Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This week on The
Speaker 1: Big Take DC, we've got an episode for you on Boeing.
Speaker 1: If you've listened to this show, you know we've been
Speaker 1: following Boeing's challenges closely for months. In this episode, my
Speaker 1: colleagues Big Take hosts David Gura and Bloomberg Aerospace reporter
Speaker 1: Julie Johnson lay out the challenges that Boeing's new CEO faces.
Speaker 1: In twenty twenty five. There was this week's rocky earnings report,
Speaker 1: the need for them to rebuild public trust, and with
Speaker 1: President Trump and the White House, delayed plans for new
Speaker 1: Air Force one jets are putting the company under scrutiny
Speaker 1: from Trump and his new Department of Government Efficiency run
Speaker 1: by longtime Boeing competitor Elon Musk.
Speaker 2: It's been a tough stretch for Boeing, and this week's
Speaker 2: earnings made that clear.
Speaker 3: The last year especially, has been like something out of
Speaker 3: the book of job from a corporate perspective, just really
Speaker 3: felt like everything that could go wrong did go wrong.
Speaker 2: Julie Johnson is a senior aerospace reporter for Bloomberg.
Speaker 3: It started with a panel blowing out of an Alaska
Speaker 3: Airline seven thirty seven, just moments after it had taken off.
Speaker 3: Photo show a gaping hole where an emergency door could be.
Speaker 3: But I think it really highlighted the quality breakdowns at
Speaker 3: Boeing because the plane had just come out of Boeing's
Speaker 3: factory like two months earlier, so it's brand new.
Speaker 2: Federal air safety officials say bolts on a bowing jetliner
Speaker 2: were missing.
Speaker 3: It sort of precipitated a series of investigations. Boeing's management
Speaker 3: had a big shake up.
Speaker 2: Boeing said it would reduce its workforce by ten percent
Speaker 2: as it tries to recover from financial and regulatory troubles.
Speaker 2: Boeing brought in a new CEO, Kelly Ortberg, with a
Speaker 2: mandate to turn things around. Ortberg now finds himself at
Speaker 2: the helm of a storied American manufacturer, entering twenty twenty
Speaker 2: five with a chess board of challenges, a new earnings
Speaker 2: report on Tuesday that paints a grim picture of its finances,
Speaker 2: an uphill battle to regain public trust, and a tightrope
Speaker 2: act in Washington that will force it to work with
Speaker 2: one of its biggest rivals, Elon Musk, and President Trump
Speaker 2: himself I'm David Gerra, and this is the big take
Speaker 2: from Bloomberg News Today. On the show, Boeing needs to
Speaker 2: turn things around? Can it pull it off? And how
Speaker 2: might President Trump's return make things even more complicated.
Speaker 3: Something I think people don't appreciate about Trump is that
Speaker 3: he's a playing guy.
Speaker 2: Bloomberg's Julie Johnson says President Trump may like aviation, but
Speaker 2: he especially likes Boeing. He's mostly used Boeing planes in
Speaker 2: his private fleet for years, but when Trump became president
Speaker 2: in twenty seventeen, he found himself in the middle of
Speaker 2: the US government's relationship with the planemaker Boeing. The US
Speaker 2: government is not just a regulator, it's also one of
Speaker 2: the company's marquee customers. Boeing supplies its aircraft to the
Speaker 2: Postal Service, to NASA, and the military. It also manufactures
Speaker 2: the planes that presidents use to travel all over the world.
Speaker 2: Every president since FDR has flown on a Boeing plane,
Speaker 2: but the current models are a little outdated.
Speaker 3: The Air Force one planes have been flying around, I
Speaker 3: think since the George Bush administration, so they're due for replacement.
Speaker 2: During his first term, President Trump helped negotiate a contract
Speaker 2: with Boeing to upgrade the Air Force one fleet with
Speaker 2: revamped seven forty seven jets. He's proud of the deal
Speaker 2: and even brought it up in an interview with Bloomberg's
Speaker 2: editor in chief John Micklethwaite last October.
Speaker 4: So I'm getting think of this the exact same plane
Speaker 4: for one point seven billion less exact, except to have
Speaker 4: a better pay. Job, Okay, much better pay.
Speaker 3: Jeb Trump cares about these Air Force aircraft honestly, like
Speaker 3: nobody else on the planet. He's highly invested in these planes.
Speaker 3: He kept models on his desk at mar A Lago
Speaker 3: when he was out of office.
Speaker 2: Boeen was supposed to get these upgraded Air Force one
Speaker 2: jets into the sky by twenty twenty four, but the
Speaker 2: project is years behind schedule and two point seven billion
Speaker 2: dollars over budget. It's a reflection of the many problems
Speaker 2: the company has faced in recent years. But Boeing's new CEO,
Speaker 2: Kelly Ortberg, knows that getting these planes in shape is
Speaker 2: a top priority because they matter to Trump.
