Sadly, he is far from gone.
Casey has the right of it.
I clearly do not know and Ortberg is going to have to evaluate each and every person in the chain of command.
To do so he has to have people in the divisions he is confident in. They in turn will depend on other deputies on down to the shop floor.
Me? I am going to watch and see. Either she goes BCA full time (per Ortberg direction) or she gets axed. I don’t see her as a candidate in waiting in the current split role or being offered the higher position.
We will see of course so rather than speculate, get the reality.
That’s an awful lot of relief.
At the end of March 2024, BA was trading at $193, when news of the poor Q1 started to leak.
On April 22, it was around $170.
When Q1 results came out on the 24th, it tumbled to $163, a $7 drop.
The Q2 results are worse than Q1 and it closed today some $3.75 up.
$10.75 swing on Calhoun out.
The whole market went up yesterday — thanks to comments from Jerome Powell.
And, in the final hour of trading, the whole market came off the boil again, thanks to remarks ftom Jeffrey Gundlach.
Boeing managed to ride that wave, despite its abysmal Q2 results.
The day after …
Back to square one (sorr of)??
10:46 am
– $9.12 (- 4.78%)
Currently down 6.09% (11:45 ET).
The recession specter has raised its head in the US, based on various figures released today.
Recession = less travel = deferred orders.
Looks like yesterday’s “Ortberg honeymoon” has gotten a cold shower.
williams wil not be a happy shareholder.
Boeing CEO will be based in Seattle
analyst buy ranking for Boeing thinks $270 in the future
https://youtu.be/C3mGxwqN5Zk
Gotta get that price up because you know, Dave needs a good severance package upon bailing because you know, he’s done such a stellar job 😉
On Dec 23, 2019, the day BA CEO Muilenburg resigned/fired, the stock closed at $335.55.
You know, Dave may be a big beneficiary if the stock goes back above $330 under Ortberg.
Frank P:
You of all people know that a short term high is not going to last in business.
So, long term the stock will settle back out to what people think its worth. A good CEO is priceless. Recovery and building a company is what counts.
Wait until Q3 for the real deck clearing to occur. New guy gets one or 2 quarters to clear out the skeletons before he has to own them.
I wonder how many special charges and write downs will occur.
I would disagree. When I was working the rule of thumb was you could blame the sleaze bag that left for 2 years, then it was on you.
So, I think we all pretty much agree that The last 4 CEO were the Walsh Pillage type (sorry williams)
A huge amount of damage has been done. Ford Auto was in the same boat, it had a lot more years of one family way of doing things, some better than others but entrenched people that only had their own interests not Fords. Clay Ford made mistakes but he recognized that Ford had to be cleaned out and it was going to be an outside if anyone could.
Keep in mind, all the same doomsayer types said Ford would never recover.
A message has been sent. Boeing is going to clean its act up. Ortberg choice speaks hugely. Its not just a good CEO (or so it looks) but it is also the type of CEO that restores a company not gut it further.
His choice says they know its not a short term project. Its a many year endeavor to turn it around.
There will be short term successes as mfg of aircraft gets back into what it should be now. But that alone does not solve all the issues. Stuff needs to be sold off, departments cleaned up.
The stock market can stick it in its ear. Its long term results now from this choice.
He is going to have to build a group and work on a successor. That is longer term thinking.
He should have things stabilized in two years, not fixed, but stabilized. After the low hanging fruit, its a slog to clean things up getting rid of the garbage that has accumulated.
And a new aircraft is going to have to be developed.
At least the majority of the Boeing board sees this as long term and too bad for the investors, they are what got it where it was and encouraged it to continue.
It doesn’t take a new CEO to stabilize BA in *two years*. Dave always says the co. can reach FCF $10 billion “in two years”!
Casey:
I suspect all sorts of write offs. Boeing need to clear the deck and books
It would be a great time to dump program accounting.
I don’t know if program accounting goes away, but I do think accounting blocks will move to the right and conceivably forward losses are possible. Certification charges on the table. Starliner cancellation. Max7 and 777-8 getting the ax also possible.
