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Boeing’s CEO Kelly Ortberg, “Our recovery plan is taking hold.”
By Karl Sinclair
Boeing CEO Kelly Ortberg. Credit: Getty Images.
July 29, 2025, © Leeham News: The Boeing Company (BA) President and CEO Kelly Ortberg is confident that, despite there still being work to do, he likes the direction that the company is headed in.
“We’re making steady progress to stabilize our business, strengthen development program execution, and change our culture to set up for the future,” he said on the 1H2025 earnings call.
While the company still reported a loss for the quarter, it was less than expected, and there were signs of improvement in areas that were projected to take longer to turn around.
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• Boeing 1H2025: Turnaround underway
Despite projections in the first quarter that 2025 would be a loss-making year for the company, along with a substantial drain on cash reserves, management was pleased to note that things were progressing along in a timely and orderly manner.
“I’m pretty pleased with where we are through the first half and through my first year. I’m not surprised with the performance of the company and the recovery. We’ve got great people in the company,” said Ortberg.
Boeing is first and foremost a commercial aircraft manufacturer. The company will go as that division does.
Boeing Commercial Airplanes (BCA)
The 737 MAX program has reached the mid-year production target of 38/mo, and the next step will be to approach the Federal Aviation Administration (FAA) to allow the company to produce beyond that rate to 42/mo. It will do so by first demonstrating stability at that rate over the coming months.
Moving forward, the ambitious goal is to increase production by five units every six months.
BCA plans to do this by opening a fourth production line in Everett (WA), dedicated exclusively to the MAX 10 variant.
However, both the MAX 7 and MAX 10 variants have yet to receive certification, and that process has now been pushed back.
“Work on the solution (for the engine nacelle de-icing design) is taking longer than expected, and we now are expecting certification in 2026,” Ortberg said.
There remain 20 737 MAXes in inventory, down from 35 at the start of the quarter. A further 35 of the uncertified MAX 7 and MAX 10 variants are also stored in inventory.
BCA expects to deliver on the sunny side of 400 MAXes during 2025.
The 787 program has now reached a production rate of 7/mo, with 37 units being delivered during 1H2025. A further 15 Dreamliners remain in inventory, with half expected to be handed over to customers in 2025 and the other half delivered in 2026.
There was no certification timeline offered on the 777X program. However, it was highlighted that production of the first 777-8F freighter variant had begun. Flight testing continues on the program, with all four flight-test vehicles completing more than 1,400 flights and 4,000 flight hours.
Boeing Commercial Airplanes is expecting to improve the 5.1% margin loss over the coming quarters, when it is projected to turn positive.
Boeing Defense, Space and Security (BDS)
Projected to produce negative margins for 2025, under the leadership of new CEO Steve Parker, BDS managed to surpass expectations by posting a modest positive earnings from operations of $110m for the quarter (1.7% operating margin), and $265m for 1H2025 (2.1% operating margin).
Compared to last year, when the division lost $762m in 1H2024, this is quite a turnaround.
BDS recently secured a contract to produce two satellites for the U.S. Space Force, worth $2.8bn.
“This contract is consistent with our strategy to ensure we enter into the appropriate contract type for the appropriate type of work”, said Ortberg.
This is about Boeing shifting away from signing fixed-price contracts at BDS.
“As we’re entering into these new contracts, we’re following our process to make sure that we only enter into the appropriate contracting type. The recent big wins, we have the development parts of those programs have all been cost plus. We’re not making the errors of the past and signing up for fixed price development, high-risk programs,” explained Ortberg.
BDS booked $19bn in orders during the quarter, and the backlog grew to $74bn. Revenue was $6.6bn, up 10% on improved operational performance. BDS delivered 34 aircraft and two satellites in the quarter.
Boeing Global Services (BGS)
Services continued to be a workhorse for Boeing, delivering solid profits at a 20% margin. The division took in $5bn in orders and the backlog ended at $22bn.
During the quarter, BGS sold its MRO operation at London Gatwick Airport and quietly went about its business.
“BGS remains a terrific long-term franchise that is focused on profitable, long-term, efficient offerings, and the team continues to execute very well,” Ortberg commented.
In 2024, Services delivered $3.6bn in profits and an 18% margin.
There was no mention of the upcoming asset sale of Jeppesen during the conference call, which is expected to raise $10.6bn in cash and close at year-end.
Financial Matters
Last quarter, Boeing projected a 2025 free-cash-flow (FCF) burn rate of between $5bn and $6bn, as stated by outgoing CFO Brian West. This has been upgraded.
“I think the $3bn net (cash-burn) is the right, reasonable assumption right now,” said West.
While declining to offer a timeline, Ortberg expressed the sentiment that achieving a $10bn annual FCF position is a matter of when, not if.
In the short term, expectations are that 3Q2025 free-cash-flow will mirror the second quarter, which will then turn positive in the final period of 2025.
