Boeing chooses an outsider to lead the response to the latest crisis | Business News

After a four-month search, a candidate was found to fill one of the most difficult roles in global business: chief executive of Boeing.

Success Dave Calhounwho was placed on the ejection seat in March after the last crisis that swallowed the company’s 737 MAX jetwill be Kelly Ortberg.

Ortberg, 64 years old, meets several requirements demanded by investors.

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Firstly, he is a qualified engineer, with a degree in mechanical engineering from the University of Iowa.

Secondly, he has more than three decades of relevant experience in the aerospace industry, having spent the majority of his career at Rockwell Collins, a supplier of avionics and information technology systems to aircraft manufacturers, which he joined in 1987.

His career culminated in him becoming chief executive in 2013 and he held the role for four years until the company was acquired for $23 billion by United Technologies. United, owner of aircraft engine maker Pratt & Whitney, merged the following year with Raytheon, maker of the Tomahawk cruise missile, to form RTX – a company on whose board Mr. Ortberg remained.

Thirdly, and crucially, Mr Ortberg – who takes office on 8 August – is an outsider who can therefore bring a fresh pair of eyes to Boeing.

Steven Mollenkopf, who became chairman in March, said: “The board conducted a thorough and extensive search process over the past several months to select Boeing’s next CEO and Kelly has the right skills and experience to lead Boeing into its next chapter. .

“Kelly is an experienced and deeply respected leader in the aerospace industry, with a well-earned reputation for building strong teams and managing complex engineering and manufacturing companies.”

Boeing had to waive the 65 retirement age to appoint Ortberg — just as it did when Calhoun turned 64 three years ago.

Ortberg beat stiff competition for the position.

Stephanie Pope, who became head of Boeing’s commercial aircraft operation in a management change in March, was seen as the leading internal candidate – but likely lost because investors made it clear they wanted an outsider.

The leading outside candidate until this week was Pat Shanahan, the new chief executive of Spirit AeroSystems, the Wichita-based company that built the fuselage of the 737 MAX 9 jet operated by Alaska Airlines, which in January suffered a mid- January. blow of air.

Boeing last month agreed to buy Spirit and that was seen as something that made Shanahan, who worked for Boeing for 31 years, a prime candidate.

The other big favorite outside of Boeing was Larry Culp, chief executive of GE Aerospace, but the Wall Street Journal reported last month that he turned down the job.

Wall Street welcomed the news and Boeing shares were up nearly 2.5% at one point this afternoon.

Ken Herbert, an analyst at brokerage RBC Capital Markets, told clients in a note: “This is a strong and safe pick. We can appreciate that Ortberg’s age may be higher than some investors would like to see. However, we believe the reputation of Ortberg at Rockwell Collins and United Technologies/RTX are strong.”

And Sheila Kahyaoglu, managing director of equity research at investment bank Jefferies, told CNBC: “He is a listener and Boeing needs someone who will listen – the FAA (the main US aviation regulator), the work, suppliers.

“He himself was a big supplier to Rockwell Collins and grew revenues – he was a driver of organic growth.

“In short, Kelly is the second best option to Larry Culp, who was everyone’s number one choice, but I think he will be liked by the workforce – and Boeing really needs that.

“Kelly will listen to the workforce, be more present with them, and I think that will be a huge step forward.”

Kahyaoglu said Ortberg is more likely to have an immediate impact at Boeing and compared that to how Calhoun replaced Dennis Muilenburg, who was fired just before Christmas in 2019 after two accidents, killing 346 people, involving the 737 MAX family.

She added: “Dave took over during the pandemic, which was very difficult, and he had a learning curve. With Kelly, the difference is he ran an aerospace company for a long time, he was an engineer.”

She said she hopes Ortberg will make conversations with Boeing customers his first priority.

The scale of Ortberg’s task was underscored this afternoon when Boeing, which has not reported annual profits since 2019, published its latest financial results.

A loss of $1.44 billion in the three months to the end of June, up from $149 million in the same period last year, was worse than expected. Group sales of $16.87 billion, a 15% drop from the same period last year, were well below the $17.4 billion that Wall Street was looking for.

In Boeing’s commercial aircraft operation, sales fell 32% as Boeing delivered just 92 planes during the quarter to airline customers, down from 136 last year.

The FAA imposed limits on the number of 737 MAX aircraft following the Alaska Airlines incident, but Boeing hasn’t even met those limits – but today the company repeated that it still expects to produce 38 aircraft per month by the end of the year.

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While Boeing’s problems in commercial aircraft have been well documented, the company – which has 170,000 employees worldwide – also has challenges in its defense division, a key supplier to the US Pentagon and NASA.

The company’s defense, space and security division lost $913 million during the quarter, up from $527 million in the same period last year, as several projects suffered cost overruns. These include the KC-46A Pegasus tanker, a military aerial refueling and transport aircraft being developed for the U.S. Air Force, and the VC-25B, the long-delayed replacement for the Air Force One aircraft that carries the president of the United States. USA.

Also under scrutiny is Starliner, the reusable spacecraft designed to transport astronauts to the International Space Station, which remains docked with the station after more than seven weeks – having originally returned to Earth after a week.

So it’s quite an inbox for Mr. Ortberg. The many stakeholders of this important company around the world, including customers like Ryanair, will wish you well.