Boeing on Wednesday appointed former aerospace veteran Robert “Kelly” Ortberg as its next CEO, as the aviation giant reported heavy losses amid persistent operational problems.
Ortberg, 64, helped lead aviation communications and electronics supplier Rockwell Collins and integrate it into United Technologies, which later merged with Raytheon to become RTX. He retired from RTX in 2021.
He is an engineer and an outsider to Boeing, and in the view of some in the aviation industry, he meets key requirements for a CEO.
His appointment, which will be effective Aug. 8, comes as Boeing attempts to recover from safety and quality control problems that have brought increased scrutiny on the company.
Those difficulties were immediately visible in Boeing’s second-quarter results released on Wednesday, which showed a loss of $1.4 billion, compared with a loss of $149 million in the same period a year earlier.
Revenue fell 14.6 percent to $16.9 billion.
The quarterly results reflected a continued decline in Boeing’s commercial division, where it has slashed production while upgrading safety and quality control practices under tight monitoring from regulators.
The latest results also showed significant weakness in the defence business, as the company suffered heavy losses due to supply chain problems caused by several fixed-price contracts, as well as high engineering costs and technical issues.
Boeing listed four defense contracts with an operating loss of $913 million in the quarter.
– Leadership change –
Boeing has been facing questions since an incident in January in which a 737 Max aircraft operated by Alaska Airlines had to make an emergency landing after a fuselage panel ruptured during flight.
That incident sparked renewed scrutiny on Boeing and the Max after two deadly crashes in 2018 and 2019 that kept the plane grounded for long periods.
Outgoing leader Dave Calhoun unexpectedly took over as CEO in January 2020 after predecessor Dennis Muilenburg was ousted in the wake of the Max crashes.
Calhoun was set to remain CEO until 2028, until the Alaska Airlines incident sparked outrage on Capitol Hill and concern among Boeing’s airline customers. Calhoun announced on March 25 that he would step down by the end of this year.
Aviation experts expected the next Boeing CEO to have an aerospace background, experience managing large manufacturing projects, strategic intelligence, a pragmatic approach to safety, and the ability to succeed in congressional hearings.
In a statement Wednesday, Boeing Chairman Steve Mollenkopf described Ortberg as “an experienced leader who is deeply respected across the aerospace industry.”
Ortberg said he was “deeply honored and humbled to join this prestigious company,” adding: “There is still much work to be done, and I am eager to begin.”
Some analysts have suggested that Boeing’s next CEO could make changes to the company’s executive positions.
But Calhoun indicated he does not expect significant personnel changes, saying, “I don’t think the intention is to make major changes in leadership.”
Calhoun said Ortberg was “well aware we were in a recovery mode,” adding that he was not deeply involved in the CEO selection process.
– ‘Very challenging work’ –
Ortberg’s immediate priorities include negotiating with machinists and aerospace unions amid the threat of a possible September strike; and restoring production levels on the MAX and 787 Dreamliner to meet Boeing’s targets for the end of 2024.
Analysts at JPMorgan Chase praised the appointment, according to a note, and said the CEO position is “still a very challenging task.”
“We believe he is highly respected within the industry, has significant operational and engineering experience, and we think he has the ability to do some of the things Boeing needs most, including restoring relationships with customers, suppliers, regulators and legislators,” the JPMorgan note said.
Third Bridge analyst Peter McNally said Ortberg’s aviation experience would help Boeing, but added that “he and the organization have a long way to go.”
Ortberg is scheduled to take office just after a two-day hearing by the National Transportation Safety Board in Washington on the Alaska Airlines incident.
Boeing has agreed to plead guilty to fraud charges as part of a plea agreement with the US Justice Department in connection with the two deadly Max crashes, according to a court document filed last week.
The deal needs to be approved by a federal judge.
Boeing shares were up 3.0 percent at midday.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
