Boeing appoints Kelly Ortberg as new chief executive – as it happened

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There is a fairly wild move in the share price of Metro Bank. It is up more than 30% today after guiding that it expects to return to profit this year.

The UK lender was once seen as a possible challenger to the five dominant high street players, but that promise dissipated after it made serious accounting blunders and missed out on the digital banking revolution. That pushed it into the arms of a billionaire bailout by the Colombian businessman Jaime Gilinski Bacal.

You can see the scale of its troubles in its share price performance over the last year – but also the scale of its share price move today on the bottom right-hand side:

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Metro’s positive guidance came despite a fairly unremarkable performance in the second quarter, according to Guardian’s banking correspondent Kalyeena Makortoff:

Metro Bank said it expected to return to profitability in the fourth quarter of this year.

The UK high street challenger Metro Bank released earnings on Wednesday, showing that the lender swung to a pre-tax loss of £33.5m in the first half of the year, having reported a profit of £15.4m a year earlier. It came amid a 22% drop in net interest income, as the bank was forced to pay out more to savers after Metro’s campaign to boost deposits at the end of last year.

It had been trying to make up for an outflow of cash last autumn, when market panic over the state of its balance sheet forced Metro to enter into a £925m rescue deal that left it 53%-owned by the Colombian billionaire Jaime Gilinski Bacal.

Wall Street shares have indeed gained at the opening bell.

Here are the opening snaps, via Reuters:

• NASDAQ UP 349.22 POINTS, OR 2.04%, AT 17,496.63.

• S&P 500 UP 71.73 POINTS, OR 1.32%, AT 5,508.17

• DOW JONES DOWN 5.79 POINTS, OR 0.01 %, AT 40,737.54

Boeing shares are up 1.2% in pre-market trading, but that is actually below the rest of the US stock market, if futures are any guide ahead of the opening within 20 minutes.

The tech-heavy Nasdaq index has sold off in recent weeks as investors start to question the huge hype around AI-related stocks that propelled chip designer Nvidia to briefly become the world’s most valuable company. But futures suggest it is on course for a 2.2% jump at the opening bell on Wall Street.

There are signs – including Samsung’s positivity today – that AI will benefit some companies massively. The question is whether that justifies the astonishing appreciation in share prices over recent months.

The S&P 500 index is due to rise by 2.3% on the opening, while the Dow Jones industrial average (which is not very accurate when gauging Wall Street’s fortunes) is set for only a 0.2% gain.

The early reactions to Boeing’s pick of Kelly Ortberg as chief executive have been positive.

Robert Stallard of Vertical Research Partners, said:

We doubt if Boeing’s pretty awful second quarter results will get that much attention today, with all the focus being on the CEO news.

In our view, Kelly Ortberg is very good hire by Boeing. While he may not be as well known as say Larry Culp (GE) or Dave Gitlin (Carrier), in our experience Kelly was an excellent CEO of Rockwell Collins. What he brings to the party is not only a wealth of aerospace and defence experience, but also a track record of running a company with an excellent corporate culture. Clearly there are a massive number of problems at Boeing, but with Kelly as CEO we think there is at least a chance of fixing them.

Rick Larsen, the lead Democrat on the US House of Representatives’ committee on transportation and infrastructure, welcomed the appointment of an engineer – rather than a finance expert.

Jefferies analysts wrote earlier this week (after industry publication the Air Current reported Ortberg was a serious contender) that Ortberg would be a welcome appointment. The note said, according to Reuters:

During his leadership at Collins he was well liked by employees and direct reports and very personable.

Jefferies said he was a “tough negotiator” dealing with a diverse set of customers and suppliers.

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Boeing has also given more detail on the crisis which Ortberg will have to turn around, reporting a billion-dollar loss for the second quarter of 2024.

The business burned $3.9bn in cash during the quarter, compared to $2.9bn generated in the same quarter last year.

The manufacturer’s troubles became apparent in October 2018 and then March 2019, after two crashes that killed 346 people. The crashes were caused by faulty software, and regulators grounded the entire fleet of Boeing’s 737 Max, its bestselling aircraft.

Ortberg’s predecessor, Dave Calhoun, was tasked with picking up the pieces after the disastrous handling of the crisis by Denis Muilenberg. Yet Calhoun’s efforts to turn around the company were undermined by an incident in January when a door plug panel blew out of an aircraft.

Nobody was hurt, but it revealed yet more problems with Boeing’s manufacturing process. Regulators have limited the production of 737 Max jets until it can show improvements, and the company has admitted criminal charges related to the crashes.

Boeing’s financials have also been dented by poor performance from its defence and space business. Ahead of last week’s Farnborough Air Show, Boeing’s defence boss Ted Colbert said it was “significantly challenged”.

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Kelly Ortberg’s ascent to the very top of the US aerospace industry was mostly spent at Rockwell Collins, a producer of avionics systems.

Ortberg started his career in 1983 as an engineer at Texas Instruments, and then joined Rockwell Collins in 1987 as a programme manager, Boeing said.

He rose up the ranks to become president and chief executive in 2013.

