Boeing’s latest attempt to reverse its troubled trajectory sees the return of Kelly Ortberg, a veteran aerospace executive, as the company’s new CEO. Ortberg, who takes over from Dave Calhoun effective August 1, 2024, faces the formidable task of restoring Boeing’s reputation and financial stability following a series of high-profile issues.
Ortberg, 64, returns from early retirement to tackle Boeing’s mounting challenges. His appointment was announced on July 31, coinciding with the company reporting a staggering $1.4 billion loss for the second quarter. Calhoun, who has overseen Boeing during a tumultuous period marked by quality control issues and financial losses, will transition to a special advisory role until March 2025.
A New Leadership Era
Ortberg’s appointment has been met with cautious optimism by industry experts. Melius Research praised Ortberg’s track record, highlighting his experience as CEO of Rockwell Collins (now Collins Aerospace, a division of RTX). His engineering background, extensive aerospace industry experience, and status as an external candidate are seen as significant assets in addressing Boeing’s complex issues.
“Ortberg’s experience in managing a large aerospace supplier and his fresh perspective are exactly what Boeing needs right now,” said CFRA Research senior equity analyst Angelo Zino.
Key Challenges and Strategic Moves
Ortberg’s immediate focus will be on addressing Boeing’s production quality issues, which have been under intense scrutiny following recent audits. The company has been working with the Federal Aviation Administration (FAA) to improve its quality standards and has drawn up a comprehensive roadmap to achieve this.
One of Ortberg’s first major strategic moves will be overseeing Boeing’s $4.7 billion acquisition of Spirit AeroSystems, a company Boeing originally spun off in 2005. The purchase, expected to finalize by mid-2025, is intended to regain control over a critical supplier and enhance production quality.
Ortberg’s appointment follows two days of hearings by the National Transportation Safety Board (NTSB) regarding an in-flight incident involving a 737 MAX 9 earlier this year. This incident led to executive changes, production freezes, and legal investigations. Ortberg will need to navigate these ongoing issues, including Boeing’s recent guilty plea in a criminal case related to two fatal crashes and upcoming civil proceedings.
Union Support and Future Prospects
Ortberg plans to work from Boeing’s Seattle headquarters, a move seen as favorable by the IAM-District 751 workers’ union, which represents over 30,000 Boeing employees. The union’s support is crucial as Boeing approaches negotiations for a new collective agreement, with a strike action pending if an agreement is not reached by September.
The new CEO also faces the task of pushing forward with Boeing’s delayed projects, including the 777X, which is nearing certification after multiple setbacks, while the 737 MAX 7 and MAX 10 continue to face delays.
Robert Clifford, a lawyer representing victims’ families from the crashes, has expressed positive expectations about Ortberg’s leadership, citing his reputable background and external perspective as beneficial for the company.
Conclusion
Kelly Ortberg’s return to Boeing represents a pivotal moment for the aerospace giant as it grapples with substantial operational and financial hurdles. With his extensive industry experience and strategic vision, Ortberg’s leadership will be closely watched as Boeing seeks to overcome its challenges and restore its standing in the aerospace sector.
I am Aparna Sahu
Investment Specialist and Financial Writer
With 2 years of experience in the financial sector, Aparna brings a wealth of knowledge and insight to Investor Welcome. As an accomplished author and investment specialist, Aparna has a passion for demystifying complex financial concepts and empowering investors with actionable strategies. She has been featured in relevant publications, if any, and is dedicated to providing clear, evidence-based analysis that helps clients make informed investment decisions. Aparna Sahu holds a relevant degree or certification and is committed to staying ahead of market trends to deliver the most up-to-date advice.
