Boeing's New Pilot Faces Rough Skies --- CEO-in-waiting ticks many boxes required to fix the jet maker, but has the turnaround job of the decade

"The leadership change at Boeing bodes well for the radical transformation that the plane maker requires. 

But outflying a troubled culture and growing debt pile will be tough.

On Wednesday, the Arlington, Va., manufacturer said Robert "Kelly" Ortberg will become its next chief executive and president on Aug. 8, succeeding Dave Calhoun, who served both roles since January 2020.

The stock rose 2% on Wednesday as investors decided this news was enough to offset disappointing second-quarter results. A $1.4 billion net loss, compared with expectations of $913 million, was the result of Boeing's building fewer commercial aircraft -- quality issues slowed deliveries of the MAX, while supplier shortages affected the 787 Dreamliner -- as well as losses in its defense programs.

Ortberg beat two other well-positioned candidates to the top job. One was Pat Shanahan, CEO of aerostructures supplier Spirit AeroSystems, which Boeing agreed to purchase. The other contender was the plane maker's head of commercial aircraft, Stephanie Pope.

The decision to hire a true outsider seems wise. Calhoun's attempts to pull the company out of its nosedive since the 2019 grounding of the 737 MAX were always compromised by his long stint as a director. Continuing production snafus on his watch, particularly the blowout of a door plug during an Alaska Airlines flight this January, further dented the confidence of investors and, even more important, of airlines and lessors.

On Wednesday, Calhoun told Wall Street analysts he doesn't expect Ortberg to undertake a big shake-up of senior management. "I don't think he's coming in with a notion of wanting to change a lot of folks," he said. "He knows full well we are in a recovery mode."

Still, signaling a fresh start should be a priority for the incoming boss. A reluctance to raise problems with management appears to be part of Boeing's culture. Changing it will need clear signals from the very top.

Building planes that don't fall apart is just the first step toward regaining ground lost to European rival Airbus in recent years. Boeing's long-term future will depend on the launch of groundbreaking new aircraft, notably a "clean sheet" narrow-body jet to replace the 737 in the 2030s. The company needs to revive the culture of innovation and dialogue with customers that made the 777 program a roaring success in the 1990s -- all while integrating Spirit and grappling with supply shortages.

On paper at least, Ortberg has the credentials, including in-depth engineering and supply-chain knowledge. Until not long ago, he was one of the aviation industry's rising stars. Having joined Iowa-based avionics manufacturer Rockwell Collins in 1987, he became its president and CEO in 2013. He undertook some big acquisitions and gained a reputation as a likable leader who frequented the factory floor, and accumulated experience dealing with regulators and the Pentagon. Rockwell was known for being an innovative firm, as opposed to the more procedure-focused United Technologies Corp. that bought it in 2018.

UTC combined Rockwell with its other aerospace division to form Collins Aerospace, and in 2020 merged with Raytheon to become RTX Corp. Ortberg left in 2021, just as he was touted by some as a potential successor to former CEO Greg Hayes, who retired this May.

 Now, he will finally get a shot at leading an aerospace giant, albeit a troubled one.

Supply snags are turning this into a bad year for Airbus, too. On Tuesday, having pushed back its delivery targets for 2024, it posted a 78% drop in second-quarter earnings compared with a year earlier.

The big difference is that Airbus hasn't had to load itself up with debt to ride through the storm. With Boeing's latest $10 billion bond issuance, its long-term debt at the end of June added up to $53.2 billion. This equals 37% of its total assets, when at the start of 2019, it was 9%. Airbus's current ratio is 8%.

Admittedly, this debt pile could be quickly reduced if Boeing meets its production targets, or if it manages to run down its huge $86 billion inventory, which has swelled because of undelivered jets and the plane maker's attempts to support its parts suppliers. It comes as a relief for investors that the firm is for now sticking to its target to make 38 MAX aircraft a month by year-end. But any production goals are precarious in the industry's current state.

As much as Ortberg looks like the right person to right Boeing's course, the financial legacy of a tumultuous half decade will weigh heavily." [1]

Funny thing is that bean counting culture, neglecting engineering, led to this spilled beans situation at Boeing. It is difficult to fix culture without letting go of some of the bean counters sitting in critical positions now at Boeing.

1. Boeing's New Pilot Faces Rough Skies --- CEO-in-waiting ticks many boxes required to fix the jet maker, but has the turnaround job of the decade. Sindreu, Jon.  Wall Street Journal, Eastern edition; New York, N.Y.. 01 Aug 2024: B.12.