Production ramp reality checks.
Max 7 & 777-8 will soldier on. You don’t slap WN in the face (after dragging them waiting for like four plus years) without consequences.
To survive (and revive), BA needs all its customers’ help.
Furthermore BA doesn’t have an extra say $250 m to $350 m sitting around to refund WN. For the next quarter or two, BA is very tight in cash if a guy like West can’t commit himself to say what FCF will be by year end.
There are settlements to be made with Southwest. Ultimately with the magnitude of the delays already incurred, I have a hard time believing Boeing will ever make a dime on the Max7 orders. It really is the Southwest variant.
Boeing can offer Max8 for the same price and still probably save money by avoiding the remaining certification cost plus post-cert support. The 777-8 is probably more important if no other reason than the freighter version.
The Starliner is as good as dead. A lot of reports out now that the stranded astronauts are hitching a Crew Dragon home and that NASA will give the Starliner a proper burial.
Boeing needs fewer development projects right now. It cannot focus on future efforts while it is still busy trying to certify the past.
A new CEO without a legacy of Boeing employment, internal loyalties, company culture.
He might forced to be take some drastic decisions his predecessors didn’t dare or couldn’t. And won’t be popular innitially. Not the old Boeing way.
Of course its going to be a rough slog.
He looks to be very capable and none of this will be news to what needs doing.
How he goes about it, that is going to be interesting. From what I can see a great selection and what is needed.
Wonder how long Calhoun’s choice of Pope will last in her current position
I think you just described a lot of executives.
Agreed.
I have seen a lot of split views on Pope but she is not the only one. I am withholding my view. If she does a good job at BCA I am good with that. She needs to be removed from the weird job title she has (chief backup CEO?) or drop being BCA head. What happens there is going to be interesting.
What I am not going to do is dis her because she is a woman. Sometimes you do find good people in the worst organization. She may be gone as a result of association with Calhoun no matter how capable. That is on her. She could have rejected offers.
But this goes down to the shop floor level where managers knew that there were holes in the MAX build process and went along with it. Those people have to go as well.
As long as you have the quality at the top you need, you can deal with those lower down. Its not going to be fast nor easy.
Pope specifically is an enigma. I haven’t heard anything bad about her, but was she chosen for her role because she wasn’t stained by other failures? If that is the only reason then the new guy is going to have to really evaluate who should be in that position. And I’m guessing Pope would never want to go back to her old role. Instead of posing any criticism I would simply ask what part of her background qualified her for such a high profile role.
At this point, I would say anyone aggressively promoted and supported by Calhoun, as she has been, is suspect. Has nothing to do with her being a woman, or apparently having only one photo of herself where she’s got this loud scarf wrapped around her neck.
Why did Calhoun promote her? Perhaps she shares his obsession with short term cash flow and not funding product development.
As soon as the Spirit deal closes, I think Shanhan is the BCA head honcho.
Assuming that the Spirit deal ever closes…
Regarding China’s new anti-trust procedures:
“Since the AML was enacted over 15 years ago, some transactions have had to go through a very lengthy and complicated procedure. In two instances the outcome of the procedure was a prohibition decision; 67 cases were approved subject to remedies; and a (hard-to-quantify) number of transactions were abandoned due to the concerns proffered by SAMR or its predecessor authority or due to the length of the procedure.”
“However, the three most recent “adverse” SAMR decisions show that, for certain sensitive or other complex transactions, securing SAMR approval may have become even more difficult post-AML amendment – both from a procedural and substantive point of view.”
