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