Boeing Warner Bros. named a longtime aerospace industry veteran on Wednesday as its next chief executive, who will take over a company rocked by legal, regulatory and production problems and mounting financial repercussions.
Robert “Kelly” Ortberg, former CEO of Boeing supplier Rockwell Collins, will succeed David Calhoun as CEO and president effective Aug. 8, the company said. Calhoun said in March that he would retire at the end of the year, and analysts generally praised the quicker transition.
Boeing announced its new CEO as it reported a loss of more than $1.4 billion as revenue fell during the second quarter. The loss was bigger and the company’s revenue was lower than Wall Street’s grim expectations, as both Boeing’s commercial plane business and defense unit lost money.
The disappointing results come at a tumultuous time for Boeing, which is the subject of multiple investigations in its safety culture and manufacturing quality.
The American aerospace giant agreed to plead guilty this month to a federal fraud charge in connection with his 737 Max jet and two accidents that killed 346 people. The Federal Aviation Administration increased oversight of the company and limited the number of planes it could produce after a panel exploded an Alaska Airlines Max flying at an altitude of 16,000 feet. Nobody was seriously injuredbut the frightening incident and subsequent scrutiny damaged Boeing’s reputation.
Boeing President Steven Mollenkopf said Ortberg was chosen after a “thorough and extensive search process” and “has the right skills and experience to lead Boeing into 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 to Calhoun days after turning 64 in 2021.
Ortberg emerged as the leading candidate only recently. Others who were reportedly considered for the role included Patrick Shanahan, a former Boeing executive and now CEO of its most important supplier, Spirit AeroSystems, and another longtime Boeing executive, Stephanie Papawhich recently took over the commercial aircraft division.
Ortberg led Rockwell Collins from 2013 to 2018, when it merged with United Technologies and ended up as part of RTX, a 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,” said Aboulafia.
Deutsche Bank analyst Scott Deuschle said Ortberg “has an engineering background, experience in the aviation industry and experience as a CEO of a public company.”
In a statement released by Boeing, Ortberg said: “There is a lot of work to be done and I look forward to getting started.”
Calhoun will serve as a special advisor to Boeing’s board until next March.
Like Calhoun, who took over as CEO following the two Max accidents, Ortberg inherits leadership of a company facing ongoing crises and criticism from within and outside the company.
Boeing, based in Arlington, Virginia, is fighting back whistleblower allegations of manufacturing shortcuts that undermine safety. It is dealing with supply chain issues that are hampering production, issues it hopes to resolve in part through reacquiring Spirit AeroSystems, a major contractor. It faces a strike threat this fall from its largest union, the International Association of Machinists.
The company is still trying to persuade regulators to approve two new Max models and a larger version of its two-aisle model. 777 plane. And it faces a multibillion-dollar decision about when to design a new single-aisle plane to replace the Max.
Quarterly earnings released on Wednesday reflected Boeing’s ongoing challenges. The reported loss of $1.44 billion in the second quarter compared to a loss of $149 million a year earlier. Since the beginning of 2019, Boeing has lost more than $25 billion.
Excluding special items, the second quarter loss was $2.90 per share. Analysts were expecting a loss of $1.90 per share, according to a FactSet survey.
Revenue fell 15% to $16.87 billion, falling short of Wall Street’s average forecast of $17.35 billion. The commercial plane division suffered an operating loss of $715 million and revenue fell 32% as Boeing delivered fewer passenger jets to airlines – 92 planes, compared with 136 a year earlier.
The FAA limited production of Boeing’s Max jets shortly after the Alaska Airlines incident, but Boeing has not even met the FAA’s limits as it seeks to fix its manufacturing process. The company said Wednesday it is sticking to its plans to increase Max production to 38 per month by the end of the year.
Boeing took a $244 million charge to cover a fine it agreed to pay as part of its settlement. plea deal with the Department of Justice in connection with the development of the Max. A federal judge in Texas will soon consider whether to approve the settlement, which also requires the appointment of an independent compliance monitor and that Boeing invest at least $455 million “in its compliance programs, quality and safety”.
Many families of the people who died in the two Max accidents, which occurred off the coast of Indonesia in 2018 and in Ethiopia less than five months later, oppose the agreement and I plan to ask the judge to dismiss it.
Boeing’s defense and space unit lost $913 million due to $1 billion in setbacks on four fixed-price government contracts, including a deal to build two new Air Force One presidential jets. The smallest services deal made $ 870 million.
Boeing shares rose 2% in morning trading.
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