As Boeing continues to chart this complicated landscape, the company’s journey is one of great realignment and a cautionary tale. In the meantime, new CEO Kelly Ortberg took the reins in August. Now she’s piloting Boeing through a transformative turnaround period, boosting output for the 737 Max jets and driving higher cash flow-boosting aircraft deliveries. Then the recent events, most notably the tragic crash of a Boeing 787-8 Dreamliner operated by Air India, take over and taint this incredible progress.
Under Ortberg’s leadership, Boeing has continued to take bold steps to accelerate the production of its most popular 737 Max jets. The company has seen an uptick in cash-generating deliveries of new planes, signaling a potential turnaround from several years of manufacturing and safety crises that have hampered its reputation and market share. Boeing is very much committed to regaining the competitive advantage it’s lost to Airbus. The company is beginning to come under pressure for mounting costs due to tariffs on aircraft and parts.
As of late April, the rental price for a 12-year-old Boeing 737 jumped up to $241,000 per month. To put that in context, that’s an almost unbelievable almost 42% jump from just two years ago! This increase in rental prices exemplifies the increasing market for aircraft as airlines are attempting to expand their fleets.
Tragically, the recent crash of Air India Flight 171 has marred Boeing’s progress. The 787-8 Dreamliner in the incident was more than 11 years old. Tragically, only one of the 242 passengers survived. What caused the crash is still unknown and will take weeks or months to figure out as investigations continue.
In response to the tragedy, Ortberg made the decision to scrap his plans to attend the Paris Air Show. It is one of the most coveted highlights of the prestigious event, which is held every other year. Second, he stressed the need to let investigators freely do their investigative work without assumption about what led to the crash.
“It is important that we do not speculate about the accident and let the investigators do their work,” – Kelly Ortberg
Ortberg had stated previously that he would focus on making sure his staff and customers were supported through this difficult transition.
“As our industry prepares to start the Paris Air Show, Stephanie and I have both canceled plans to attend so we can be with our team, and focus on our customer and the investigation,” – Kelly Ortberg
Despite these challenges, Boeing is still confident in their prospects for growth moving forward. Yet the firm plans to restart deliveries of passenger jets to China as soon as June and accelerate overall output rates. Analysts expect by 2044 markets such as China will lead the world’s fleet, taking more than half of it. That’s quite a jump from their 40% share last year.
Richard Aboulafia, an aviation industry analyst, said there’s definitely been a change in market appetite.
“It used to be all about single-aisle orders,” – Richard Aboulafia
He highlighted the new high of large twin-aisle orders driven by international traffic requirements.
“Everyone is booking these monster twin-aisle orders for international traffic,” – Richard Aboulafia
While some may question how recent events could impact Boeing’s reputation, Aboulafia stated that the evidence does not suggest design flaws in their aircraft.
“I just don’t think given what we know now it has anything to do with the design or the build of the airplane. It sure doesn’t look like it,” – Richard Aboulafia
Challenges remain. Boeing is struggling in large part because of a lack of supply of trained workers. This unprecedented shortage has caused serious delays in the company’s ability to deliver new planes. Even as the company attempts to claw its way back, it’s been under increasing pressure from both direct competition, in Samsung, and changing industry dynamics.
Boeing’s stock has been surprisingly strong this year, with shares up more than 13% so far this year, outperforming the S&P 500 index. This positive trend reflects investor confidence in Boeing’s ability to recover from past missteps and adapt to changing industry dynamics.
Boeing leaders want to be smart and strategic in meeting the challenges and seizing the opportunities ahead. They know that transparency and accountability is key to the credibility of this process. The recent crash is a very salient reminder of the great stakes that aviation safety has. More broadly, it highlights the ongoing importance of protecting the public trust.