Speaker 3: One of the first things that Ortberg did after Trump
Speaker 3: was elected was to set up some phone conversations with
Speaker 3: the president. You know where they talked through a variety
Speaker 3: of things, but he sort of delivered the bad news
Speaker 3: to the President about some of the problems Boeing had had,
Speaker 3: and the transition team response at the time was along
Speaker 3: the lines of what can we do to help help
Speaker 3: with these delays?
Speaker 2: To help keep the Air Force One project under four
Speaker 2: billion dollars, the Trump administration agreed to drop some special
Speaker 2: features like the ability to refuel mid air. Trump also
Speaker 2: roped in his new Department of Government Efficiency, which is
Speaker 2: tasked with reducing government spending and maximizing productivity. The man
Speaker 2: in charge of that department is Elon Musk, whose company
Speaker 2: SpaceX is one of Boeing's main competitors when it comes
Speaker 2: to securing NASA contracts. Now, Musk's scrutiny of Boeing and
Speaker 2: its work with the US government could test the company's
Speaker 2: path to recovery. One afternoon in December, Musk's own jet
Speaker 2: landed at a Boeing facility in San Antonio, Texas.
Speaker 3: It's where Boeing is working on the new Air Force
Speaker 3: One aircraft.
Speaker 2: According to air traffic that Julie and her team monitored,
Speaker 2: Musk's jet landed just a few hours after another plane,
Speaker 2: which was carrying Boeing CEO Kelly Ordberg, and.
Speaker 3: The two aircraft were parked right next to each other,
Speaker 3: and that's how we confirmed that there had been this
Speaker 3: highly unusual meeting between one of Boeing's main rivals and
Speaker 3: a huge critic of the company and its new leadership.
Speaker 2: I just wonder sort of what you know of the
Speaker 2: substance of the conversation that took place that day, or
Speaker 2: I guess, more broadly, sort of what Elon Musk was
Speaker 2: doing there at that airfield in Texas.
Speaker 3: We know he was there on behalf of the president.
Speaker 3: We don't know what was discussed. The meeting we think
Speaker 3: took about two hours, again just based on the jet
Speaker 3: traffic in and out of the airport. But interestingly, a
Speaker 3: week later, when Musk was asked on Twitter about Boeing,
Speaker 3: he spoke very highly of the new CEO Ortberg, so
Speaker 3: it feels like he met the moment, But really we
Speaker 3: won't know that for a while.
Speaker 2: From there, both jets flew to Florida, specifically to Palm Beach.
Speaker 2: Ortberg has a house there, and Musk has spent a
Speaker 2: lot of time at the president's resort.
Speaker 3: It's just fascinating to me that they both wound up
Speaker 3: in the vicinity of mar A Lago and Trump. And
Speaker 3: doesn't that sort of encapsulate this moment in time Ortberg
Speaker 3: as the chief of the largest US exporter on the
Speaker 3: global stage, you know, with a very volatile, unpredictable president
Speaker 3: and a new set of characters around Trump.
Speaker 2: So how is Ortburg managing that unusual position and the
Speaker 2: hurdles Trump presidency could throw in his way? And is
Speaker 2: Boeing succeeding at pulling things together? That's coming up. President
Speaker 2: Trump's relationship with Boeing goes way back almost thirty years.
Speaker 2: Before he was negotiating deals with the airliner on behalf
Speaker 2: of the US government, he was buying a fleet of
Speaker 2: Boeing jets himself. Donald Trump bought the Eastern Shuttle for
Speaker 2: a price tag of three hundred and sixty five million dollars.
Speaker 4: We had other people wanting this very much, as we
Speaker 4: all know, and it was just really a nice victory.
Speaker 2: Within three years, he'd sold the Trump Shuttle airline, but
Speaker 2: he never stopped caring about planes, and his tone on
Speaker 2: Boeing has fluctuated over the years.
Speaker 3: One of the first things he did when he was
Speaker 3: elected in twenty sixteen, was this kind of fiery tweet
Speaker 3: about air Force one being over budget. Boeing is building
Speaker 3: a brand new seven forty seven air Force One. He wrote,
Speaker 3: costs are out of control, more than four billion, cancel order.
Speaker 2: Soon after the tweet, he told reporters he might cancel
Speaker 2: Boeing's Air Force one contract.
Speaker 4: I think it's ridiculous. I think Boeing is doing a
Speaker 4: little bit of a number.
Speaker 3: And Boeing used that to actually set up a series
Speaker 3: of meetings with the President and to establish, you know,
Speaker 3: this tight relationship with him, and he became something of
Speaker 3: a cheerleader for Boeing, though he also didn't hesitate to
Speaker 3: slaying a few darts at the company as well, because
Speaker 3: that's Trump being Trump. But early on he visited Boeing's
Speaker 3: plan in South Carolina.
Speaker 4: I want to thank the great people of South Carolina.
