Boeing is experiencing a challenging period marked by quality control issues, declining production rates, and eroding trust from regulators and the public. In an effort to steer the company back on track, Robert “Kelly” Ortberg, an experienced industry veteran, will take over as the new CEO and president on August 8. This leadership change follows a severe incident in January when the door plug of a Boeing 737 Max blew off mid-flight, heightening scrutiny and resulting in financial setbacks. Boeing reported a significant core operating loss of $1.4 billion for the April-June quarter, a figure 250 percent higher than the previous year, with quarterly revenues at $16.9 billion, both missing Wall Street estimates.
Earlier reports highlight a series of difficulties Boeing has faced, including two fatal 737 Max crashes in 2018 and 2019, which led to a temporary grounding of the fleet. The company recently pleaded guilty to misleading regulators about the aircraft’s safety. Additionally, Boeing has struggled with production issues and has not achieved an annual profit in five years. The recent financial results, showing a larger-than-expected loss, continue to emphasize the extent of Boeing’s ongoing challenges.
Ortberg Brings Engineering Expertise
Ortberg, 64, hails from Dubuque, Iowa, and holds a degree in mechanical engineering, which might help alleviate concerns from critics and industry leaders who believe Boeing’s leadership should prioritize engineering over finance. Unlike his predecessor Dave Calhoun, whose background is in business and accounting, Ortberg’s extensive engineering experience is seen as a positive shift. Ortberg’s career began at Texas Instruments before he moved to Rockwell Collins, eventually becoming its CEO and overseeing its integration with United Technologies in 2018. His previous roles include running the aerospace unit at the merged company and serving as a special advisor.
Overcoming Production and Safety Challenges
The upcoming CEO will be based in Seattle, suggesting a potential relocation for the company, which has been headquartered in Arlington, Virginia, for the last two years. Boeing’s decision to waive the mandatory retirement age of 65 for Ortberg indicates confidence in his ability to lead despite his age. Kevin Michaels, founder of AeroDynamic Advisory, commented that Ortberg’s high energy and deep understanding of aerospace make him well-suited for the demanding role.
Following the January 737 Max incident, the Federal Aviation Administration restricted Boeing from increasing its monthly production of the aircraft beyond 38 units, affecting the company’s commercial sector, which reported a $715 million loss for the quarter. The defense, space, and security division also faced challenges, posting a $913 million loss, while the division focused on repairs and parts supply remained profitable, generating $870 million.
“Safety and quality will be our top priorities,” stated Ortberg. “There is much work ahead, and I am eager to commence.”
As Boeing navigates its current difficulties, Ortberg’s leadership will focus on restoring the company’s reputation for safety and reliability. Addressing both financial and operational challenges will be critical for Boeing to regain its standing in the aerospace industry. Ortberg’s extensive experience and engineering background could play a pivotal role in achieving these goals. Moving forward, Boeing’s ability to implement changes and meet regulatory standards will be essential in rebuilding trust and ensuring long-term success.
