Boeing Names Former Aerospace Veteran Robert “Kelly” Ortberg as New CEO

New York:

Boeing on Wednesday named former aerospace veteran Robert “Kelly” Ortberg as its next CEO, as the aviation giant reported a major loss due to ongoing operational problems.

Ortberg, 64, helped lead aviation communications and electronics supplier Rockwell Collins and integrate it into United Technologies, which then merged with Raytheon to become RTX. He retired from RTX in 2021.

He is an engineer and an outsider at Boeing, fulfilling the CEO’s main requirements in the eyes of some aviation experts.

His appointment, which will take effect Aug. 8, comes as Boeing tries to recover from a series of safety and quality control problems that have intensified scrutiny on the company.

Those difficulties were immediately visible in Boeing’s second-quarter results released Wednesday, a loss of $1.4 billion, compared with a loss of $149 million in the same period a year earlier.

Revenues fell 14.6% to $16.9 billion.

The quarterly results reflected continued resistance from Boeing’s commercial division, where it has reduced production and improved safety and quality control practices under the close watch of regulators.

The latest results also showed significant weakness in its defense business due to a series of fixed-price contracts where it suffered deep losses due to supply chain issues, as well as higher engineering costs and technical issues.

Boeing listed four defense contracts responsible for an operating loss of $913 million in the quarter.

– Change of leadership –

Boeing has been in the spotlight since an incident in January in which a 737 MAX operated by Alaska Airlines made an emergency landing after a fuselage panel exploded mid-flight.

That incident raised new scrutiny on Boeing and the MAX after two fatal crashes in 2018 and 2019 that led to a long grounding of the plane.

Outgoing leader Dave Calhoun ascended to the role of CEO in January 2020, unexpectedly, following the dismissal of predecessor Dennis Muilenburg amid the fallout from the MAX crashes.

Calhoun appeared prepared to remain CEO until 2028 until the Alaska Airlines incident sparked outrage on Capitol Hill and concern among Boeing airline customers. Calhoun announced on March 25 that he would step down by the end of this year.

Aviation experts expected Boeing’s next CEO to ideally have an aerospace background, experience managing large production projects, strategic intelligence, a practical approach to safety and the ability to navigate Congressional hearings.

In Wednesday’s statement, Boeing President Steve Mollenkopf described Ortberg as “an experienced leader who is deeply respected in the aerospace industry.”

Ortberg said he was “extremely honored and humbled to join this iconic company,” adding, “There is a lot of work to be done and I look forward to getting started.”

Some analysts have suggested that Boeing’s next CEO could reshuffle the company’s executive ranks.

But Calhoun indicated he doesn’t expect significant personnel changes, saying, “I don’t think this is a major leadership overhaul.”

Ortberg “knows very well that we are in recovery mode,” Calhoun said, adding that he was not deeply involved in the CEO selection process.

– ‘Very challenging work’ –

Immediate priorities facing Ortberg include negotiations with a machinists and aerospace union amid a potential strike threat in September; and restore MAX and 787 Dreamliner production levels to meet Boeing targets by the end of 2024.

Analysts at JPMorgan Chase praised the appointment, but noted that the role of CEO “remains a very challenging job,” according to a note.

“We believe he is highly respected in the industry, has important engineering and operational experience, and we think he has the potential to do some of the things Boeing needs most, including restoring relationships with customers, suppliers, regulators and policymakers.” said the JPMorgan note.

Third Bridge analyst Peter McNally said Ortberg’s aviation experience will help Boeing, but said “he and the organization face a long road ahead.”

Ortberg is expected to take office shortly after a two-day hearing organized by the National Transportation Safety Board in Washington into the Alaska Airlines incident.

Boeing agreed to plead guilty to a fraud charge as part of a plea deal with the U.S. Department of Justice over the two fatal MAX crashes, according to a court filing last week.

The agreement must be approved by a federal judge.

Boeing shares were up 3.0 percent near midday.

(Except the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)