“Finally, the SAMR remedies decisions since the AML amendment are also illustrative to show the authority’s sector priorities: among six remedies decisions, two involved semiconductor deals, two (air) transport deals, one a chemicals deal, and one a pharmaceutical deal. This selection of industries is actually in line with the past practice of SAMR and the preceding merger control authority, as around 60% of remedies decisions pre-August 2022 are related to these industries.”
https://competitionlawblog.kluwercompetitionlaw.com/2024/02/03/chinese-merger-control-after-the-big-antitrust-reform-2022/
—
“Unlike other jurisdictions, Chinese law requires that, in addition to competition concerns, SAMR consider the impact of a transaction on the “national economic development of China,” i.e., whether it runs counter to China’s industrial policies or domestic interests. This means that, in most ordinary merger reviews, SAMR must solicit input from and take into account the views of a wide range of Chinese stakeholders.”
https://www.skadden.com/insights/publications/2022/12/2023-insights/more-intense-merger-reviews/demystifying-chinas-merger-review-process
Yep, we are worried about China again.
They can do what?
Not buy more MAX? Oh, they are finishing up what they bought and no more?
Oh well. Its not like there is not a 5000 aircraft backlog for MAX (flip off the top of my head, )
Haha what does Boeing say? China is the largest national market thru 2043.
He will probably divest to be able to invest. He won’t be out there to restore the old Boeing where competition was weak, engineering ruled and Uncle Sam paid a lot of bills.
End the 737-7, 777-8, maybe more..
It’s certainly hard to see the value of perpetuating the costs associated with poor sellers.
I strongly suspect that Ortberg will turn out to be an interim CEO. He is 64, and unless everything goes a whole lot better than anyone is expecting, there’s a lot of hard work ahead. More recent articles on Leeham are suggesting a 10 year turn around for the company (which I think is about right for the things that have to happen). I can’t see a 64 year old being willing to expend 10 good years of a well earned retirement dealing with massively hard problems.
However, it could be that I’ve over estimated the difficulty. If he’s pre-negotiated the sharpness of his axe and has carte-blanche to swing it as he sees fit with no care for who he’s upsetting (investors and customers included), that’d make it a whole lot easier. I’m not sure I’d want the job unless it came with absolute power over everything, including how much money investors have to stump up.
And I think the company and its owners do need to be very careful to make his job as easy and as calm as possible. Having secured his services, and seemingly gaining a good reception from interested observers / analysts, one then has to consider the consequences of the different scenarios in which he might quit.
Obviously if he quits after 10 years having somehow turned it all round, no problem.
If he quits unexpectedly in 1 or 2 years with not much of an explanation, Boeing would be labelled as “the company that not even Ortberg was prepared to fix”. Any kind of unexplained departure by Ortberg would give the market more than just the jitters; it could kill the company dead on the spot given its precarious financial state.
I wish him all the very best of luck and good fortune. Turning this one round would certainly cement his name in US corporate history. I just hope he doesn’t regret it; this stage of life is the one where you’re supposed to kick back and enjoy the company of family.
I also hope he’s reckoned wisely on the role of other market players. If Embraer do come to market with a decent 737-replacement proposal, or if Airbus up A350 production rates, launch a -1100, and / or NEOise or replace the A380, Ortberg could find that he’s trying to fix a company that everyone else has already given up on.
Federal Boeing filing says the Board already waived the mandatory retirement to 2031.
It depends on how long he wants to work as well.
That’s a small start. At least they recognise that they need a leader to stick around.
But, 2031 is interesting. A newer Leeham article’s headline is suggesting that it’d take 10 years to turn this round, which does feel about right. 2031 is only 6 and bit years away.
What’s worrying is that if the board / company is being overly optimistic now about the company’s recovery time, have they already created the conditions for that recovery to fail? If Ortberg says, “It’s going to take me 10 years”, and they stick with the line “you’re gone in 6”, what does that start looking like to the market, to customers, and to regulators at home and abroad?
I say “start”, because for the moment I suspect that there’s a lot of company outsiders who are breathing a sigh of relief that the company has at least, and at last, managed to attract a name with good credibility. But as the clock starts ticking, the “who is next?” question will become a pressing question once more.
Maybe the most valuable thing Ortberg can do is to bring on an obvious replacement for himself, “trained up in his image” as it were. Succession planning is the hardest thing to do, and it’s certainly a thing Boeing has lacked.
