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Ortberg Solidifies His Role As Boeing’s Turnaround-In-Chief
Aviation Week editors spoke with Boeing CEO Ortberg in a Seattle factory during a visit in early May.
Kelly Ortberg has had the kind of first year on the job that would make many people glad not to be in his position. Weeks after he became CEO of Boeing on Aug. 8, 2024, the company’s central corps of factory workers in Seattle launched a heated 53-day strike. The disasters piled up: prominent management changes, a round of company-wide layoffs, President Donald Trump’s tariffs, federal contract upheaval, the first 787 widebody crash and, above all, Boeing’s worsening finances.
Ortberg began his tenure by relocating his main office to Boeing Commercial Airplanes (BCA) near Seattle, effectively reversing predecessors’ decisions to move headquarters to Chicago and then to the Boeing Defense, Space and Security (BDS) site in Arlington, Virginia.
That was just the first of many reversals that Ortberg has initiated at Boeing. A year into his tenure, analysts acknowledge that while the company still faces considerable challenges before it can reclaim its precrises prowess and industry leadership, at least the company is making progress.
- Observers credit Ortberg with kick-starting Boeing’s recovery
- Hard challenges remain, including certifications and cash flow
“It’s clear our recovery plan is taking hold,” Ortberg declared on July 29 while delivering second-quarter 2025 results. “We’re making steady progress to stabilize our business, strengthen development program execution and change our culture to set up for the future.
“I still have some work to do,” he told a teleconference of financial analysts later, “but I’m pretty pleased with where we are through the first half and through my first year.”
Others are pleased as well. “Today, Boeing’s relationships with regulators, employees, suppliers and customers are on the mend,” Melius Research analyst Scott Mikus affirmed to his clients after hearing Ortberg speak. “Customers are expressing increased confidence in Boeing’s delivery projections, and suppliers note that Boeing is now more collaborative and recognizes the importance of taking a long-term view in an industry where aircraft programs span decades.
“In an organization of 170,000 people, culture changes aren’t easy, and they don’t happen overnight,” Mikus continued. “However, we believe Boeing is heading in the right direction and that progress is showing up in the quarterly results.”
Indeed, the latest quarterly results beat consensus forecasts on Wall Street, and analysts already had heightened expectations. Boeing reported a core loss per share of $1.24 compared with a consensus vision of $1.40. Revenue in the second quarter of 2025 was up 35% year over year, to $22.7 billion, and $500 million above expectations. Better yet, cash burn of $200 million in the latest quarter paled in comparison with forecasts of around $1.6 billion. Stripping out other costs and looking at only operations, the second-quarter 2025 performance also included the first positive operating cash flow report since 2023, at $227 million in the latest three-month period compared with a $3.92 billion cash burn in the same 2024 period.
What is more, while Boeing still has not provided formal 2025 financial guidance, retiring Chief Financial Officer Brian West told financial analysts during a teleconference that they can expect the aerospace and defense giant to burn only $3 billion or so in cash this year. That compares with previous—albeit similarly unofficial—guidance of $4-5 billion used in all of 2025.
“The first-half free cash flow usage of $2.5 billion exceeded our expectations, and the second quarter use of $200 million was quite a bit better,” West said. Results were driven primarily by better commercial aircraft delivery numbers as well as timing of some financial issues.
Ryan O’Loughlin, a director at credit agency Fitch Ratings, said the improved performance further positions Boeing to cut its gross debt “significantly” in 2026. That debt stood at $53.3 billion at the end of the latest quarter, while cash on hand and marketable equivalents totaled $23 billion.
Overall, the airframer and defense prime’s combined work backlog has grown to $619 billion, up about 14% sequentially from $545 billion at the end of the first quarter of 2025. The backlog now includes more than 5,900 aircraft.
First-half deliveries totaled 280 aircraft, the most since 2018’s 378, which came amid the last full year in which no major production-related interruptions or delivery pauses occurred linked to safety or quality shortcomings. Monthly rates on its two key programs, the 737 MAX and 787, are climbing steadily and, crucially, with the stability needed to sustain growth.
Leading the charge is the 737 program. Boeing is settling in at a production rate of 38 aircraft per month. The next step is securing the FAA’s approval to go beyond 38, the maximum rate set after the Alaska Airlines 737-9 door-plug blowout in January 2024 kick-started a company-wide safety and quality revamp. “I expect to be going to the FAA soon to start . . . discussions on the rate increases,” Ortberg said.
The 787 widebody program is following a similar trajectory. Monthly output recently stepped up to seven of the twin-aisles from five, and Boeing has laid the groundwork to increase production to its previous high of 14 jets per month or more.
Ortberg nonetheless insists that every rate increase will be methodical, in part to ensure stability in the supply chain but also to secure customer confidence. This disciplined approach is occurring in the company’s defense and space division, too. Boeing this year won the landmark contract to build the F-47 combat aircraft for the U.S. Air Force, and BDS finances appear to be stabilizing.
The finalized April-June results show that Boeing has avoided a second sequential quarter of charges against some of its troubled programs. Ortberg reiterated that the company will no longer sign contracts with challenging conditions—firm, fixed-price development—that caused trouble on the loss-making KC-46 tanker, T-7A trainer and MQ-25 refueling drone. Both the F-47 and another win, the Evolved Strategic Satcom program, are cost-plus development with less risk.
