Boeing has announced Kelly Ortberg as its new chief executive, marking the end of a challenging four-month search. Ortberg will take the reins from Dave Calhoun, who was recently ousted due to the latest crisis with the 737 MAX jet.
Ortberg’s appointment has been met with widespread approval within the aerospace industry. However, the task of restoring confidence in the beleaguered company remains monumental.
A Fresh Start with a Veteran
After a thorough four-month search, Boeing has appointed Kelly Ortberg as its new chief executive. Ortberg will succeed Dave Calhoun, who was removed from his position following the latest crisis involving the 737 MAX jet. Ortberg’s appointment has been broadly welcomed by industry experts.
Ortberg, 64, brings over three decades of experience in the aerospace industry. He started his career at Rockwell Collins in 1987 and eventually became the chief executive in 2013. He held that position until Rockwell Collins was acquired by United Technologies in 2017 for $23 billion.
The Decision to Choose Ortberg
The decision to appoint Ortberg involved intense competition. Stephanie Pope, the head of Boeing’s commercial aircraft operation, was seen as the leading internal candidate. However, investors had made it clear that they preferred an outsider for the role.
Pat Shanahan, the new chief executive of Spirit AeroSystems, was also a strong contender. Shanahan had worked for Boeing for 31 years and was considered a prime candidate. However, Boeing’s recent agreement to buy Spirit AeroSystems may have influenced the final decision.
Larry Culp, the chief executive of GE Aerospace, was another favourite. But reports indicated that he had turned down the role, opening the door for Ortberg’s appointment.
Industry Reactions
Wall Street has positively reacted to the news, with Boeing shares rising by almost 2.5% on the day of the announcement. Ken Herbert, an analyst at RBC Capital Markets, described Ortberg as a ‘strong and safe pick.’
Sheila Kahyaoglu, managing director at Jefferies, also spoke highly of Ortberg. She emphasised his reputation as a good listener, which is crucial for Boeing’s future. ‘He’s a listener and Boeing needs someone who listens – to the FAA, to the workforce, to suppliers,’ she said.
Kahyaoglu also pointed out that Ortberg is likely to make a quicker impact compared to his predecessor, Dave Calhoun. She highlighted Ortberg’s extensive experience in the aerospace industry as a significant advantage.
Challenges Ahead
Boeing faces a daunting task in regaining public and investor confidence. The company has not reported an annual profit since 2019 and recently posted a quarterly loss of $1.44 billion. This is a significant increase from the $149 million loss in the same period last year.
The company’s commercial aircraft sales have also been struggling. In the last quarter, Boeing delivered just 92 planes, a significant drop from 136 planes delivered in the same period the previous year. The FAA has also imposed limits on the number of 737 MAX aircraft Boeing can produce.
The challenges are not limited to the commercial aircraft division. Boeing’s defence, space, and security division also reported significant losses. The division lost $913 million during the last quarter, up from $527 million the previous year.
Focus on Workforce
One of the key areas where Ortberg is expected to make an impact is in engaging with Boeing’s workforce. Industry experts believe that Ortberg’s reputation as a good listener will be crucial in this regard.
Sheila Kahyaoglu stated, ‘Kelly will bring listening to the workforce, will be more present with them, and I think that will go a long way.’ This indicates that Ortberg’s leadership style may help boost morale and productivity within the company.
Ortberg is also likely to focus on improving communication with the FAA, suppliers, and customers. His background at Rockwell Collins, a major supplier in the aerospace industry, gives him a unique perspective on these relationships.
Financial Woes
Boeing’s financial troubles are a significant concern. The company’s recent quarterly loss was much worse than analysts had expected, and its sales figures were also disappointing.
The commercial aircraft division saw a 32% drop in sales, while the defence, space, and security division reported increased losses. Projects like the KC-46A Pegasus tanker and the VC-25B, the replacement for Air Force One, have faced numerous cost overruns.
For Ortberg, turning around Boeing’s financial performance will be a top priority. The company is hoping to increase production of the 737 MAX to 38 planes per month by the end of the year.
Customer Relations
Improving relationships with customers will be crucial for Boeing’s recovery. Ortberg is expected to prioritise talks with airline customers and other stakeholders.
The recent financial losses and production delays have strained relationships with key customers. Rebuilding this trust will be essential for Boeing’s future success.
Ortberg’s experience in growing revenues at Rockwell Collins may prove beneficial in this regard. His ability to drive organic growth could help Boeing regain its footing in the market.
Defence and Space Division
Boeing’s defence and space division also faces significant challenges. The division has been struggling with cost overruns on several major projects, including the KC-46A Pegasus tanker and the VC-25B.
The Starliner programme, designed to carry astronauts to the International Space Station (ISS), has also faced delays. The spacecraft has remained docked to the ISS for over seven weeks, far longer than initially planned.
Ortberg will need to address these issues to stabilise the division and improve its financial performance. His engineering background and industry experience will be valuable assets in tackling these challenges.
Looking Forward
Kelly Ortberg has a monumental task ahead of him as he steps into his new role. The aerospace industry will be watching closely to see how he navigates these challenges.
Ortberg’s extensive experience and reputation as a good listener will be crucial in his efforts to turn Boeing around. The company’s many stakeholders, including customers and investors, will be hoping for a swift and effective recovery under his leadership.
In summary, Kelly Ortberg’s appointment as the new CEO of Boeing has been well-received, but immense challenges lie ahead.
With his decades of experience and reputation as a good listener, there’s cautious optimism that he can steer the company toward recovery.
Ortberg’s leadership will be crucial as Boeing navigates financial difficulties and strives to regain trust in the industry.