 

Kinijos lyderis, ponas Xi, yra karštas marksistas

"Nė vienas Kinijos komunistų partijos generalinis sekretorius nuo Mao laikų su tokiu užsidegimu neprisižadėjo ištikimybės marksistinei doktrinai, kaip ponas Xi. Ponui Xi Kinijos "atjauninimas", įteisinantis jo valdymo leitmotyvas, buvo neatsiejamas nuo atsidavimo Markso mokymams atkūrimo. Mažiau, nei du mėnesiai nuo to. kai pradėdamas eiti generalinio sekretoriaus pareigas, p. Xi įsakė partijos Centriniam komitetui „lygiuotis su gyva marksizmo siela“, – sakė jis, pridurdamas, kad Marksas buvo „didžiausias mąstytojas žmonijos istorijoje“ ir pareiškė, kad jo mokymai išlaiko savo „jėgą ir gyvybingumą“ ir išlieka partijos „vadovaujančia teorija“.

 

 2018 m. švęsdamas Markso 200-ąjį gimtadienį, ponas Xi pasakė kreipimąsi pavadinimu „Markso teorijoje vis dar šviečia tiesa“. Marksistinė istorijos teorija, apie kurią kalbėjo p. Xi, žinoma, kaip istorinis materializmas, postuluoja nenumaldomą visuomenės „gamybos jėgų“ raidą. Pasikeitusi „ekonominė bazė“ sunaikina seną „antstatą“ – politiką, kultūrą, vertybes ir pakeičia ją nauja, ekonominei pažangai tinkama, sistema. Kapitalizmo nuvertimas ir komunizmo pradžia yra neišvengiamos šio proceso pasekmės.

 

 Kai kurie bendražygiai, ponas Xi sakė savo valdymo pradžioje, komunizmą gali laikyti „nepasiekiamu“, netgi „iliuziniu“, bet taip yra dėl jų „silpno“ istorinio materializmo vertinimo. Jis tvirtino, kad tikrovė ne kartą įrodė, kad Markso ir Friedricho Engelso pagrindinių kapitalistinės visuomenės prieštaravimų analizė yra teisinga. Jis sakė, kad „kapitalizmas neišvengiamai išnyks, o socializmas triumfuos“, yra „negrįžtama bendra socialinės ir istorinės raidos tendencija“.

 

 Istorinis materializmas yra raktas į tai, ką p. Xi išaukštino, kaip marksizmo „praktinį charakterį“, kuriuo partija „apsiginklavo“. Marksistinė istorijos teorija, pabrėžė jis, cituodamas Leniną, kuris citavo Engelsą, „nėra griežta dogma“, o veikiau „veiksmo vadovas“.

 

 Kinija ėmėsi veiksmų. „Slėpk savo jėgą ir lauk savo momento“, – 1980-aisiais įsakė Dengas Siaopingas, kitas atsidavęs marksistas ir ekonominės reformos po Mao tėvas. Kinijos bendrasis vidaus produktas tuo metu buvo mažesnis, nei 350 mlrd. dolerių. Iki to laiko, kai 2012 m. pabaigoje valdžią perėmė p. Xi, Kinijos BVP išaugo daugiau, nei 24, kartus – iki 8,53 trilijono dolerių. Iki praėjusių metų šis skaičius savo ruožtu išaugo daugiau, nei dvigubai – iki 18 trilijonų dolerių.

 

 Išlaisvinusi „gamybos jėgas“, – 2018 m. kalbėdamas per Markso gimtadienį paskelbė ponas Xi, partija per trumpą laiką pasiekė tokią ekonominę sėkmę, kurią Vakarams pasiekti prireikė šimtmečių. Matyt, atėjo laikas pritaikyti Dengo sukurtą „antstatą“. P. Xi teigimu, augdama „klestinčia“, Kinija „tapo stipri“ – pakankamai stipri, kaip jis paaiškino atskirai, kad „norėtų ir galėtų daugiau prisidėti prie žmonijos“.

 

 Čia taip pat Marxas nurodė kelią. Filosofai „tik interpretuoja“ pasaulį, bet „esmė yra jį pakeisti“, – garsiai rašė Marksas. Iš to išplaukia, kad ponas Xi pabrėžė Markso „nepailstamą kovą, siekiant apversti senąjį pasaulį ir įkurti naują“. P. Xi pažadėjo, kad naujojoje pasaulio santvarkoje „negali dominuoti kapitalizmas ir Vakarai, ir ateis laikas pokyčiams“. Iškalbinga, kad Fidelis Castro kartą gyrė poną Xi kaip „vieną stipriausių ir pajėgiausių revoliucijos vadų“, kokį jis kada nors buvo sutikęs.