Interestingly, one of Toyota’s key secrets has been succession planning. There’s no point learning how to do “quality” properly and profitably if you don’t know how to pass that knowledge on at all levels of the entire company structure. So, training people in how to train people is a key component of their sustained quality production. In fact, in Toyota, the whole Andon thing is all about training as well as a tool to achieve quality on a production line, in as much as it teaches people that it really is perfectly OK to stop a $billion production line if something is not right (indeed, you’ll be thanked profusely for it).
That’s a lesson Boeing (who have claimed to run an Andon system) hasn’t learned. Boeing’s version taught people that stopping the line was not alright, for any reason…
‘… analysts at Agency Partners said earlier this month that the industry may be headed toward a “civil aviation recession.” Boeing, the analysts continued, may have run out of time to generate cash and reduce its debt before the industry upturn draws to a close.
Aerospace analysts from Bloomberg Intelligence felt differently. In a note to investors earlier this month, analysts said Boeing appeared set to ramp up production, and get back on track, as “distractions begin to clear.” But, “if a second-half recovery stumbles, Boeing might find itself raising cash at far higher rates on fears of a protracted recovery,” the Bloomberg Intelligence analysts wrote.’
‘Members of the International Association of Machinists have asked for up to a 40% raise, resulting in a 1.5-2% increase in production costs per plane, according to an analysis from Bloomberg Intelligence.’
https://www.seattletimes.com/business/boeing-aerospace/boeing-lost-1-4b-in-3-months-so-why-are-execs-sure-of-a-turnaround/
Ron Epstein, lead aerospace analyst with Bank of America… noted that “Ortberg is walking into a Boeing with a potential production strike in September, a Defense business that is limping along, and Commercial business that has lost the trust of regulators and the public.”
Jon Holden, president of IAM 751: “We’re looking for a commitment of not just the next airplane program, but a commitment that there will be a relationship to work on those issues.”
https://www.seattletimes.com/business/boeing-aerospace/boeing-chief-coming-home-new-ceo-will-be-based-in-seattle/
Like the mantra of it has to be an engineer, I don’t buy Boeing has to be based in Seattle.
The days of it being a Seattle company are long gone. It has sections all across the US.
Seattle is fine but a lot of the long term CEO work (assuming its not Calhoun who does not work) is out of Washington DC.
Frankly someplace like Denver would be a good central location to HG from. Boeing is no longer just about LCA. It has a huge defense aspect.
“Boeing, the analysts continued, may have run out of time to generate cash and reduce its debt before the industry upturn draws to a close.”
That sums it up perfectly. The clock here is ticking…and it’s not going to stop for Mr. Ortberg.
It takes an analyst across the pond to be outside the echo chamber?
“Significant new aircraft deferrals at Spirit: All planes previously planned for Q2 25-Q4 26 now slated for 2030-2031. A319s are still expected to exit the fleet by Q2 25.
https://x.com/WandrMe/status/1818969815693902170
“Lessor @AerCapNV has acquired 36 @Airbus A320neo aircraft that were ordered by @SpiritAirlines. Deliveries/leases to Spirit are scheduled for 2027 and 2028, offering AerCap access to an important portfolio in the US.
“The deal is a win/win for both @AerCapNV and @SpiritAirlines, says Aengus Kelly. AerCap gets its hands on the most-popular aircraft (A321neo) very soon.
If Spirit would get into trouble, AerCap would have them placed elsewhere in no time.
https://x.com/rschuur_aero/status/1818989793239273568
Nobody is talking about the workforce that Ortberg is inheriting. Remember the brain drain that was reported last year, here on Leeham and in The Seattle Times? Guess what — that problem hasn’t gone away.
The current workforce at BA is (one or more of) de-motivated, under-qualified, inexperienced and under-numbered. Fixing that will require a lot of money and a lot of time…and BA has neither of those.
