Boeing names Kelly Ortberg as new CEO to replace Dave Calhoun

Boeing named Robert “Kelly” Ortberg to replace CEO Dave Calhoun, picking a longtime aerospace veteran from outside the company as the manufacturer struggles to regain its footing from safety and production crises. It will start on August 8.

Ortberg, 64, previously headed major aerospace supplier Rockwell Collins, which later became Collins Aerospace, leading major acquisitions, including one early in his tenure. The business is now part of an industrial giant RTX. He retired in 2021, although he was most recently on RTX’s board and resigned on Wednesday.

The appointment of the more than three-decade aerospace veteran shows that Boeing is looking for a steady hand that knows the industry — but also one from outside the company. Jefferies analyst Sheila Kahyaoglu said in a July 29 note that at Collins, Ortberg was a “tough negotiator dealing with a diverse set of clients and suppliers and managing the complexities of her diverse client base,” including Boeing.

Ortberg, who has a degree in mechanical engineering, will face a number of challenges in turning Boeing around: persistent losses, added regulatory scrutiny, supply chain strains, a crisis of confidence from airline customers whose planes are delayed, cost overruns in defense of the unit. and strained labor talks that now include the risk of a strike.

Boeing said in March that Calhoun would step down by the end of the year, part of a broader restructuring of the company that also included the departure of its then-president and the replacement of the head of its commercial aircraft unit. The changes came after a door plug blew on a nearly new 737 Max 9, boosting federal scrutiny of Boeing just as it was trying to move on from two deadly crashes of its best-selling plane.

Boeing announced Ortberg’s appointment alongside a bigger-than-expected quarterly loss and a 15% drop in sales.

“Kelly is an experienced leader who is deeply respected in the aerospace industry, with an earned reputation for building strong teams and running complex engineering and manufacturing companies,” Boeing President Steven Mollenkopf said in a memo to employees Wednesday. .

Ortberg will also join Boeing’s board of directors.

Boeing has struggled in recent months to overcome production and safety crises, including the lingering fallout from two deadly crashes of its Max planes in 2018 and 2019 that killed 346 people.

Earlier this month she pleaded guilty to a federal fraud charge that she said she misled regulators about the Max planes before they were certified. The deal calls for an independent corporate monitor at the company for three years.

As CEO, Ortberg will have to ensure the quality of Boeing products that depend on a strained and massive supply chain. The company, which employs about 170,000 people, must train thousands of new employees to replace more experienced staff who left because of the pandemic, a challenge Boeing’s suppliers are also facing.

The explosion of the door plug in the air sent Boeing leaders back into crisis mode, although there were no serious injuries among the passengers or crew. The screws to hold the door panel in place were not installed at the Boeing factory in Renton, Washington, according to early accident reports.

That accident was the most serious of a host of manufacturing defects that also included incorrect bores and incorrect spacing in the fuselages, problems that slowed deliveries, costing the company cash and customers for the new planes.

Boeing reached an agreement earlier this month to buy Spirit AeroSystems, its previous fuselage supplier. Many of the recent problems originated there, and Boeing leaders said the acquisition would help them better handle quality after years of outsourcing, a practice outgoing CEO Calhoun said earlier this year that probably went “too far”.

“One person can’t turn a company around, but Kelly should be able to cast a wider net for talent than a Boeing insider could,” said Bank of America aerospace analyst Ron Epstein. in a note on Wednesday. “We also note that Rockwell Collins has fostered a strong culture, which we believe Boeing desperately needs now.”

Boeing is working to get FAA certification on its long-delayed new 777 jetliner. The company earlier this month began flight testing of the 777-9 model with the FAA on board, a major milestone. It is also trying to get the FAA’s blessing for the long-awaited 737 Max 7 and Max 10, the largest and smallest models in the Max family.

Calhoun wrapped up his final earnings call as Boeing CEO on Wednesday, answering a question from analysts about whether new Max certification work could be completed in the first half of next year. He was careful not to step on the toes of the FAA, which contributed to Boeing’s previous CEO, Dennis Muilenburg, losing his job in 2019.

Next year “sounds realistic to me,” Calhoun said, quickly adding, “but they’re in charge.”