Boeing has announced the appointment of Robert “Kelly” Ortberg as its new CEO, following a reported loss of over $1.4 billion in the second quarter. Ortberg, a former CEO at aerospace supplier Rockwell Collins, will succeed David Calhoun as CEO on August 8.
The company’s financial results were worse than expected, with revenue falling 15% compared to the previous year. Both Boeing’s commercial airplanes business and defense unit reported losses.
In Commercial Airplanes, Boeing delivered 92 aircraft in the second quarter of 2024: 44 less than the same period of 2023. When comparing the 2024 and 2023 first semesters, the gap widens, considering the 175 aircraft dispatched in 2024 against the 266 units delivered last year.
“Commercial Airplanes second-quarter revenue of $6.0 billion and operating margin of (11.9) percent primarily reflect lower deliveries and planned higher period costs, including research and development,” said the company in its release.
“The 737 program gradually increased production during the quarter and still plans to increase production to 38 per month by year-end. The 787 program maintains plans to return to 5 per month” by December this year, Boeing stated.
A new face to deal with old problems
The expedited announcement, aiming to calm investors, comes at a difficult time for the manufacturer, as it is facing increased regulatory oversight and legal challenges. The company recently agreed to plead guilty to fraud related to the 737 Max, two of which crashed, resulting in the deaths of 346 people. The Federal Aviation Administration (FAA) has intensified its scrutiny following several incidents, including a panel blowout on an Alaska Airlines jet.
Boeing is also dealing with supply-chain issues that are hampering production and preventing aircraft delivery ramp-up and impacting new deals. The company aims to address these problems by re-acquiring Spirit AeroSystems, a key contractor. Additionally, Boeing is working to gain regulatory approval for two new MAX variants (-7 and the Airbus A321neo long awaited rival, the -10) and a larger, modern version of its two-aisle 777.
Ortberg was selected as CEO after a comprehensive search process. Boeing Chairman Steven Mollenkopf stated that Ortberg has the necessary skills and experience to guide Boeing through 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. We look forward to working with him as he leads Boeing through this consequential period in its long history”, Mollenkopf said.
“I’m extremely honored and humbled to join this iconic company,” said Ortberg. “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.”
Ortberg, 64, holds a bachelor’s degree in mechanical engineering from the University of Iowa. He started in 1983 as an engineer at Texas Instruments, and joined Rockwell Collins in 1987 as a program manager. He worked his way up to become president and CEO in 2013. After five years leading Rockwell Collins, he steered the company’s integration with United Technologies and RTX until he retired from RTX in 2021.
Ortberg’s announcement has been well received by the markets, as Boeing stock price went up 2 percent in the opening.
