A huge cash crisis looms as Boeing's new leader faces multiple challenges

At a critical turning point in the global aviation industry, Boeing is facing a dual crisis of finance and trust. To address these challenges, the company is determined to undergo profound reforms and has specially appointed Kelly Ortberg as the new helmsman to lead the company on the path to transformation.

This year, Boeing's stock price has fallen by over 24%, poised to deliver its worst annual performance since 2020. An incident on January 5 has added further pressure on the company. As the new CEO, Kelly Ortberg's top priority is to restore trust among airlines, U.S. regulators, and the public, and to continuously improve the production line.

Boeing's financial situation is extremely tight. In its recent financial report, Boeing disclosed a cash burn of as high as $4.33 billion in the second quarter. This figure, following the first quarter, once again highlights the company's cash outflow pressure. CFO Brian West warned that after consuming over $1 billion per month in the first half of the year, Boeing will continue to face cash outflow pressure in the third quarter, with the total annual cash consumption amount being unpredictable. Without the recent $10 billion financing obtained, Boeing may have already been in a serious financial crisis. The company urgently needs to improve its operations, otherwise it will struggle to continue borrowing or maintain a good credit rating.

Boeing is also facing issues in its Defense and Space division, with losses totaling $1 billion since mid-2023, mainly due to the significantly increased costs of converting two 747 jumbo jets into the next generation of Air Force One. These setbacks not only highlight Boeing's challenges in the commercial sector but also expose operational issues in its defense department.

In this context, Kelly Ortberg's appointment is particularly crucial. He is known for his keen insight and straightforward, pragmatic management style during his time at aviation supplier Rockwell Collins. Just 11 days into his CEO role, he completed a major acquisition, demonstrating his rapid and precise decision-making abilities. This style and capability are exactly what Boeing needs at present.

Aviation analyst Nick Cunningham emphasizes:

"Boeing urgently needs a corporate doctor who can delve into the core of the problem, reveal all truths, take decisive actions, and lead the company to a successful transformation."

It is worth noting that Kelly Ortberg was one of the few executives who dared to publicly criticize Boeing. In 2016, when Boeing suddenly extended payment terms from 30 days to up to four months, squeezing suppliers' working capital, Ortberg publicly accused Boeing of "withholding" payments.

Boeing Chairman Steve Mollenkopf speaks highly of Ortberg, stating: "Kelly is a highly respected senior leader in the aviation industry." To ensure Ortberg can fully leverage his leadership, Boeing has specifically waived the mandatory retirement age limit of 65, similar to the treatment given to former CEO Calhoun in 2021 After undergoing a leadership restructuring, Boeing also engaged in industry consolidation by selling its aviation business in Cedar Rapids, Iowa to United Technologies Corporation, which later merged with Raytheon Technologies Corporation to form the current RTX. This deal set a record for the largest acquisition in the history of the aviation industry.

Current CEO Dave Calhoun plans to continue serving until March 2025 as a special advisor. As part of his resignation plan, Boeing appointed Stephanie Pope as the new leader of its Commercial Aviation division earlier this year. The 52-year-old Pope is considered the most promising internal CEO candidate and is expected to become the company's head in the future