Five years later, he led the business through takeovers by United Technologies and RTX, the aerospace and weapons company formerly known as Raytheon. He left RTX in 2021, after serving on its board.

Ortberg also works on the board of Aptiv, a car parts supplier. He has previously chaired the Aerospace Industries Association (AIA), a lobby group.

Boeing has named aerospace industry veteran Kelly Ortberg as chief executive, giving him the task of turning around the plane manufacturer after years of self-inflicted crisis.

Ortberg will start as chief executive next week on 8 August, succeeding Dave Calhoun after his retirement.

Steven Mollenkopf, chair of the Boeing board, said:

The Board conducted a thorough and extensive search process over the last several months to select the next CEO of Boeing and Kelly has the right skills and experience to lead Boeing in its next chapter. Kelly is an experienced leader who is deeply respected in the aerospace industry, with a well-earned reputation for building strong teams and running complex engineering and manufacturing companies.

The Board would also like to thank Dave Calhoun for his strong leadership at Boeing, first as chair and then as chief executive, when he stepped in to steer the company through the challenges of recent years.

Ortberg said:

I’m extremely honored and humbled to join this iconic company. Boeing has a tremendous and rich history as a leader and pioneer in our industry, and I’m committed to working together with the more than 170,000 dedicated employees of the company to continue that tradition, with safety and quality at the forefront. There is much work to be done, and I’m looking forward to getting started.

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Oil prices have rebounded by 2.5% on Wednesday after Iran promised to avenge the political leader of Hamas who was allegedly killed by Israel.

Brent crude oil futures prices rose by nearly $2 or 2.5% to reach $80.57, while the North American benchmark, West Texas Intermediate, gained $2.10 or 2.8% to hit $76.83.

Ismail Haniyeh was killed by a strike in Tehran, Iran’s capital. Iran blamed Israel and said it was its duty to avenge the killing. Israel has not commented, although it has previously vowed to destroy Hamas in response to its murder of 1,139 people on 7 October. Israel responded by waging war on Hamas in Gaza, killing an estimated 39,000 people, most of them civilians.

The latest attack has put investors on alert over a possible escalation in the crisis in the Middle East, which could eventually affect oil supplies.

Iran is a major supplier of oil, but its products are embargoed by many Western countries including the USA, while Israel is not a major oil producer. Nevertheless, a conflagration in the Middle East would likely result in oil prices soaring.

However, some analysts have questioned if today’s price jump will last, after weeks of falling prices.

Gaurav Sharma, an independent oil analyst in London, told Reuters:

Overnight developments and elevated geopolitical risk merely provide temporary reprieve for oil benchmarks. Unless oil and gas infrastructure is hit, the latest spike is unlikely to last.

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The Bank of Japan is very much at the other end of the monetary policy cycle: it today announced an interest rate hike and laid out plans for the ending of massive bond purchases used to stimulate the economy.

The BoJ’s board on Wednesday raised the overnight call rate target – its benchmark rate – to 0.25%, up from 0-0.1%. Its board voted 7-2 in favour of the hike. It will also slow the monthly pace of bond buying to around JPY3tn (£16bn) by the first quarter of 2026.

The bank’s governor, Kazuo Ueda also struck a hawkish tone that suggests that it really could be the end of Japan’s long-running programme to stimulate inflation. Reuters reported: Ueda “did not rule out another hike this year and stressed the bank’s readiness to keep raising borrowing costs to levels deemed neutral to the economy”:

Wednesday’s hike was the largest since a 25 basis point increase in February 2007, which was the last major policy tightening before a long era of massive monetary stimulus aimed at reflating sluggish consumer demand.

Kit Juckes, a strategist at French bank Société Générale, said:

The BoJ message was clear – they don’t want the yen to go on weakening.

The important part was the BoJ governor’s message, which seems to be that we are in a regime shift for monetary policy, with positive implications for the yen in the short and long term. The caveat is that it’s too early to be sure that stronger wage growth will lead to a sustained rise in inflation, and equally premature to be confident that the economy is on the right path.

The surprise rise in inflation makes a September rate cut from the European Central Bank (ECB) a very close call, according to ING, an investment bank.

Peter Vanden Houte, ING’s chief economist for the eurozone, said:

Looking at today’s data, we would definitely need better inflation figures in August and September to remain on course. This is still possible, since in both the PMI survey and the European Commission’s business and consumer survey, it appears that businesses’ pricing power has started to weaken, now also in services.

The latest data has not given the ECB the certainty it needs to confirm that the inflation battle has been won. That said, survey data still suggests that the downward trend in inflation is likely to continue.

Janet Mui, head of market analysis at wealth manager RBC Brewin Dolphin, said:

Despite the headline re-acceleration, there are details that should be pleasing to the ECB. Excluding-energy, the headline consumer price index contracted month-on-month. Services inflation has slowed from 4.1% to 4.0% year-on-year, which a component that the ECB is very much focused on. Food prices continued to slow and goods prices were still in outright contraction.

Analysing all the data there is still a high likelihood that the ECB will be cutting again at its September meeting.