Boeing is also facing an upcoming one-time payment of $700m, as related to the DOJ non-prosecution case, in the third quarter.
The projection for BDS is that it will return to high single-digit margins, as the company continues to focus on securing cost-plus contracts in the future. The risks associated with the current fixed-price contracts that currently saddle the division have much of their sunk costs expensed in previous periods.
Boeing also seems to have a handle on the problems with Commercial Airplanes.
“We’ve reduced travelled work at roll-out by 50%,” explained Orberg. “This is critical to our performance to deliver safe and high-quality aircraft on time to our customers and steadily execute our planned production increases.”
The key to success at BCA is increasing production and delivery rates, without the added expense of re-work. Full-year targets are for ~425 MAX deliveries and ~75 Dreamliners in 2025.
One-year anniversary
Aug. 8 marks the one-year anniversary of Ortberg taking over the helm of Boeing. He was asked about it by an analyst on the earnings call.
“I’m pretty pleased with where we are through the first half and through my first year…my role here is just to help everybody get organized and headed in the right direction. You know, it’s turning a big ship around. I think that we’re turning it,” he commented.
Ortberg knows that there is still work to be done, but Boeing is headed in the right direction.
As I have noted, Boeing has a lot of potential, it needed to change the culture and that is happening faster than I expected.
The MAX-7/-10 is an issue. It should not be that hard to solve the icing issue on the cowl.
Its going to be cool to see the 777-9 get into service.
KC-46A has had a huge leg up the last few weeks. Boeing worked out cost plus issues on the T-7A. USAF wanted more and Boeing said yes we can but we don’t do it for nothing. Usual USAF mess, nothing has changed in training and they want more flight time. Boeing saw that need in advance and built it in.
The original program was 179 KC-46, which is nearing the end. However the buy was extended under that contract to 188. The no competition contract for 75 more is being fianalised.
Originally the KC-46 spec was designed around the fuel load for the KC-135 and to replace that type. However the USAF actually replaced the KC-10 once the orders began, clearly the so called KC-135 replacement was a fudge to block off competition from the A330 tanker .
The no competition bid for 75 more ( plus probably at least as many again) was also done to make sure there wasnt a competing airframe.
Don’t believe that’s true. The KC-10 was a dead duck before KC-46 deliveries started. It’s original mission is gone (European theater operations flown from CONUS), because Europe now has their own tanker fleet. And the KC-10 was also far and away the costliest tanker platform to fly.
It’s a great aircraft, it served it’s function but it’s no longer needed. The USAF wants to focus on more frequent missions at lower cost and lower fuel loads. That gives them the greatest flexibility.
The MRTT has the same problem as the KC-10 for US CONOPS. Again it’s a great aircraft and for most European CONOPS, it’s a better match than the KC-46. It’s just not a good fit for most US missions, just like the KC-46 is not a good fit for most of Europe.
Even Israel is buying the KC-46 mostly because the American taxpayer is paying for it.
“The KC-10 was a dead duck before KC-46 deliveries started. It’s original mission is gone… And the KC-10 was also far and away the costliest tanker platform to fly.”
Isn’t this typical short-term thinking? Did the USAF look ahead a few decades? I guess not. Last but not the least, the capacity of the KC-10 is almost double that of the KC-135/KC-46, shouldn’t critics take that into account?
Don’t cry when such decision comes back to bite the behind.
Your comment reflects a lack of understanding of the facts.
The USAF evaluated the KC-46 for the missions the KC-10 was doing, and found that equivalent missions could be constructed around it. It has flown missions from the east coast to the South Pacific and back.
So that can be done if needed, it just requires a few more steps and resources. But the trade is a large reduction operational costs. And there are better mission designs that don’t require it.
Neither the KC-10 nor the MRTT can conduct those missions without themselves needing to be refueled. So it’s really just matter of degree.
A mission that takes one KC-10 would requires two KC-135/KC-46. Double the crew requirement.
A mission that can be completed by six KC-10 would require 14 smaller tankers.
All in name of saving money??
This isn’t true, because again you haven’t understood the CONOPS.
If you talked to a boomer or saw the tanker mission planning forms, you’d better understand the mission requirements. It’s not a simple matter of capacity.
The same is true for any logistics and delivery system. An 18 wheeler truck is not necessarily best for all land deliveries either.
What matters is the tanking fuel you arrive at the destination with, and the time you can loiter with it, while maintaining an anytime abort plan that allows you to land safely if something goes wrong.
When all that is considered, the larger tanker doesn’t necessarily come out as the best option. And having separate flight and delivery fuel supplies, can also be an advantage in mission planning.
@Duke
Boeing is taking a beating on the KC-46A. If Boeing is dumb enough to sell that aircraft for what they did then the taxpayer is the winner.