Speaker 3: Boeing's aircraft were the backdrop to the speech that he gave,
Speaker 3: and he ended it.
Speaker 4: May God bless the United States of America, and God
Speaker 4: bless Boeing.
Speaker 3: With God Bless Boeing, which again, I mean just really
Speaker 3: unconventional and sort of a break with the usual presidential decorum.
Speaker 3: But I think it just reinforced that Trump was invested
Speaker 3: in this company. They generate a big trade surplus for
Speaker 3: the US in aerospace. That's one of the industries where
Speaker 3: the US definitely exports more than it imports.
Speaker 2: For all of Trump's criticism and praise of Boeing's the
Speaker 2: truth that, at least for now, he can't avoid. Boeing
Speaker 2: is the biggest US exporter, and in many ways it
Speaker 2: represents the kind of American manufacturing Trump pushes in speeches
Speaker 2: and proposed policies.
Speaker 4: We want products made by our workers, in our factories,
Speaker 4: stamped with those four magnificent words made in the USA.
Speaker 3: Boeing planes are built in the US, though some of
Speaker 3: the engineering is done overseas, and they have a global
Speaker 3: supply chain. But it's an American made product.
Speaker 2: But that also makes the company vulnerable to Trump's protectionism.
Speaker 3: Anytime you talk about roiling global trade, definitely, I think
Speaker 3: heartspeat a little faster at Boeing.
Speaker 2: The trade war during Trump's first term costs the company
Speaker 2: its market lead in China, which hasn't placed a large
Speaker 2: aircraft order with Boeing since twenty seventeen, and the tariff's
Speaker 2: Trump is threatening this time around could take an even
Speaker 2: bigger toll on a company who's finances are already suffering.
Speaker 3: I think they are girding definitely for some more turbulence,
Speaker 3: and it goes beyond China. I mean, if Trump goes
Speaker 3: after other friendlier countries. One of the easy ways to
Speaker 3: retaliate is if you don't want to buy American, you
Speaker 3: just don't buy American planes.
Speaker 2: Boeing's main competitor, Airbus, is European, and in the wake
Speaker 2: of Boeing's repeated disasters, business has been good. Just last year,
Speaker 2: Airbus delivered more than twice as many commercial jets to
Speaker 2: customers as Boeing did. Meanwhile, Boeing reported its fourth quarter
Speaker 2: earnings on Tuesday, and it had the largest annual loss
Speaker 2: since twenty twenty, with a cash train over fourteen billion dollars.
Speaker 2: Ortberg told shareholders he'll be overhauling the company's portfolio to
Speaker 2: get things back on track, and on CNBC yesterday he
Speaker 2: sounded resolved about his collaboration with Musk and Doge on
Speaker 2: the Air Force One project.
Speaker 3: The President wants a airplay sooner, and so we're working
Speaker 3: with the a lot on the team to figure out
Speaker 3: what can we do to pull up the schedule.
Speaker 2: Of that aircraft. Julie says the company also tried to
Speaker 2: buy itself some time last year by raising some twenty
Speaker 2: four billion dollars in capital.
Speaker 3: So they've got a little bit of runway here, but
Speaker 3: they've also been burning through cash at just an extraordinary
Speaker 3: pace over the last year, like to the tune of
Speaker 3: around four billion a quarter, and that's got to stop.
Speaker 2: Boeing is also still being monitored by the Federal Aviation Administration.
Speaker 2: Trump hasn't yet appointed a new head of that agency
Speaker 2: since its previous leaders stepped down on Inauguration Day, but
Speaker 2: Trump's Transportation Secretary pick Sean Duffy has called for tough
Speaker 2: love and oversight when it comes to Boeing. In the meantime,
Speaker 2: in February, Boeing is expected to give the US Air
Speaker 2: Force an update on the Air Force one project, and
Speaker 2: Ortberg does not want to disappoint the president.
Speaker 3: But some of the milestones on the plane, it looks like,
Speaker 3: have slid, and so it raises the risk that the
Speaker 3: plane could show up really, really late during this administration
Speaker 3: or even after he leaves office. So this is kind
Speaker 3: of a tension point from Boeing early on just how
Speaker 3: do you manage this? Are there resources they could throw
Speaker 3: at this? And could Musk in his new capacity, step
Speaker 3: in and maybe help.
Speaker 2: This is the Big Take from Bloomberg News. I'm David Gura.
Speaker 2: This episode was produced by Julia Press. It was edited
Speaker 2: by our senior producer Naomi Shaven, Aaron Edwards, and Benedict Cammell.
Speaker 2: It was mixed and sound designed by Alex Segura and
Speaker 2: FactCheck by Jessica bec and Andreana Tapia. Our senior editor
Speaker 2: is Elizabeth Ponso. Our executive producer is Nicole Beemster. Bor
Speaker 2: Sage Bauman is Bloomberg's head of podcasts. If you liked
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