**Analysts Express Cautious Optimism Regarding Boeing CEO’s Production Promises Amidst Past Leadership Challenges**
Boeing’s new CEO, Kelly Ortberg, stepped into his role aware of the significant challenges facing the company, which culminated in an $11.8 billion loss last year. During recent earnings calls and interviews, Ortberg suggested that the worst may be behind Boeing, highlighting efforts to resolve ongoing production issues. He announced plans to increase the production rate of the 737 MAX to 38 jets per month later this year, contingent on federal regulatory approval.
Industry analysts have responded with a mix of hope and skepticism. Gautam Khanna, an aerospace analyst at TD Cowen, noted that since Ortberg’s appointment in early August, Boeing has adopted a more measured approach to addressing production challenges, opting to slow down temporarily to ensure a smoother ramp-up in the future. As of January, Boeing had delivered 33 737 MAX jets, significantly surpassing previous monthly delivery rates. Following the earnings announcement, Boeing’s stock rose by 2.8% since Ortberg took over, although it experienced some pullback afterward.
Despite these positive indicators, Khanna cautioned that Ortberg’s assurances are overshadowed by the unfulfilled promises of his predecessors, including issues related to the 787 program and the 737 MAX incidents. “Everyone’s scarred from the history,” he remarked.
Suppliers, in particular, have been hesitant to invest in anticipation of production increases that have not materialized in the past. Many are holding back their funds, as noted by Andrew Flores, president of Independent Forge, a supplier of aluminum parts for the 737 MAX. He expressed cautious optimism, stating, “I see light at the end of the tunnel, but it’s a long tunnel.” For the supply chain to improve, there needs to be a renewed trust in Boeing’s commitment to ramping up production.
Phil Gibbs, an analyst with KeyBanc Capital Markets, emphasized the importance of trust between Boeing and its suppliers, as their success is intertwined. However, a Boeing supplier, who requested anonymity, pointed out that suppliers are currently making independent decisions, reflecting a cautious stance following a 53-day strike that halted nearly all Boeing production last year. While there is a sense of optimism now that the strike is over and production is set to increase, the path forward remains uncertain.