At the risk of “beating” a dead horse, Boeing took a “beating” on the development contract for the KC-46, but not the production and service contracts. The development contract was only $5B of the contract total.
Even if that is doubled or tripled by cost overruns, the entire package is now valued around $200B, with the addon orders. So roughly 3%.
IIRC, the losses on the KC-46 program were $7bn. Now add on the cost of financing because BA doesn’t have any money – $53bn in borrowings.
Now calculate how much in revenues is needed, at the current margin – to cover that $7bn loss, plus interest.
Financing is really a separate issue, which Boeing has handled pretty well.
We’ve had this discussion before and nothing has really changed, so no need to have it again. I trust the evaluation of the banks and the many observers who are monitoring Boeing. All of them acknowledge the development loss but none of them view it as a threat.
The KC-46 losses have been written off as they occurred and the remaining majority of the contract is free of loss. So the impact going forward for either BDS or Boeing as a whole, is minimal.
@Rob
“The KC-46 losses have been written off as they occurred and the remaining majority of the contract is free of loss. So the impact going forward for either BDS or Boeing as a whole, is minimal.”
No.
The losses are still there. They just have a different name. They are now called Short and Long-Term Debt.
“Nothing has changed”, as you put it, because there is still $50bn + of debt on the balance sheet, that is still costing the company money.
$1.418bn in the first six months of 2025, alone.
So, that $7bn has to be re-paid, along with the borrowing cost on it. AT 5% that’s $350m per year.
So how many KC-46’s does Boeing have to sell, to cover $350m with earnings? Let’s sat they make $25m an aircraft (we’ll be generous) that makes 14 jets handed over, to cover interest expense only.
Boeing has handed over 5 in the first 6 months. Only another 9 to go, then it can start making money to pay off capital.
(and while this subject may have been covered before, it is worth repeating, when rosy predictions are made.)
“The MAX-7/-10 is an issue. It should not be that hard to solve the icing issue on the cowl.”
LMAO. Seriously?? If it’s that* easy, why doesn’t BA have the solutionby now after eighteen months of work??
Remember, Boeing initially claimed that issue would be fixed and certified “within 6 to 9 months”.
That was several years ago..
Ah, can TW worked undercover for BA or an inspiration for BA’s engineers?
To clarify, Boeing is about 6 months behind schedule on the deicing fix.
They’ve been through a couple stages. First they said they would apply for a waiver, then when the solution became more involved, they said they would build the redesign into certification.
Now they said there will be another several months delay to redesign for engine air inlet conditions around the improved cowling.
Note that has happened as well for the B-52 engine upgrade. That cowling too has gone back into the wind tunnel to be tuned for specific conditions where it caused a problem.
I don’t know the details, but it’s likely due to geometry or heating that trips the boundary layer of the inlet into turbulence, for specific conditions. That can alter engine performance and create stresses on the fan. And it’s the kind of thing you usually find in testing. CFD only gets you so far.
The nacelle anti-ice system in a composite inlet touches on many systems from engine and on. With new FAA requirements all systems need to be fully fault analysed, tested and documented. Still that should be natural routine for any modification. I guess the new strength requirements for inlets with blade-out at top rpm and fan cowl fool proofing latches indication of fully locked comes into the redesign together with coat and mass reduction.
Still no timeline for 777X EIS. Interesting.
Thats because the flying has been done and the paperwork done. Its FAA timeline now, who knows how many experienced staff have been let go under the ‘ trumpist-party-state purges’
https://www.ainonline.com/aviation-news/air-transport/2025-02-17/hundreds-faa-employees-drawn-mass-layoffs
“Thats because the flying has been done and the paperwork done.”
Can you explain what’s holding back the 777-9 from certification? It seems the glass in your eyes is “overflowing”. 😂 Not sure where is your source or how correct it is, but it’s said that there’s a long, long way to go as the FAA allow BA to move to the “next phase” of certification.
To clarify, they said it was the final phase of certification. You may be reading too much into this.
Leeham just published an article that 777X certification is close, and all signs are pointing to that being the case.
I heard that’s not true. This is the fourth phase of the certification program.
Apparently more tests are underway:
“N779XY is back in the air”
Fourth and final are not necessarily mutually exclusive. The evidence weighs heavily against you here. But if this is what you choose to believe, that’s your privilege.
There is a timeline, it’s just not narrowed down to a specific date. Boeing has ended that practice because they cannot predict FAA progress or requests for further documentation.
Also it creates the impression that the tail is wagging the dog, with Boeing telling the FAA when to certify the aircraft. All of that ended with the MAX accidents.
Except of course, for the MAX 7 and MAX 10 program. Boeing is ok with letting customers know it’s now going to be 2026. That, they can predict and I guess the process didn’t really end with the Max…did it?
Certification of the 777-9 Ortberg said is still 2026. That timeline has not changed.