Thorny problem-in-the-making for Mr. Ortberg…not sure that his stint at Rockwell Collins will help him much if this one goes south:
“Families of Boeing crashes want company to pay higher fine, have jury trial”
“The families of some of the 346 people killed in two Boeing Max jetliner crashes have asked a federal judge to reject a plea agreement Boeing and the U.S. Justice Department have proposed. Instead, the families want the judge to schedule a jury trial for Boeing.”
https://www.voanews.com/a/families-of-boeing-crash-want-company-to-pay-higher-fine-have-jury-trial/7725595.html
“COMAC to Boost C919 Aircraft Production”
“The manufacturer of China’s first domestically developed single-aisle aircraft C919 said it is accelerating its production capacity, and the model is on track to be delivered to more carriers in the second half.
“The C919 will be delivered to State-owned carriers Air China and China Southern Airlines in the latter half of the year, said He Dongfeng, chairman of Commercial Aircraft Corp of China (COMAC). Currently, Shanghai-based China Eastern Airlines operates seven C919 planes on commercial flights.”
http://en.sasac.gov.cn/2024/08/01/c_17581.htm#:~:text=The%20manufacturer%20of%20China's%20first,carriers%20in%20the%20second%20half.
—
“C919 production to ‘greatly improve’ as Shanghai eyes R&D, industrial chain uplift”
https://www.scmp.com/economy/china-economy/article/3270816/c919-production-greatly-improve-shanghai-eyes-rd-industrial-chain-uplift
—
One wonders what Mr. Ortberg’s views on China are. Is he as dismissive as some commenters here…or does he smell the coffee like the crowd over at Airbus?
Usually Boeing is dismissive of strong competition. Because that is what stock & stake holders and the home public wants to hear. Everything’s under control.
It support stock value & stock value determines Boeings executive bonuses, multiple times as high as salary.. Lets see how $en$itive Ortberg is for this IMO counterproductive Boeing mechanisms.
State owned/controlled airlines buying/leasing planes from state owned airliner factory building A320 replicas powered by western engines and western electronics.
Its a chronic copy cat culture under leninist-party-state systems
👇👇😂😂😂
FT:
Chief executive of Raytheon, said the company had “several thousand suppliers in [the “leninist-party-state”] and decoupling . . . is impossible”. […]
“If we had to pull out of [the “leninist-party-state”], it would take us many many years to re-establish that capability either domestically or in other friendly countries.”
Not even the Pentagon is successful to freeze Huawei out of its operations. Oops.
Duke has the right of it.
China is a central order by the Govt. Airlines take what they are told to.
All C919 so called orders are China govt and or China govt owned firms as well as leasing companies. Most of the so called over seas orders are Chinese controlled entities.
The couple that are not are Silk Road screaming deals until you have to pay the rent.
Boeing was willing to madly build and lost quality (Airbus is building fast but has mostly retained quality).
Comac is the polar opposite. It does not dare loose control, so, risk adverse and low production. They will ramp up extremly slowly to ensure they do not attract the attention of the Govt with any bad press and to their and all our hopes, no crashes.
Best case if you get fired, you never work again. Worst case you get assigned to a Gulag. There is a reason there are no whistle blowers in China.
👇 “Central order by the government”
Do your own research how “computer chip” was born out of a massive govt project with a multi-billion $$$ budget. 😂
We have entered the revisionist stage.
What happened?? Why FCF for 2H is going to be worse than forecast? Monthly rate of 38 737 MAX by year end, delivery to China has resumed. What’s not according to their forecast?
“On the analyst conference call, Boeing CFO Brian West warned the company would have “larger use of cash than previously forecast” for the rest of the year, again impacting free cash flow.”
https://finance.yahoo.com/news/boeing-taps-kelly-ortberg-as-new-ceo-reports-wider-than-expected-q2-loss-and-revenue-miss-115844407.html
Who says the line rate for the MAX will be 38 by year end? It’s currently stuck at 18.
And, as always: what’s the margin on those planes?
N x zero = zero…no matter how big N is.
