news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

(Photo by Wang Xiaoyu)

Our reporter Wang Xiaoyu (chinatimes.net.cn) reports from Beijing

Fifty-six months after parting ways with its last engineer-turned-chief, Boeing will once again return to an engineer-led era on August 8.

Robert K. "Kelly" Ortberg, who is about to take office as the new president and CEO of Boeing, faces the same problem that his predecessor David Calhoun faced when he took office more than four years ago: how to revive this once dominant manufacturing giant. This is also the main reason why Calhoun announced his retirement early. Although the board of directors commented that he "led the company to cope with various challenges in recent years", he failed to help Boeing out of its predicament and rebuild its competitiveness, and even fell into more troubles and crises, which doomed the "Savior 1.0 era" to a hasty end.

Return to tradition?

Since Calhoun announced in March that he would retire at the end of the year, who will take over this troubled company has become the focus of attention both inside and outside the industry, and the "coach selection" work has also started.

Over the past few months, people including Stephanie Pope, current CEO of Boeing Commercial Airplanes, Pat Shanahan, CEO of Spirit AeroSystems, a supplier just acquired by Boeing, and leaders of some of the industry's top companies have been linked to this seemingly "hot" position. But for the successor, the temptation of being able to help Boeing, an industrial giant with huge influence in the world, get back on track and leave a name in history is totally worth the risk.

"The Board conducted a comprehensive and extensive search over the past several months to select Boeing's next CEO, and Ortberg has the right skills and experience to lead Boeing in its next phase," said Boeing Chairman Steven Mollenkopf. "Ortberg is a seasoned leader who is well respected in the aerospace industry and has a reputation for building strong teams and running complex engineering and manufacturing companies. We look forward to working with him to lead Boeing through this critical period in its long history."

According to a statement released by Boeing on July 31, Ortberg, 64, holds a bachelor's degree in mechanical engineering from the University of Iowa and has more than 35 years of leadership experience in the aerospace industry.

Ortberg's LinkedIn profile shows a resume that is "demonstrable enough". He previously served as CEO of United Technologies Collins Aerospace, which was formed by the merger of United Technologies and Rockwell Collins in 2018. Collins Aerospace is a global leader in the aerospace and defense market with annual sales of $23 billion and 70,000 employees worldwide.

Ortberg joined Rockwell Collins in 1987 as a project manager and held increasingly important leadership positions at the company, ultimately becoming president and CEO in 2013. Ortberg led Rockwell Collins to complete the two largest acquisitions in the company's history, acquiring flight services provider ARINC and cabin interiors supplier B/E Aerospace in 2013 and 2017, respectively. According to industry evaluations, Ortberg led Rockwell Collins to "reshape the aerospace industry and help the company develop into an important Tier 1 supplier."

Rockwell Collins announced its merger with United Technologies in 2018, and merged with the then United Technologies Aerospace Systems to form Collins Aerospace. In April 2020, United Technologies merged with the large defense giant Raytheon to form Raytheon Technologies, which was later renamed RTX.

Boeing said Ortberg has held many important leadership positions in the industry, including director of RTX. In addition, he also serves as a director of Aptiv PLC, a global technology company that is a leader in the vehicle system architecture industry. He also served as chairman of the board of directors of the Aviation Industries Association (AIA).

"Judging from Boeing's current situation, the new leadership will face huge difficulties and it is difficult to judge the prospects. But judging from the general direction of change, there seems to be some hope compared with before," an aviation manufacturing analyst currently living in the United States said in an exchange with a reporter from the China Times. "Most of the problems Boeing needs to solve now are concentrated in the production and manufacturing field, and the return of the engineering culture is crucial."

Another big change is that Ortberg may lead the executive team to move the office location from the current Virginia back to Seattle, Washington, where Boeing started. Although it has not been officially announced yet, according to the China Times reporter from sources close to Boeing and industry veterans, Ortberg will move the office location to Seattle, where Boeing's main manufacturing facilities are located, after taking office.

In 2001, Boeing moved its headquarters from Seattle to Chicago, a city in the central United States, and moved again to Arlington, Virginia in May 2022. Prior to this, Boeing had sold many properties in Washington State, including the headquarters office building of the Civil Aircraft Group. According to Calhoun at the time, "Given that the new global headquarters is located in an area close to our customers and stakeholders and has access to world-class engineering and technical talent, the region is strategically important to our global headquarters."

According to a person close to Boeing who spoke to a China Times reporter, "If Ortberg chooses to work in Seattle, it will obviously be a statement of attitude, and other executives will likely follow suit, which will actually create an effect where the company's headquarters returns to the West Coast, where this once-powerful company established its foundation."

A tough start

For Boeing, although the impact of the 737MAX crash a few years ago and its subsequent effects have gradually faded after a series of adjustments, the door plug falling off of the Alaska Airlines 737MAX9 cabin door that occurred at the beginning of this year and the re-exposure of many new problems in production organization, supply chain management, and quality risks have not only caused trouble at the regulatory level, but also had a huge impact on the capacity expansion and delivery of civil aircraft products, and further transmitted to financial indicators.

