Boeing's Turnaround Under Kelly Ortberg: A Calculated Bet on Long-Term Resilience?

Boeing’s journey under CEO Kelly Ortberg has been a study in balancing short-term survival with long-term reinvention. After reporting a $6 billion quarterly loss in Q3 2024—the second-largest in its history—the aerospace giant has shown glimmers of recovery in 2025. Yet, the question remains: Is this turnaround sustainable enough to justify long-term investment in a stock still shadowed by debt, regulatory scrutiny, and operational fragility?

Operational Recovery: Stabilizing the Core

Ortberg’s first act as CEO was to prioritize quality over speed. By slowing 737 MAX production to 38 units per month in Q2 2025, Boeing reduced bottlenecks and improved margins, which turned from -11.9% in 2024 to -5.1% in 2025 [1]. This disciplined approach, though initially controversial, has stabilized cash burn, which fell to $200 million per quarter from $4.3 billion in the prior year [4]. The Commercial Airplanes segment, now generating $10.87 billion in revenue (up 81% year-over-year), has become a cash flow engine, supported by a $522 billion backlog of orders [6].

However, challenges persist. Certification delays for the 737 MAX 7 and 10 variants, expected until 2026, could disrupt production timelines [1]. Meanwhile, the Defense, Space & Security segment—once a drag on profits—has turned a corner, posting a 1.7% operating margin in Q2 2025 and securing a $2.8 billion satellite contract for the U.S. Space Force [3]. This pivot to defense and space, now accounting for 35% of revenue, offers a stable cash flow stream amid commercial aviation’s volatility [5].

Strategic Shifts: From Debt to Discipline

Ortberg’s strategic playbook includes aggressive debt reduction and a focus on sustainable aviation. Boeing’s gross debt of $53.3 billion remains daunting, but deleveraging efforts—such as the $21 billion stock issuance in 2024 and the sale of its Digital Aviation Solutions business—have improved its credit profile [2]. Fitch Ratings recently noted that Boeing’s debt could fall “significantly” by 2026, though its debt-to-capital ratio of 106.6% still exceeds the 60% covenant threshold in its new $3 billion credit facility [7].

The CEO has also reoriented Boeing toward innovation. Partnerships for sustainable aviation fuel (SAF) compatibility by 2030 and net-zero emissions targets align with global decarbonization trends [5]. In defense, Boeing’s F-47 fighter jet contract and sixth-generation R&D investments signal a bid to reclaim market share from competitors like Lockheed Martin [6].

Analyst Optimism vs. Lingering Risks

Analysts remain cautiously optimistic. With 20 out of 25 analysts recommending a “Strong Buy” and a $249.21 average target price (12.3% upside from current levels), the stock has gained 39% since Ortberg’s appointment [8]. Projections suggest adjusted earnings per share could jump from a $1.95 loss in 2025 to $11.92 in 2029, driven by free cash flow turning positive by 2026 [8].

Yet, risks loom large. The $53.3 billion debt load, coupled with potential labor strikes and certification delays, could derail progress. A recent $445 million DOJ fine for compliance lapses further underscores operational vulnerabilities [3]. Moreover, the proposed sale of Boeing’s space division—home to the Starliner spacecraft—remains unresolved, with Blue Origin and other bidders weighing in [6].

The Calculus for Long-Term Investors

For long-term investors, Boeing’s appeal lies in its structural advantages: a $619 billion total backlog, a 35% defense revenue buffer, and a leadership team prioritizing operational discipline. Ortberg’s emphasis on safety culture—reducing tool loss by 85% and streamlining governance documents—has restored some customer trust, with United Airlines praising Boeing’s “straight talk” on delivery schedules [5].

However, the path to profitability is far from certain. The company’s interest coverage ratio remains negative, and its BBB- credit rating carries a negative outlook [7]. A successful turnaround will require not only stabilizing the 737 MAX program but also launching a new aircraft to compete with Airbus—a costly and time-intensive endeavor.

Conclusion: A High-Stakes Gamble

Boeing’s 2025 turnaround under Ortberg is a testament to the power of disciplined leadership in crisis. Yet, the stock’s long-term potential hinges on its ability to navigate regulatory hurdles, manage debt, and innovate in a sector defined by rapid technological shifts. For investors with a high risk tolerance and a multi-year horizon, Boeing offers a compelling narrative of resilience. But for those seeking certainty, the aerospace giant’s turbulent history serves as a stark reminder: even the most ambitious turnarounds can falter under the weight of their own legacy.

Source:
[1] Boeing Reports Second Quarter Results [https://investors.boeing.com/investors/news/press-release-details/2025/Boeing-Reports-Second-Quarter-Results/default.aspx]
[2] Boeing's Strategic Turnaround Under Kelly Ortberg [https://www.ainvest.com/news/boeing-strategic-turnaround-kelly-ortberg-buy-opportunity-high-conviction-aerospace-recovery-play-2508/]
[3] Boeing Second Quarter 2025 Performance Analysis [https://www.linkedin.com/pulse/boeing-second-quarter-2025-performance-analysis-072925-faisal-amjad-0id1f]
[4] Boeing Has Declared 2025 Its 'Turnaround Year.' Should You Bet On BA Stock? [https://finance.yahoo.com/news/boeing-declared-2025-turnaround-bet-113001854.html]
[5] Boeing's Leadership Transition and Strategic Turnaround [https://www.ainvest.com/news/boeing-leadership-transition-strategic-turnaround-time-invest-2508/]
[6] Boeing's Q2 2025 Earnings and Kelly Ortberg's Turnaround [https://www.ainvest.com/news/boeing-q2-2025-earnings-kelly-ortberg-turnaround-case-long-term-investment-2507/]
[7] Boeing's New $3 Billion Credit Facility and Its Implications [https://www.ainvest.com/news/boeing-3-billion-credit-facility-implications-liquidity-credit-risk-2508/]
[8] Analysis-CEO Pulled Boeing Out of Nosedive, but New Challenges Approach [https://wtvbam.com/2025/08/08/analysis-ceo-pulled-boeing-out-of-nosedive-but-new-challenges-approach/]