—
Chinese MAXs:
What new discount has been given on these frames, to compensate for the fact that they’re now 4-5 years old?
Also: huge costs have to be pumped into each one, so as to remove the effects of years of damp storage.
Does anyone really believe that those frames are cashflow positive?
—
Has Mr. West factored in the loss of “cashflow” from deposits? No orders means no deposits. Nothing was ordered in April-June, and the Farnborough orders aren’t on the books yet. Meanwhile, there have been 130 cancellations…and deferrals have officially started.
—
Any scheduled debt repayments coming up? They’ll eat cashflow.
—
My guess is that Brian will be going a-borrowing again very soon now…especially if the MAX plea deal gets binned.
Let’s see how long the current credit rating survives.
38 MAXes p/m by the end of the year, according to BA.
Dream on, dudes.. what a [deluded] outfit.
The good, the bad & the ugly:
“Just hours after the embattled planemaker announced Ortberg as its new leader, the enormity of the task came into sharper focus. Boeing will continue to burn cash in the third quarter, after consuming more than $1 billion each month in the first half, Chief Financial Officer Brian West cautioned. Just how big the drain would turn out to be for the full year, he couldn’t say.
[…] “I’m just not smart enough right at this moment to say whether it’s $5 billion or $10 billion,” West told analysts during Boeing’s earnings conference call. […]
The company would be dangerously low on cash if not for a $10 billion debt financing injection last quarter. And it’s unclear how long Boeing can continue to tap bond markets, or maintain its investment grade rating, without a sharp improvement in its operations. […]
Nicolas Owens, industrials equity analyst at Morningstar Research Services LLC. “The real test for any Boeing CEO will be navigating the very long cycle and high cost of investment in new plane designs, which can be tricky because the rewards accrue in decades, not years,”
https://www.bnnbloomberg.ca/business/2024/07/31/boeing-names-ortberg-as-ceo-to-revive-embattled-planemaker/
“I’m just not smart enough…” West told analysts.
Yes, dear, we already knew that 🤭
‘On May 1, 2024, Boeing issued $10,000 of fixed-rate senior notes consisting of:
$1,000 due May 1, 2027 that bear an annual interest rate of 6.259%,
$1,500 due May 1, 2029 that bear an annual interest rate of 6.298%,
$1,000 due May 1, 2031 that bear an annual interest rate of 6.388%,
$2,500 due May 1, 2034 that bear an annual interest rate of 6.528%,
$2,500 due May 1, 2054 that bear an annual interest rate of 6.858%,
$1,500 due May 1, 2064 that bear an annual interest rate of 7.008%.
As noted in the financials, all of the debt is bracketed between ~6.2% and 7%. Therefore, BA is adding about an additional $650m in annual interest payments to its debt servicing costs.’
https://leehamnews.com/2024/08/01/the-boeing-liabilities-problem-a-decade-to-resolve/#more-45043
Short-term debt and current portion of long-term debt: $4,765m
Long-term debt: $53,162m
Advances and progress billings: $58,151m
Total: $116,078m
‘BA must return ~$58bn to lenders and it must deliver ~$58bn worth of aircraft, which it is currently doing at negative margins, to airlines. The Q2/2024 Operating Margin at BCA was (11.9%) and the H1/2024 Operating Margin was (17.4%).’
Where is this Investment money you speak of, Mr Owens, going to come from?
Think positive!!
“The DOT is revising how the 777X will be certified for loss-of-power operations. Among other things, it will require sufficient redundancy to maintain control of flight for the maximum certified diversion time, not just 5 minutes, and in IMC conditions, not just VFR.
https://x.com/WandrMe/status/1819008552976941552
2026 just became 2030…
Now Korean Airlines and Sir Timothy Clark of Emirates can argue over 2032 delivery slots instead of 2028
This one??
https://public-inspection.federalregister.gov/2024-16979.pdf
I can’t say that I understand this, but at first glance it looks absolutely horrendous.Do other aircraft (such as the A350)comply?
