President, Chief Executive Officer & Director, Boeing
Boeing CEO: New Air Force One most complex twin-aisle plane we've ever built
Boeing CEO Kelly Ortberg tells CNBC's Phil LeBeau that the next-generation Air Force One jets will be among the most complex ...
About Robert Ortberg
Boeing CEO Kelly Ortberg said the company is "turning the corner" but has not yet "finished turning the corner," citing progress in production ramp-ups and a strong backlog. He stated that the company needs "another couple of years" to improve cash flow and pay down debt before it can commit to developing a next-generation aircraft, noting that the market is not yet ready and customers are focused on existing product maturity. Ortberg described the new Air Force One as "the most complex twin-aisle aircraft that we've ever done," adding that the design phase is complete and the company is "confident" in the build. Ortberg confirmed that Boeing will start production on a new 737 Max assembly line in Everett on July 6, moving from 42 to 47 aircraft per month. He said the company is "not going to push airplanes out the door if we're not stable" and that key production metrics have been "pretty good." On regulatory trust, Ortberg noted that the FAA recently restored full certification authority, which he called a "signal of our regaining trust with our regulator." He attributed the company's execution focus to its own efforts, while acknowledging that the Trump administration has been "very helpful" to the aerospace industry through trade policy and sales campaigns.
Transcript (23 segments)
P
Phil0:00
Let's talk about right now. The 737 Max 7. You guys are close to FAA certification with that. How critical is that when you get it that it's that next milestone?
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Robert Ortberg0:11
Well, it's the first new airplane we've certified in a long time. So, it's a really critical milestone. And as you mentioned, we're done with the flight testing on the -7, and we expect certification here very shortly. And then following right after that will be the -10 certification. So, we've got a couple flights left on the -10, and then we'll be glad to get that product into the market as well.
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Phil0:32
The FAA last week gave you guys, once again, full certification authority. Haven't had it since 2019. We all know what's happened since then. How much will that help you guys as you're increasing your production and delivery rates?
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Robert Ortberg0:46
Well, it'll help us, but I think even more than that, it's a signal of our regaining trust with our regulator. We've been working very, very hard to be more transparent and work collaboratively with the FAA and establish that trust so that they can allow us to sell off each aircraft.
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Phil1:01
What's the biggest thing that you've learned in this process over the last few years when you talk with the FAA and when you talk with the administrator himself?
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Robert Ortberg1:09
Be an open, transparent, work together on the issues, and we'll be fine.
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Phil1:13
The supply chain is a big focus for a lot of companies here. And you guys have invested heavily in increasing capacity and production. How much better is that supply chain resiliency now than, let's say, a year or 2 years ago?
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Robert Ortberg1:27
Well, I think it's significantly better than 2 years, and it's better than it was last year, and it's going to continue to get better as we go forward. Now, we're increasing rates as you just talked about, and so as we increase rates, we're going to expect the supply chain to also step up and increase rates. So, we've got to work together as we do that.
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Phil1:45
All right, you heard them talking earlier. We heard them talking earlier about future generation aircraft. You were asked about this yesterday here in England. Where are you guys on the thought process for when you will introduce that replacement for the 737?
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Robert Ortberg2:01
Well, we think about three things that have to happen. First of all, we have to be ready, and part of that is getting our financial house in order, and we're working on that. It's going to take a couple more years to get where we want to be. The second is the technology's got to be ready to introduce a new airplane, and then the third component is the market's got to be ready. Right now, the customers are telling me focus on your existing product line. We really want to see better maturity of the existing product line before we move to a new airplane. So, it's a ways off.
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Phil2:30
It's not though that you guys are ignoring this. You know that at some point you will. I think some people have heard the comments from some of your competitors, well, it's 2030 or 2031. You guys look at this and say, let's focus on now, and then we have time to start rolling out plans for the future.
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Robert Ortberg2:46
Well, yeah, but believe me, we're spending time thinking about what the new airplane should be, and we'll be ready when the market is ready.
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Phil2:55
The engineers union contract negotiations, and you made comments yesterday about the importance of better understanding your employee workforce, working with them better. How confident are you that you can get a contract done when the current one expires in October?
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Robert Ortberg3:10
Well, we've started negotiations actually early. That contract comes up in October, and I'm very hopeful that we get through the negotiations with no work perturbation, and we get on. We want to have a good contract with our SPEEA employees.
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Phil3:24
Air Force One is also getting a lot of attention, especially what's going on. You're not involved with the current one that was the gift to the Trump administration, but you are developing the next two aircraft that'll be the next generation Air Force One. Still on schedule for the 2028 time frame for delivery?
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Robert Ortberg3:41
Yeah, it is, Phil. One thing that we've said is we're going to spend a little bit more money on the VC-25B program to make sure it stays on schedule. So, we're going to provide some additional staffing, engineering, and production staffing, and work some multiple shifts to make sure we keep that airplane on schedule. Very important to deliver that on time.
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Phil4:00
Maybe you could put this in layman's terms. People do not fully understand. This is not your typical aircraft that you're developing and building.
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Robert Ortberg4:06
No, this is the most complex twin aisle aircraft that we've ever done. So, very, very complex. We're all through the design phase and building the airplanes back up. So, we're confident. We know what we've got in front of us.
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Phil4:19
The Defense Department and the Trump administration made it very clear. They want the contractors to increase production, to work with suppliers. Have you been able to start making those investments to the point where you start to see some payoff?
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Robert Ortberg4:33
Oh, yeah, absolutely. In St. Louis, we're investing in a million square feet of secure facility for our next generation fighter programs. We're investing, as you know, in our commercial business both in Charleston and in the Puget Sound. We're investing heavily. We'll invest $4 billion in capital just this year, and that will increase next year.
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Phil4:56
Last question. I know you don't want to get ahead of yourself. Orders still have to be announced while they're here. What kind of a show do you think we're going to see in terms of demand?
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Robert Ortberg5:04
Well, I think it'll be a good show. We'll see what the customers want to announce. I think there'll be a few announcements here.
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Phil5:11
All right.