On 20 February, Boeing chief executive Kelly Ortberg told investors and the company’s vast network of suppliers exactly what they wanted to hear.
“Supply chain on the 737 is in good shape… I feel like we are headed in the right direction,” he said during a Barclays investor conference. “We don’t have any supply chain constraints that are going to keep us from ramping up to 38 per month.”
Observers might be forgiven for taking those comments with heavy scepticism, however. After all, Boeing’s leadership have a well-documented history in recent years of glossing over troubling and unresolved issues with optimistic assurances, only for them to later prove more troubling and less resolved than implied.
REAL ASSURANCES
But this time might be different, since the man making the assurances had no hand in creating the troubles in the first place. It was not former CEO Dennis Muilenburg, who ran the company into and during the 737 Max grounding, nor his successor David Calhoun, a board-member turned CEO under whom Boeing’s recovery never gained traction.
A former outsider and one-time Collins Aerospace chief, Ortberg was hired by Boeing’s board last August to make something in the way of positive action finally happen for it.
Considering his reception so far, including from typically cautious industry analysts and consultants, Ortberg could be called the face of New Boeing.
“I’m very bullish on Boeing. I think Kelly is going to turn this company around. Supply chain is improving,” Kevin Michaels, managing director of AeroDynamic Advisory, told Boeing suppliers during a conference near Seattle in February. “I am hopeful we are coming out of this stupid shareholders-first era that has punished this industry.”
“Boeing is really instilling a sense of quality and safety-first to their supply chain now,” says Michael Aplin, consulting leader at aerospace and defence advisory Patriot Industrial Partners. There is a sense that under Ortberg Boeing is “shifting back toward an engineering and quality company”.
“My confidence stems from Kelly Ortberg’s strong engineering background and presence on the shop floor at Boeing’s manufacturing sites surrounding Seattle. Contacts there have expressed unanimous optimism post-strike,” Aplin adds.
But there is no doubt that Boeing has a long, long way to go.
The company has lost significant competitive ground to Airbus. Areas of its supply chain remain wobbly. Financial pressures abound. And Boeing faces the incredibly complex task of completing its planned acquisition of supplier Spirit AeroSystems.
FINANCIAL RESULTS
On the financial front, Boeing closed 2024 with a $3.9 billion fourth-quarter loss (the first full quarter on Ortberg’s watch), bringing its full-year 2024 loss to a staggering $11.8 billion. The results reflected all sorts of problems, but most impactful were a production slowdown prompted by the January 2024 inflight blow-out of a 737 Max 9’s mid-cabin door-plug, and a late-year, nearly three-month stoppage in the Pacific Northwest due to a machinists union strike.
Those factors left Boeing able to deliver only 348 commercial jets last year, down one-third from the 528 aircraft it delivered in 2023. By contrast, Airbus delivered 766 aircraft in 2024.
Boeing has also lagged in the orders department. The company signed deals last year covering the purchase of 569 jets – reduced to 377 net orders when accounting for cancellations. By comparison, Airbus took net orders for 826.
Boeing ended January with 5,554 jets in its backlog, including 4,296 737s, 109 767s, 427 777s and 722 787s. Airbus, meanwhile, has nearly 8,700 jets in its backlog, reflecting the competitive challenges facing the US manufacturer.
But analysts see reasons for optimism, starting at the top.
“I would argue still that Dave Calhoun was perhaps the worst CEO… of any company ever created,” Richard Aboulafia, also with AeroDynamic, said in February. “Kelly Ortberg, by contrast, I think is a pretty darn good guy. I like what I’m hearing out of Boeing… I’m kind of a believer in their recovery plan.”
The company is also on firmer financial footing after raising $24 billion in fresh capital late last year.
Against that backdrop, Ortberg says the airframer is on track to significantly hike 737 Max production, and hence deliveries, this year – a critical step toward ensuring more cash is soon moving through its front door.
The US Federal Aviation Administration (FAA) capped 737 production at 38 jets monthly last year following the door-plug blow-out, which occurred because workers failed to install securing bolts during production.
Boeing has not recently been producing close to 38 737s monthly. But Ortberg has said it intends to accelerate output, hitting the rate-38 cap this year before boosting output, with FAA approval, to 42 narrowbodies monthly.
The company will need to complete a “capstone review” with the regulator to demonstrate its readiness before the FAA approves a rate exceeding 38 monthly, the CEO has said.