This is Leehams specialty,please can you explain this Bjorn?
APU have been used as backup power since forever.
The document is just a procedural thing for new certifications to correct previous oversight
“The FAA proposes to require that these non-normal procedures be incorporated in the AFM instead of requiring them to be in the operating limitations section of the AFM.”
“The proposed changes are to remedy an oversight that occurred during the issuance of the original special conditions where the FAA inadvertently required the nonnormal procedures to be in the limitations section of the AFM”
anything known about how FAA and EASA views compare ( or diverge ) here?
Procedural oversight in previous regulations. Thats all.
FAA even spells it out for those who understand the whole story
“The proposed changes are to remedy an oversight that occurred during the
issuance of the original special conditions where the FAA inadvertently required the nonnormal procedures to be in the limitations section of the AFM”
“Procedural oversight in previous regulations. That’s all.”
That IMHO is a rather rich statement.
Something in that domain is at the core of the MCAS “mis”design.
Just a “small” aspect overlooked and no oversight by FAA.
Jet Blue
“It is understood that JetBlue began the work to smoothen the upcoming delivery stream back in January.
However, in July, the airline deferred 44 Airbus A321neo aircraft on order from 2025-2029 to 2030 and beyond, which will provide savings of $3bn.
Seen above, the contractual aircraft delivery assumption assumes that.
Within this, they have also extended leases on or purchased off lease 12 Airbus A320 aircraft to drive lighter growth.
As for the E190 aircraft, JetBlue have now confirmed the airline will retire these aircraft next year.
This allows simplification of it’s fleet being the Airbus A220 and A320 Family aircraft for better commonality.”
I am seeing indicators that a downturn is coming. Then Airbus and Boeing start to madly juggle the back orders when slots are opened up and see if someone else can take them.
Backlog is not true confirmations. Its when those are supposed to be delivered.
In theory, Airbus could have a back log of 10,000 all due after 2035 and not delivering until then (reality no)
Airbus forced deliveries during the downturn. The orders were close enough and all but last payments in.
When the damn broke everyone then wanted aircraft. Its never a smooth process.
Airbus wants to maintain production but those aircraft then have to be delivered. Options no but there are firm orders in a back log as well.
If you can find someone to take your order (or Airbus can) then they can swap. Airbus may force a delivery (fully within their rights, its a legal contract) so that other airline wanting a slot can be given a different delivery up to including a gap that has opened.
Its a hugely complex dance that goes on. Suppliers are affected if their orders drop, that impacts recovery latter on.
We are seeing the supply chain issues still cropping up as firms laid off talent and that talent may have elected to not return to work. Not only skills lost but working relationships.
Which will suffer the most, AB or BA? Oh how concentrated are those 777X orders? The sky is falling, one has a war chest of billions of $$$ while the other one is mired in over $50 billion debts.
The US rather than Chinese economy is about to “collapse”?
“Spirit has deferred until 2030 and 2031 deliveries of A320neo-family jets previously scheduled to arrive between July 2025 and end-2026, the carrier said in disclosing its second-quarter financial results on 1 August.”
Bottom line here, is there is a new CEO who has the chops.
All the financial stuff is going to be a mess for some time.
Only purpose of any tracking is to see how its doing but nothing is going to change for the next year and probably two.
Its going to be bad news until the mess is corrected. When your ship is sinking the first thing you do is try to stabilize it. Get the holes covered, balance it out, get ahead of the inflow. Then you slowly get it back to normal.
A lot like stories of the old Frigates and Ships of the Line after a fight they win, horrible mess and a long time to get it back to even limping along.
But, what all the finance people are missing here is its going to be bad, that does not reflect what is going on within the company is the important aspect.
Rome was not built in a day and fixing it is not going to happen in a day. There will be some up periods and down periods. Up being better but at best its going to be zero, you are not going to see the Sun shining brightly and all is rainbows and roses.
Metrics like increased MAX and 787 Production and how the quality is going.
