2024-07-31 18:34:33
Shares of Boeing rose 3.0 percent near midday. (File)
New York:
Boeing on Wednesday named former aerospace veteran Robert “Kelly” Ortberg its next CEO, as the aviation giant reported a hefty loss on continued 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 is an outsider to Boeing, fulfilling key CEO requirements in the eyes of some aviation insiders.
His appointment, which will take effect August 8, comes as Boeing attempts to rebound from a series of safety and quality control problems that have sharpened 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 year-ago period.
Revenues fell 14.6 percent to $16.9 billion.
The quarterly results reflected a continued drag from Boeing’s commercial division, where it has lowered production while upgrading 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 number of fixed price contracts where it has experienced deep losses due to supply chain problems, as well as higher engineering costs and technical issues.
Boeing listed four defense contracts behind an operating loss of $913 million in the quarter.
– Leadership shake-up –
Boeing has been in the hot seat since a January incident in which a 737 MAX operated by Alaska Airlines made an emergency landing after a fuselage panel blew out mid-flight.
That incident raised fresh scrutiny on Boeing and the MAX following two fatal crashes in 2018 and 2019 that led to a lengthy grounding of the plane.
Outgoing leader Dave Calhoun ascended to CEO in January 2020 unexpectedly following the ouster of predecessor Dennis Muilenburg amid fallout from the MAX crashes.
Calhoun appeared poised to stay on as CEO to 2028 until the Alaska Airlines incident sparked outrage on Capitol Hill and concern among Boeing’s airline customers. Calhoun announced on March 25 that he would step down by the end of this year.
Aviation experts had hoped the next Boeing CEO would ideally have an aerospace background, experience managing big manufacturing projects, strategic smarts, a hands-on approach to safety and the ability to navigate congressional hearings.
In Wednesday’s statement, Boeing Chairman 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 much work to be done, and I’m looking forward to getting started.”
Some analysts have suggested that Boeing’s next CEO could remake the company’s executive ranks.
But Calhoun indicated he does not expect significant personnel changes, saying, “I don’t think this is intended to be a large leadership overhaul.”
Ortberg “knows full well that we’re in a recovery mode,” said Calhoun, adding that he was not deeply involved in the CEO selection process.
– ‘Very challenging job’ –
Immediate priorities facing Ortberg include negotiations with a machinists’ and aerospace union amid a potential September strike threat; and restoring production levels on the MAX and 787 Dreamliner to meet Boeing’s targets by late 2024.
Analysts at JPMorgan Chase praised the appointment, while noting the CEO post “remains a very challenging job,” according to a note.
“We believe he is highly respected in the industry, he has important operational and engineering 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 legislators,” said the JPMorgan note.
Third Bridge analyst Peter McNally said Ortberg’s aviation experience will help at Boeing, but said “he and the organization face a long road ahead.”
Ortberg is set to take office just after a two-day hearing organized by the National Transportation Safety Board in Washington on the Alaska Airlines incident.
Boeing has agreed to plead guilty to a fraud charge as part of a plea deal with the US Department of Justice over the two fatal MAX crashes, according to a court filing last week.
The deal must be approved by a federal judge.
Shares of Boeing rose 3.0 percent near midday.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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