According to Boeing's latest financial report, its loss in the second quarter reached $1.4 billion, and civil aircraft deliveries fell 32% compared with the same period last year. Boeing's revenue in the second quarter was $16.9 billion, with a loss per share of $2.33. Compared with the same period in 2023, revenue fell 15%, while losses per share increased almost 10 times. As of the end of June 2024, Boeing's net debt was approximately $45.3 billion, an increase of approximately $5 billion from the first quarter of 2024.

Due to restrictions on increasing production capacity imposed by the Federal Aviation Administration, Boeing has currently set its single-aisle passenger aircraft production target at 38 aircraft per month by the end of the year. This is not only inconsistent with the number of its backlog orders and market demand, but is also far below Boeing's actual production organization capabilities.

If we also take into account the fact that the aviation manufacturing supply chain is still far from returning to normal, the impact on the financial situation is likely to continue.

A series of unfavorable factors may have contributed to Boeing's extremely low-key appearance at the Farnborough International Air Show held in the UK not long ago. According to Boeing, it has adjusted its participation in the 2024 Farnborough International Air Show, "focusing on strengthening safety and quality, fulfilling customer commitments, and showcasing next-generation technologies and capabilities."

Boeing did not bring some of its latest prototypes to the air show for flight demonstrations and ground displays as it did at other air shows. According to Dr. Brendan Nelson, president of Boeing International Group, "The company is currently focused on implementing comprehensive safety and quality plans and fulfilling customer commitments. Based on these priorities, we have reduced aircraft displays and flight demonstrations at the air show and focused our energy on new technology, sustainability, safety and service solutions. The best way to build trust is through the first-class performance of our factory and paying attention to every aircraft."

However, compared with the "dismal" order harvest at last year's Paris Air Show, although Boeing still lags behind its old rival Airbus in terms of total orders this year, the quality of orders has obviously improved significantly.

Boeing received 96 firm orders and 22 commitments at Farnborough, with the largest order coming from Korean Air, which ordered 20 777Xs and 20 787-10s, with options for 10 787-10s. Qatar Airways also announced an order for 20 777Xs.

An exhibitor told a reporter from China Times during the air show that although the absolute number is small, Boeing's orders still show the competitiveness of its products in wide-body aircraft. "The demand for wide-body aircraft is much smaller than that for narrow-body aircraft, so it is particularly important to 'occupy a position' in the competition for orders."

Boeing also released its latest market forecast report during the air show, predicting that global aircraft deliveries will increase by 3% in the next 20 years, and by 2043, global airlines will need nearly 44,000 new civil aircraft.

Boeing said that in an increasingly interconnected world, the growth in demand for air travel continues to outpace economic growth. Four years after the pandemic grounded most of the global civil aviation fleet, air traffic growth has returned to the long-term trend Boeing predicted 20 years ago. According to the 2024 Civil Aviation Market Outlook, air passenger traffic will grow by an average of 4.7% per year over the next two decades compared to 2023. The number of routes served by global airlines has returned to 2019 levels, of which nearly 20% are new routes, reflecting the adaptability of the aviation industry in a dynamic market.

Boeing's forecast data shows that Eurasia is expected to become the largest market for aircraft deliveries in the next 20 years (accounting for 22% of the total), followed by North America (20%) and China (20%). Among the new demands, single-aisle aircraft will account for 71% of the fleet in 2043, serving short- and medium-haul routes with their flexibility, with a total of 33,380 new aircraft delivered. The global wide-body fleet will more than double, and twin-aisle aircraft will account for 44% of the Middle East fleet.

However, Boeing's competitiveness in the single-aisle aircraft market has obviously lagged behind its competitors, and with many unfavorable factors such as limited production capacity and supply chain impact, it is difficult to significantly increase the delivery volume in the short term, which will have a significant impact on cash flow. Therefore, the progress of its wide-body aircraft products in R&D, manufacturing and certification will become more important.

During a July 31 earnings call, Boeing Chief Financial Officer Brian West revealed that its 777-9 model, which is currently undergoing testing, "is currently advancing through the certification process and remains on track to begin deliveries in 2025."

In terms of the certification progress of narrow-body aircraft, Calhoun said in a July 31 earnings call that "both the 737-7 and 737-10 will be certified by mid-2025."

For Boeing, another positive sign comes from China. According to information obtained by our reporter from multiple channels, the issue of suspension of delivery due to the certification of cockpit voice recorder batteries has been resolved, and the delivery of new aircraft to Chinese airlines has been resumed not long ago. At the same time, the completion and delivery center established by Boeing in Zhoushan, Zhejiang has also begun to resume delivery of 737MAX series aircraft to Chinese airlines.

Editor-in-charge: Huang Xingli Editor-in-chief: Han Feng