You will see (if it works) periods of well this is good and then, oh, not so good. You don’t wreck something and its fixed tomorrow .
Two years minimum to some stability and at least 5 years to having cleaned up the rot. Then its build it back up. It could be 10 years for a full recovery to what Boeing should be (per a Leeham behind the wall article indicates). I look at their programs on both sides of the business and see them getting cleaned up and doing a lot better but a rebuild of the divisions and engineering talent and a working machine again, yea 10 years.
Just taking over Spirit is going to cause some cash loss.
It is a hoot that some keep saying Boeing can’t borrow money and they borrow 10 billion no problem. Maybe they don’t know what they are talking about? Nah, that can’t be it.
“I look at their programs on both sides of the business and see them getting cleaned up and doing a lot better”
Evidence??
“Two good programs- possibly three.”
😉
https://money.usnews.com/investing/news/articles/2024-07-31/us-supplier-howmet-under-spotlight-over-airbus-engine-delays
Airbus Christian Scherer: “.. we’re at the beginning of an era where the next steps will need to crystallize themselves.”
Yes, I saw that interview in The Air Current this morning.
Note how Scherer explicity mentions the new market share challenges presented by COMAC and a possible Embraer entry into the mainstream narrowbody market.
The man doesn’t have his head in the sand…unlike some commenters here.
https://theaircurrent.com/industry-strategy/aerospace-less-stable-duopoly-embraer-scherer-airbus-boeing/
How to lose your human capital aka intricate knowledge of building stuff? By retirement, redeployment or pushing your most experienced staff out the door like you know who.
FT: Last days of the lonely interstellar spacecraft
https://www.ft.com/content/0f2dce04-ec78-4aeb-808c-cff5b5135699
https://pbs.twimg.com/media/GUDQhNxWMAARSW2?format=jpg
USGAO: that “assumptions such as ‘we did it before so we can do it again’ are often wrong”.
Mr. Aboulafia on the selection of Ortberg:
“…apparently you can count on the Boeing board doing the right thing…after exhausting all other possibilities. ”
https://amp-cnn-com.cdn.ampproject.org/v/s/amp.cnn.com/cnn/2024/08/01/business/boeing-new-ceo-kelly-ortberg-nightcap?amp_gsa=1&_js_v=a9&usqp=mq331AQIUAKwASCAAgM%3D#amp_tf=From%20%251%24s&aoh=17227916511313&referrer=https%3A%2F%2Fwww.google.com&share=https%3A%2F%2Fwww.cnn.com%2F2024%2F08%2F01%2Fbusiness%2Fboeing-new-ceo-kelly-ortberg-nightcap%2Findex.html
The main question remains: where will the required extra money realistically come from?
Starliner story gets more insane every day
NASA likely to significantly delay the launch of Crew 9 due to Starliner issues
“NASA is planning to significantly delay the launch of the Crew 9 mission to the International Space Station due to ongoing concerns about the Starliner spacecraft currently attached to the station.”
https://t.co/1o3Ljgzksa
https://x.com/SciGuySpace/status/1820484918419546576
https://pbs.twimg.com/media/GUOtarmagAAMw54?format=png&name=900×900
“Airbus registered 59 orders and delivered 77 commercial aircraft in July 2024”
“Airbus’ commercial aircraft orders and deliveries for the month of July 2024 have been published as follows.
“July 2024 deliveries: 77 deliveries to 40 customers (1 A220-100, 6 A220-300, 2 A319neo, 24 A320neo, 32 A321neo, 5 A330-900, 6 A350-900, 1 A350-1000)
“July 2024 gross orders: 59 [6 A320neo for Berniq Airways, 26 A321neo (11 for Japan Airlines, 15 for an undisclosed customer), 7 A330-900 for Virgin Atlantic Airways, 20 A350-900 for Japan Airlines]
“2024 deliveries to date: 400 deliveries to 70 customers”
https://www.aviation24.be/manufacturers/airbus/airbus-registered-59-orders-and-delivered-commercial-aircraft-in-juy-2024/