Boeing has announced the appointment of Robert K. Kelly Ortberg as its new President and Chief Executive Officer succeeding Dave Calhoun, who is stepping down during regulatory scrutiny and financial challenges. Ortberg, a seasoned aerospace executive and former CEO of Rockwell Collins will assume his new role on August 8, 2024.
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Boeing has named Robert Kelly Ortberg, a seasoned aerospace industry veteran, as its new president and CEO. Kelly Ortberg is set to assume his duties on August 8, 2024 replacing Dave Calhoun, who announced his decision to step down earlier this year.
Kelly Ortberg is a well-respected figure in the aerospace industry. He previously led Rockwell Collins, a major aerospace supplier which later became Collins Aerospace.
Kelly Ortberg has over three decades of experience in the industry, making him a seasoned leader equipped to handle the complexities of Boeing’s current situation.
Kelly Ortberg is regarded for his leadership skills and engineering expertise. Richard Aboulafia, managing director of AeroDynamic Advisory, commented that Ortberg’s appointment is Boeing’s best day in decades.
Boeing reported a $1.4 billion loss for the second quarter of 2024. This financial strain is by the company’s defense and space business, which has suffered billions in losses due to cost overruns on fixed-price contracts.
Such contracts have high margins but expose contractors to inflationary pressures, which have been impacting US corporate earnings.
A crisis emerged in January 2024 when a cabin panel blew off a 737 Max 9 aircraft shortly after takeoff.
The Federal Aviation Administration (FAA) has increased inspections and imposed production limitations on Boeing.
The company is also under scrutiny following two fatal crashes involving its Max 8 jets in 2018 and 2019.
Boeing is under regulatory scrutiny particularly from the Federal Aviation Administration (FAA) following the mid-air blowout of a door panel on a Boeing 737 Max 9 plane operated by Alaska Airlines earlier this year.
The company’s safety culture has been questioned due to several accidents including the 737 Max crashes and the door panel blowout.
The National Transportation Safety Board (NTSB) has sanctioned Boeing for prematurely disclosing details about investigations.
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The FAA has capped production of the 737 Max at 38 units per month until Boeing can demonstrate improved quality control.
Boeing has submitted a plan to address systemic quality issues, but regulatory approval for increased production remains pending.
Boeing reported a loss of over $1.4 billion in the second quarter of 2024, exceeding Wall Street’s expectations. Revenue fell by 15% compared to the previous year.
The production constraints on the 737 Max have led to a decrease in aircraft deliveries with only 92 units delivered in the second quarter, a 32% drop from the previous year.
Boeing’s Defense, Space and Security unit has also reported losses totaling $1.76 billion last year.
Kelly Ortberg stated, “There is much work to be done, and I’m looking forward to getting started,”
Following the announcement of Ortberg’s appointment Boeing’s shares rose by 2% in pre-market trading in New York. Boeing’s stock market value has dropped by 25% since the start of the year.
Boeing delivered 92 aircraft in the second quarter, a 32% decrease from the previous year. The company aims to produce 38 Max jets per month by the end of the year.
Brian West, Boeing’s CFO, previously indicated that the company would burn rather than generate cash in 2024 due to lower jet deliveries compared to the previous year.
Boeing is working on gaining regulatory approval for two new models of the 737 Max and a larger version of its 777 jetliner.
Additionally, the company is contemplating the development of a new single-aisle aircraft to eventually replace the Max, a decision that carries multibillion-dollar implications.
Boeing’s shares rose more than 3% in premarket trading following the announcement of Kelly Ortberg’s appointment.
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