Boeing
Co appointed Kelly
Ortberg
as its next chief executive officer, entrusting a retired veteran of the aviation industry with one of the most complex turnaround challenges in corporate America.
The US planemaker made the announcement as it reported a steep loss for the second quarter. Ortberg, 64, is an engineer by training who rose through the ranks at
Rockwell Collins
, an aviation supplier that’s now part of
RTX Corp
.
He will take on the new role on Aug. 8.
Boeing rose as much as 2.7% as investors parsed the surprise appointment that ended months of uncertainty after current
CEO
Dave
Calhoun
announced in March he would step down. The planemaker is working to placate frustrated airlines and win back the trust of US regulators and the flying public after a near-catastrophe in January was linked to a breakdown in quality controls in its 737 factory outside of Seattle.
“Ortberg’s appointment is the best news for Boeing in a long time,” said Nick Cunningham, an aviation analyst at Agency Partners in London. “Right now, Boeing needs a company doctor to come in, turn over every stone, tell everyone the bad news, take the charges needed and then bring about an effective turnaround.”
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Ortberg will take over a company that’s seen its finances badly dented from the fallout of the January accident. The stock has lost 27% in value this year, which puts it on track for its worst annual performance since 2020.
Among his biggest tasks will be to “incentivize and foster continuous problem solving and collaboration on the shop floor, said Nicolas Owens, industrials equity analyst at Morningstar Research Services LLC.
“The real test for any Boeing CEO will be navigating the very long cycle and high cost of investment in new plane designs, which can be tricky because the rewards accrue in decades, not years,” Owens said.
The planemaker said on Wednesday that it burned through $4.33 billion in cash during the second quarter. That’s after a similar outflow in the first three months, as Boeing slowed down output of its commercial jet factories.
Boeing’s defense and space division suffered its worst quarter since mid-2023 as costs ballooned to convert a pair of 747 jumbo jets into the next presidential Air Force One fleet. The company said it recorded $1 billion of losses on fixed-price contracts, including a loss on the KC-46 military tanker program.
The defense stumbles are a reminder that Boeing’s operational difficulties extend well beyond its crisis-stricken commercial division. The company has gradually been stepping up output in its 737 Max jets under close supervision by federal regulators, but faces another crisis with a strike deadline looming in September for Seattle-area factory workers.
The company said it still expects to increase production of the 737 Max to 38 planes a month, and the 787 Dreamliner to 5 a month by year-end.
‘Experienced leader’
With the appointment, Ortberg steps out of retirement and into the leadership role that many once expected him to play at RTX, one of Boeing’s biggest suppliers and the parent to enginemaker Pratt & Whitney. He briefly ran Collins Aerospace before shifting to an advisory role and eventually RTX’s board in 2020.
At Rockwell Collins, Ortberg had a track record as dealmaker — striking his first major acquisition just 11 days after taking over as CEO. He was known for his blunt, no-nonsense style and his effort to flatten hierarchy.
“Kelly is an experienced leader who is deeply respected in the aerospace industry,” said Boeing Chairman Steve Mollenkopf, who led the search for the new CEO. Boeing said it waived the mandatory retirement age of 65 for Ortberg, as it did in 2021 for Calhoun.
Ortberg was the rare executive to openly criticize Boeing at a time when the US planemaker held huge sway over its subcontractors. Ortberg called out the manufacturer as “delinquent” in 2016, after it abruptly switched payment terms from 30 days to as long as four months, squeezing working capital for its suppliers.
Leadership shuffle
He eventually joined the consolidation wave, selling the Cedar Rapids, Iowa-based aerospace company to United Technologies Corp., which later combined with Raytheon Technologies Corp, now RTX. At the time, it was the biggest acquisition in aviation history.
Boeing picked Ortberg as it works through one of the most tumultuous periods in the company’s history. In January, a fuselage panel blew out of an almost-new 737 Max 9 airliner during flight, which investigators attributed to missing bolts in the so-called door plug segment.
While nobody was seriously hurt in the accident, it set off a cascade of developments, from Calhoun’s departure to a regulatory clampdown to Boeing pleading guilty to felony charges connected to two previous accidents.
Calhoun will continue to serve as special adviser until March 2025. As part of his decision to step down, Boeing also named Stephanie Pope as new head of its commercial aviation business earlier this year. Pope, 52, was seen as the most promising internal candidate for the CEO job.
“Boeing overall has a long road ahead if the underperformance in this quarter is an indicator of what’s to come,” said Ron Epstein, an analyst at BofA Securities Inc.
