Boeing has experienced a notable turnaround in the past year, shifting from a precarious position to a more optimistic outlook under the leadership of new CEO Kelly Ortberg. A stark contrast to the previous year’s challenges—including delayed parts delivery and a military program plagued by budget overruns—investors are responding positively, with shares seeing a slight increase during Monday’s trading session.
Richard Aboulafia, managing director at AeroDynamic Advisory, has highlighted a significant cultural shift at Boeing, suggesting that the company is overcoming past self-inflicted challenges. This change comes as Boeing is on track to record its first annual profit since 2018, marking a pivotal recovery for the aerospace giant.
Ortberg implemented sweeping measures to stabilize the company, including a 10% workforce reduction, divesting divisions, and reworking executive operations. These steps were crucial in establishing a new labor agreement with workers following a protracted seven-week strike. Although bumps in the road remain, including ongoing disputes with clients like Air India, customer feedback indicates noticeable improvements in Boeing’s product quality.
However, a new strike may be on the horizon. Recently, Boeing offered a production deal to its fighter jet division in St. Louis, which faced rejection despite being characterized as the “richest contract ever.” The proposed agreement promised a 20% wage increase over four years for the fighter jet division, contrasting with a more attractive 38% increase offered to the passenger aircraft division. This discrepancy has led Boeing to prepare for potential industrial action.
On the investment front, analysts exhibit confidence in Boeing’s stock potential, as indicated by a “Strong Buy” consensus rating from Wall Street. Over the past year, BA stock has surged by 25.69%, with an average price target suggesting further upside potential of approximately 6.93%.
Overall, while challenges persist, the improvements at Boeing under Ortberg’s leadership signal a optimistic path forward, highlighting the resilience of the aerospace sector.