Boeing named a new CEO on Wednesday after reporting a core operating loss of $1.4 billion in the second quarter—more than triple the loss from the previous year. Increased scrutiny of the safety and quality of its planes has hindered the troubled company from producing enough aircraft to return to profitability.
Robert “Kelly” Ortberg, former CEO of supplier Rockwell Collins, will be the new CEO, effective August 8, replacing retiring CEO Dave Calhoun, who has faced criticism for the company’s issues.
“I’m extremely honored and humbled to join this iconic company,” said Ortberg in a statement. “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.”
Ortberg acknowledged that "there is much work to be done" at Boeing. His background in mechanical engineering could appeal to staff who have criticized Boeing’s management for prioritizing finance over engineering quality.
Ortberg’s appointment does not necessarily ensure the right decisions will be made by the new leadership. While Calhoun’s background is in finance, his predecessor, Dennis Muilenburg, who oversaw the troubled development of the 737 Max jet and its subsequent crashes, also had an engineering background.
Ortberg began his career in the aviation industry in 1983 as an engineer at Texas Instruments and joined Rockwell Collins in 1987 as a program manager. He became CEO of Rockwell Collins in 2013 and retired from the company in 2021.
“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,” said Boeing Chairman Steven Mollenkopf in a statement. “We look forward to working with him as he leads Boeing through this consequential period in its long history.”
Rockwell Collins, which provides avionics and IT systems for the aerospace industry, was purchased by United Technologies in 2018 and now operates as Collins Aerospace. Ortberg remained with the company for three years during its integration into United Technologies before retiring.
Even one of Boeing’s harshest critics found hope in Ortberg's appointment.
“The arrival of a new CEO at Boeing could not have happened at a more crucial and necessary time for the safety of the traveling public around the world,” said Robert Clifford, attorney for the families of 737 Max crash victims. He criticized the previous leadership under Muilenburg, Calhoun, and Boeing’s “do nothing” board, describing the company as being in a “nosedive.”
Ortberg faces significant challenges in fixing Boeing’s problems, as the company has not posted a profitable year since 2019. Its core operating losses have totaled $33.3 billion since then, including the latest loss. Returning to profitability will be difficult until Boeing can convince regulators it has resolved safety and quality issues.
The company admitted that two 737 Max crashes in October 2018 and March 2019, which killed a total of 346 people, were due to a design flaw. The crashes and the time taken to fix the design cost the company more than $20 billion.
Boeing recently agreed to plead guilty to charges that its employees defrauded the Federal Aviation Administration during the original certification process for the 737 Max. As part of the plea deal, Boeing agreed to operate under the supervision of a court-appointed monitor.
The company has faced renewed scrutiny after a 737 Max plane’s door plug blew off shortly after takeoff in January. Over a dozen whistleblowers have reported bad practices at Boeing to Congressional investigators, including the use of substandard parts and retaliation against employees who raised safety concerns.
The company has agreed to an FAA demand to curb production of the 737 Max until the regulator is satisfied it has addressed safety and quality issues, which will continue to impact Boeing's financial performance.
Boeing’s problems extend beyond the 737 Max. The company’s defense business reported $913 million in losses in its defense, space, and security unit, nearly double the $527 million lost a year earlier.
Its Starliner spaceship made its first crewed flight in the quarter but developed problems after docking at the International Space Station, leaving its two astronauts stranded with no known return date.
Boeing also reported additional losses in its program to deliver two new 747 jets for Air Force One. The contract has already cost Boeing more than $2 billion, and increased engineering costs for that contract and the Starliner contributed to Boeing’s increased losses.
Shares of Boeing (BA) initially fell in premarket trading on the financial results but bounced back on news of Ortberg’s appointment. Shares were up more than 1% at the U.S. market open but are down 28% year-to-date through Tuesday’s market close.
This story was updated with additional reporting and context.
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