(qlmbusinessnews.com Thurs. 1st Aug, 2024) London, UK —
“Robert K Ortberg Steps In as Boeing's CEO Amidst Rising Financial Losses”
Boeing has appointed aerospace industry veteran and engineer Robert K “Kelly” Ortberg as its new chief executive, aiming for a turnaround amidst ongoing challenges. Ortberg, known for his leadership at aircraft electronics supplier Rockwell Collins, will assume his new role next month, succeeding Dave Calhoun. Calhoun's departure comes in the wake of renewed scrutiny over Boeing's safety and manufacturing standards following a mid-air incident involving an Alaska Airlines plane.
The announcement coincided with Boeing reporting worsening financial losses. Chairman Steven Mollenkopf expressed confidence in Ortberg, praising his extensive experience and leadership skills. “Kelly brings the right expertise to guide Boeing into its next chapter,” Mollenkopf stated in a letter to staff.
Ortberg, 64, has a notable track record in the aerospace sector, having led Rockwell Collins through several significant mergers before retiring in 2021. He now faces the task of restoring Boeing's reputation, which has been marred by the fatal crashes of two 737 Max planes over five years ago. Boeing recently pleaded guilty to fraud charges related to those crashes, agreeing to a $244 million criminal fine.
The company continues to grapple with lawsuits and government investigations following the Alaska Airlines incident, along with escalating financial losses. Boeing reported a $1.4 billion loss for the April-June period, a significant increase from the $150 million loss reported last year. This decline reflects not only the challenges in its commercial sector but also rising costs in its defence division, exacerbated by inflation.
Ortberg has pledged to prioritise safety and quality as he leads Boeing's global workforce of over 170,000 employees. “There is much work to be done, and I'm eager to get started,” he said.
During his tenure at Rockwell Collins, Ortberg was known for his focus on employees, including eliminating executive parking perks. He also navigated conflicts with Boeing, especially during the merger of Rockwell Collins with United Technologies in 2018.
Dave Calhoun, who will remain as a special advisor to the board until March 2025, expressed optimism about Ortberg's appointment. “Kelly is a seasoned operator aware of the challenges ahead,” he said.
Boeing, one of the world's leading commercial airplane manufacturers, currently has a backlog of approximately 5,400 aircraft orders. The company's production slowdowns have impacted the broader aerospace industry, causing delays in new plane deliveries.
Christopher Carey, portfolio manager at Carnegie Investment Council, noted that Ortberg's appointment will be a “wait-and-see” scenario to determine its effectiveness. Shares of Boeing rose over 1% following the announcement, indicating investor optimism.
Representative Rick Larsen, senior Democrat on the House Transportation Committee, expressed encouragement at Boeing's decision to appoint a mechanical engineer as CEO, hoping it would prioritise safety in manufacturing.
Calhoun highlighted recent progress, including a deal to acquire Spirit Aerosystems and a manufacturing plan submitted to regulators. “Despite a challenging quarter, we are making substantial strides in strengthening our quality management system,” he said.
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