But Boeing is making progress with the most problematic of its BDS programs also, Ortberg said. For instance, Boeing has advanced the MQ-25 closer to first flight for the U.S. Navy. The program has started ground tests and moved production to a new facility. Boeing also has achieved five milestones as part of an agreement with the Air Force on adjusting the T-7A plan. In addition, the company received a morale boost when the Air Force said it would pursue a sole-source award for the next program of tankers.
Company management expressed confidence that the defense business can reach the target of high-single-digit earnings margins. BDS delivered a 1.7% operating margin in the second quarter, up from a negative 15.2% in the prior-year period.
The latest quarter also was the second consecutive period with positive pretax earnings for BDS, JP Morgan analysts Seth M. Seifman, Rocco Barbero and Alexander Ladd noted. “There is still a lot of work to do under Steve Parker, who recently took over the segment on a permanent basis after being named interim leader last year, but we are seeing early progress,” they said.
Mikus of Melius said that looking back, Boeing’s recent pivot has been phenomenal considering the litany of challenges facing it and Ortberg. “In that vein, the turnaround at Boeing has been nothing short of remarkable,” Mikus said.
As if to punctuate for effect, Ortberg told analysts that he sees no reason why Boeing cannot hit the November 2022 prediction of then-CEO David Calhoun that the company would generate $10 billion in free cash flow a year—although Calhoun promised as much by 2027 while Ortberg explicitly declined to forecast a date.
Therein lies the rub—the OEM must still overcome substantial hurdles to reach the $10 billion mark, which is critical to Boeing’s long-term viability, since it must pay down $30 billion of accumulated net debt. Boeing shares closed down more than 4% in regular trading on July 29. While it is hard to ascertain stock traders’ motivations, commenters on Yahoo Finance and Reddit cited a bevy of reasons, beginning with the now-confirmed delay of 737-7 and -10 FAA certifications into 2026.
A recent uptick in flight-test activity through June indicated that Boeing was closing in on a preferred configuration to address the long-running redesign of the 737-7/10 engine anti-ice system and associated nacelle inlet structure, but Ortberg acknowledged, “we just haven’t closed the design.”
Some investors might have been disappointed that Boeing’s 737 ramp-up is not as aggressive, analysts also noted. Ortberg has been adamant that stability means multiple months of green key performance indicators (KPI). One of the metrics—rework during final assembly—still is “below the threshold,” he said. “So we’re working that down, and once we get that KPI where we need it, then we’ll be having those discussions with the FAA.”
After reaching the rate of 42 aircraft per month, Ortberg reiterated that subsequent rate increases will occur in increments of five no sooner than every six months. In a best-case scenario that sees Boeing transition to 42 by year-end, it would move to 47 in mid-2026 and then 52 sometime around late 2026 or early 2027.
While possible, such a path is far from assured, as Boeing managers know. “As we go to the new rate, [we will] ensure we’re stable and can prove that the production system has the right metrics before we go request an increase in rate,” Ortberg said. “And if they aren’t, then we’ll stay at that rate until we get the stability to where we want it.”
Meanwhile, BDS union workers in Missouri and Illinois went on strike on Aug. 4 after rejecting a proposed four-year labor agreement, a reminder of the trouble Boeing had with its Puget Sound workforce last fall. The labor action involved approximately 3,200 workers, a fraction of the BCA workers who walked off the job near Seattle. The strike affects facilities that build Boeing’s F-15EX and F/A-18 fighters as well as missiles, defense systems and the new MQ-25 Stringray. It also comes as Boeing looks to begin work on its new sixth-generation F-47 jet for the U.S. Air Force.
Another watchpoint is closing the acquisition of Wichita-based Spirit AeroSystems and then integrating the world’s largest aerostructures provider into Boeing. The deal, worth more than $8 billion up front before integration costs, was initially projected to close by midyear but now will not be consummated until the third quarter of 2025, at the earliest. Rival Airbus has suggested it could spend billions of dollars to fix the smaller parts of Spirit that it is buying as part of the carve-up, leaving Boeing’s ultimate integration costs uncertain.
To be sure, Ortberg has not been without criticism in his first year as Boeing CEO. During the Seattle strike, several industry observers wondered aloud why Ortberg was not more prominent in trying to resolve the situation sooner. A few openly questioned whether he was fully informed or had complete control of Boeing’s bureaucracy.
Ortberg also has been questioned about the rate of change in Boeing management and about making then-BDS chief Ted Colbert his first apparent ouster last September. By contrast, top BCA leadership was left untouched, although Ortberg later removed corporate chief operating officer duties from BCA head Stephanie Pope to let her focus on the commercial division. He also announced a 10% reduction in force (RIF) last year and was criticized for risking the loss of necessary expertise and institutional knowledge.
Certainly, Ortberg has since made more management changes, including recruiting well-regarded veteran finance leader Jesus “Jay” Malave to become Boeing chief financial officer starting Aug. 15. Boeing could also face future RIFs regardless, especially as it integrates the majority of Spirit.
Ortberg is the first to admit he and Boeing have much more to do. When an analyst asked him on July 29 to reflect on his first year as Boeing CEO, Ortberg exuded the same Midwestern evenness that had helped establish him as a reputable leader last decade (AW&ST Aug. 12-Sept. 1, 2014, p. 14).
“As you know, I spent a lot of my career working very closely with Boeing,” Ortberg responded, alluding to his days running erstwhile Rockwell Collins. “So not a lot of surprises with what we’re dealing with. It’s just one day at a time. Improve our performance; address the issues that we have; restore trust and build confidence with our customer base and our end-users of our products. And I think you’re seeing that.”
—With Brian Everstine in Washington
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