Boeing named a longtime aerospace industry veteran on Wednesday as its next chief executive, who will take over a company that has been rocked by legal, regulatory and production problems. Robert “Kelly” Ortberg, a former CEO at Boeing supplier Rockwell Collins, will succeed David Calhoun as CEO and president effective Aug. 8, the company said. Calhoun announced in March that he would retire at the end of the year, and analysts generally praised the quicker transition.
Quick Read
- Boeing names new CEO amid $1.4 billion second-quarter loss
- New CEO Announcement: Boeing named Robert “Kelly” Ortberg, former CEO at Boeing supplier Rockwell Collins, as its new CEO, effective August 8.
- Leadership Transition: Ortberg succeeds David Calhoun, who announced his retirement earlier this year. The quicker transition has been praised by analysts.
- Second-Quarter Financials: Boeing reported a loss of more than $1.4 billion in the second quarter, with revenue falling short of Wall Street expectations.
- Ongoing Challenges: Boeing’s commercial-airplanes and defense units both lost money, with significant production and regulatory issues persisting.
- 737 Max and Legal Troubles: Boeing recently agreed to plead guilty to a federal fraud charge related to its 737 Max jetliner, linked to two deadly crashes.
- FAA Oversight: Increased scrutiny from the FAA continues after manufacturing quality concerns, limiting production of Max jetliners.
- Analyst Reactions: Ortberg’s appointment has been positively received, with analysts noting his extensive industry experience and leadership qualities.
- Retirement Waiver: Boeing waived the mandatory retirement age of 65 for Ortberg, as it did for Calhoun in 2021.
- Commercial Airplanes Division: The division saw a 32% revenue drop, delivering fewer jets compared to the previous year.
- Defense and Space Unit: The unit faced $1 billion in setbacks on fixed-price government contracts, contributing to its $913 million loss.
- Stock Performance: Despite financial losses, Boeing shares rose 2% in morning trading following the announcement.
- Corporate Strategy: Boeing is focusing on addressing supply-chain problems and production inefficiencies, with plans to reacquire Spirit AeroSystems.
- Regulatory Approvals: The company continues to work on gaining approval for new models of the Max and a larger 777 jetliner.
The Associated Press has the story:
Boeing names new CEO as it posts loss of more than $1.4B in 2nd quarter
Newslooks- (AP)
Boeing named a longtime aerospace industry veteran on Wednesday as its next chief executive, who will take over a company that has been rocked by legal, regulatory and production problems. Robert “Kelly” Ortberg, a former CEO at Boeing supplier Rockwell Collins, will succeed David Calhoun as CEO and president effective Aug. 8, the company said. Calhoun announced in March that he would retire at the end of the year, and analysts generally praised the quicker transition.
Boeing named its new CEO as it reported a loss of more than $1.4 billion on falling revenue during the second quarter. The loss was wider and revenue lower than Wall Street expected, as both Boeing’s commercial-airplanes business and defense unit lost money. The disappointing results come at a tumultuous time for Boeing. The company agreed to plead guilty this month to a federal fraud charge in connection with its 737 Max jetliner and two crashes that killed 346 people. The Federal Aviation Administration increased its oversight of the company after the blowout of a panel on an Alaska Airlines jet raised manufacturing quality concerns.
Boeing Chairman Steven Mollenkopf said Ortberg was chosen after a “thorough and extensive search process” and “has the right skills and experience to lead Boeing in its next chapter.” Ortberg has earned a reputation for running complex engineering and manufacturing companies, Mollenkopf said. The company waived the mandatory retirement age of 65 for Ortberg, a spokesperson said. Boeing did the same for Calhoun days after he turned 64 in 2021.
Ortberg emerged as a leading candidate only recently. Others who were reportedly considered for the job included Patrick Shanahan, a former Boeing executive and now CEO of its most important supplier, Spirit AeroSystems, and another longtime Boeing executive, Stephanie Pope, who recently took over the commercial airplanes division. Ortberg led Rockwell Collins from 2013 to 2018, when it merged with United Technologies and wound up as part of RTX, the company formerly known as Raytheon. He retired from RTX in 2021.
Richard Aboulafia, a longtime aerospace analyst and consultant and recently a harsh critic of the company, said the hire is great news for Boeing. “He is a deeply respected leader in the aerospace industry, and brings more hope for a better future than the company has enjoyed in decades,” Aboulafia said. Deutsche Bank analyst Scott Deuschle said Ortberg “has an engineering background, experience in the aviation industry, and experience as a public company CEO.”
In a statement issued by Boeing, Ortberg said, “There is much work to be done, and I’m looking forward to getting started.” Calhoun will serve as a special adviser to the Boeing board until next March. Like Calhoun, who took over as CEO in the wake of the two Max crashes, Ortberg will inherit the leadership of a company facing ongoing crises and criticism from inside and outside the company. Boeing has lost more than $25 billion since the start of 2019.
Boeing, based in Arlington, Virginia, is pushing back against whistleblower allegations of manufacturing shortcuts that crimp on safety. It is dealing with supply-chain problems that are hindering production, which it hopes to fix in part by re-acquiring Spirit AeroSystems, a key contractor. It faces a threatened strike this fall by its largest union, the International Association of Machinists. The company is still trying to persuade regulators to approve two new models of the Max and a bigger version of its two-aisle 777 jetliner. And it faces a multi-billion-dollar decision on when to design a new single-aisle plane to replace the Max.
The quarterly earnings reported Wednesday reflect the continuing challenges at Boeing. The company reported a loss of $1.44 billion for the second quarter, compared with a loss of $149 million a year earlier. Excluding special items, the loss worked out to $2.90 per share. Analysts expected a loss of $1.90 per share, according to a FactSet survey. Revenue dropped 15%, to $16.87 billion, falling short of Wall Street’s average forecast of $17.35 billion. The commercial-airplanes division had an operating loss of $715 million and revenue plunged 32% as Boeing delivered fewer passenger jets to airlines — 92 planes, compared with 136 a year earlier.
The FAA has limited Boeing’s production of Max jetliners since shortly after the Alaska Airlines incident, but Boeing hasn’t even hit the FAA limits as it seeks to fix its manufacturing process. The company said Wednesday that it is sticking with its plans to boost production of the Max to 38 per month by year end. Boeing took a charge of $244 million to cover a fine that it would pay as part of an agreement with the Justice Department to plead guilty to fraud in connection with development of the Max. A federal judge in Texas will soon consider whether to approve the deal, which is opposed by many families of those who died in the two Max crashes. Boeing’s defense and space unit lost $913 million because of $1 billion in setbacks to four fixed-price government contracts, including a deal to build two new Air Force One presidential jets. The smaller services business earned $870 million. Boeing shares rose 2% in morning trading.