Boeing this year also aims to hike 787 production to seven from five jets monthly, and to deliver 75-80 of those widebodies, up from 51 last year. But Ortberg notes that the 787 programme remains hindered by supply shortages – including of heat exchangers reportedly supplied by Collins Aerospace – and hold-ups to certification of cabin seats.
The company has also made recent progress winnowing its once-massive inventory of undelivered 737 Max and 787s, and is preparing to shutter so-called “shadow factories” – the sites where it has been completing rework to fix defects prior to delivery.
At the end of 2024, Boeing’s undelivered inventory included 55 737 Max 8s and 25 787s produced prior to 2023, down from respective figures of 140 and 50 787s at the end of 2023, Boeing chief financial officer Brian West says.
SPIRIT ACQUISITION
Progress aside, Boeing’s recovery depends on it clearing several major hurdles, including the acquisition of Wichita aerostructures firm Spirit, and achieving certification of the 737 Max 7, Max 10 and 777-9.
“I’m cautiously optimistic that Boeing is getting back on the right track, but there’s a lot to be done,” says BofA Global Research analyst Ron Epstein. “The reintegration of Spirit AeroSystems is a challenge. The ramp-up of various programmes is a challenge.”
Boeing in 2024 disclosed its intention to acquire Spirit as a means of helping address the supplier’s quality issues. But the deal is incredibly complex, requiring that Airbus acquire large work packages Spirit currently performs for its A220 and A350 programmes.
Spirit and Boeing hope to close the deal in mid-2025.
Meanwhile, Boeing’s 777-9 certification effort suffered a major recent setback after the company discovered cracks in engine-related structural elements, prompting it to ground its four flight-test aircraft in August last year. Flight testing only resumed in January.
Boeing still says it expects to deliver the first of the type in 2026, to launch customer Lufthansa, but previous delays have left customers wary of putting stock in its commitments.
Also early this year, Boeing quietly stripped orders for 38 777-9s from its backlog, moving the deals to an accounting bucket reserved for deals it suspects might never actually close. Such orders remain backed by contracts, but Boeing considers them uncertain due to reasons that can include certification delays and the financial health of buyers. The change further whittled an already modest 777-9 orderbook to 358.
The 737 Max 7 and Max 10 certification programmes also sit on uncertain ground, especially after Boeing in January revealed that the types’ stall-management yaw damper (SMYD) systems do not meet regulatory requirements due to the FAA adopting stricter software standards.
Boeing therefore asked the FAA to exempt them, through the end of October 2028, from airworthiness rules applicable to the SMYD. The rules in question set as “extremely improbable” the likelihood of SMYD failures capable of preventing safe landings.
In its January exemption application to the FAA, Boeing insists the SMYD systems are safe as designed. It intends to ensure they comply with the regulations before the exemption would expire.
Where that request stands with the FAA remains unclear. The agency did not respond to a request for comment, but the move has sparked some pushback.
The Foundation for Aviation Safety, a non-profit group headed by a Boeing whistleblower and former 737 production manager, and the Air Line Pilots Association (ALPA) have opposed the exemption on safety grounds.
“ALPA believes the certification of the SMYD system should be concluded before entry into service,” the union told the FAA in a 3 February letter.
HIGH DEMAND
Boeing needs to get the Max 7 and Max 10 into airlines’ hands as fast as possible. Southwest Airlines has been particularly clamouring for the Max 7, the smallest of the narrowbody family, and Boeing has robust orders for the Max 10, the largest variant and its answer to Airbus’s best-selling A321neo.
It is that jet – including the newly certificated 4,700nm (13,700km)-range A321XLR variant – that has left Aboulafia especially concerned about Boeing’s future.
Airbus has already taken orders for more than 6,800 of the narrowbodies, and deals keep rolling in. As such, Airbus has come to own the so-called mid-market space between widebodies and smaller narrowbodies – a segment Boeing once controlled with its 757.
Several years ago, Boeing had seemed poised to defend the space by launching development of the “NMA” – a new mid-market airplane. But former CEO Calhoun shelved those plans in 2020 amid the 737 Max grounding.
As a result, Airbus has only grown stronger, which is why Aboulafia is looking beyond Boeing’s short-term recovery, and making the case that it needs to think bigger by finally pulling the trigger on a clean-sheet jet to beat the A321neo.
“Boeing can destroy it. All they have to do is [build] something new. That’s the big challenge,” he says. “You can stimulate demand and capture market share simultaneously if you do it right.”