 

 Revoliucinių pokyčių perspektyva dar labiau vilioja dėl to, ką p. Xi apibūdino, kaip „kartą per šimtmetį“ ir „giluminių“ pokyčių, apėmusių pasaulį. Aiškindamas pono Xi kalbą prieš 2017 m. partijos kongresą, oficialus Centrinio komiteto laikraštis People's Daily teigė, kad Vakarų dominavimą tarptautiniuose santykiuose tapo „sunku išlaikyti“, kaip ir „vakarietiškas vertybes“, būdingas tarptautiniams santykiams." [1]

1. Marxism and the Xi-Putin Link. Aron, Leon.  Wall Street Journal, Eastern edition; New York, N.Y.. 01 Aug 2024: A.15.

China's Leader Xi Is a Fervent Marxist

 

"No Chinese Communist Party general secretary since Mao has pledged allegiance to Marxist doctrine with such ardor. For Mr. Xi, China's "rejuvenation," the legitimizing leitmotif of his rule, has been inseparable from rekindling devotion to Marx's teachings. Less than two months into his tenure as general secretary, Mr. Xi enjoined the party's Central Committee to "keep up with the living soul of Marxism." Communism, he said, is the party's "highest ideal and its ultimate goal." Mr. Xi has since called Marx the "greatest thinker in human history" and declared that his teachings retain their "vigor and vitality" and remain the party's "guiding theory."

To celebrate Marx's 200th birthday in 2018, Mr. Xi gave an address titled "Marx's Theory Still Shines With Truth." The Marxist theory of history of which Mr. Xi spoke, known as historical materialism, postulates the inexorable development of society's "forces of production." The changed "economic base" scraps the old "superstructure" -- politics, culture, values -- and replaces it with a new system befitting economic progress. The overthrow of capitalism and the onset of communism are inevitable consequences of this process.

Some comrades, Mr. Xi said at the start of his rule, may regard communism as "beyond reach," even "illusory," but that's due to their "infirm" appreciation of historical materialism. He asserted that reality has repeatedly proved Marx and Friedrich Engels's analysis of the basic contradictions of capitalist society is true. That "capitalism is bound to die out and socialism is bound to triumph," he said, is "the irreversible general trend of social and historical development."

Historical materialism is key to what Mr. Xi has extolled as Marxism's "practical character," with which the party "arms itself." The Marxist theory of history, he has emphasized, quoting Lenin, who was quoting Engels, "is not a rigid dogma" but rather a "guide to action."

China did take action. "Hide your strength and bide your time," Deng Xiaoping, another devoted Marxist and the father of post-Mao economic reform, decreed in the 1980s. China's gross domestic product was then less than $350 billion. By the time Mr. Xi assumed power in late 2012, China's GDP had grown more than 24-fold, to $8.53 trillion. By last year, that figure had in turn more than doubled, to $18 trillion.

Having unleashed the "forces of production," Mr. Xi proclaimed in his 2018 address on Marx's birthday, the party had achieved in a brief window a degree of economic success that it took the West centuries to reach. Apparently, the time had come to adjust Deng-designed "superstructure." In growing "prosperous," Mr. Xi said, China was "becoming strong" -- strong enough, he explained separately, to be "willing and able to contribute more to mankind."

Here, too, Marx pointed the way. Philosophers "only interpret" the world, but "the point is to change it," Marx famously wrote. It follows that Mr. Xi has emphasized Marx's "unremitting fight to overturn the old world and establish a new one." The new world order, Mr. Xi has vowed, "cannot be just dominated by capitalism and the West, and the time will come for a change." It's telling that Fidel Castro once hailed Mr. Xi as "one of the strongest and most capable revolutionary leaders" he had ever met.

The prospect of revolutionary change is all the more alluring because of what Mr. Xi has described as "once in a century" and "profound" changes sweeping the world. Explaining Mr. Xi's address before the 2017 Party Congress, the People's Daily, the Central Committee's official newspaper, argued that Western dominance of international relations has become "hard to sustain," as have the "Western values" intrinsic to international relations." [1]

1. Marxism and the Xi-Putin Link. Aron, Leon.  Wall Street Journal, Eastern edition; New York, N.Y.. 01 Aug 2024: A.15.