Boeing recently announced the appointment of aerospace industry veteran Kelly Ortberg as its new President and CEO, effective August 8, 2024. This decision comes after a months-long search to find a leader who can steer the struggling planemaker through a challenging period marked by financial losses, quality control issues, and a tarnished reputation.
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Ortberg, who previously served as CEO of Rockwell Collins, brings a wealth of experience and a well-earned reputation for building strong teams and running complex engineering and manufacturing companies. Boeing's board chairman, Steven Mollenkopf, praised Ortberg's appointment, stating that he is deeply respected in the aerospace industry and has a proven track record of success. The appointment of Ortberg comes at a critical time for Boeing, as the company reported a net loss of $1.4 billion in the second quarter of 2024. The financial strain is largely due to the troubled defense and space business, which has suffered billions of dollars in losses in recent years. Boeing's decision to pivot away from fixed-price contracts, which have high margins but leave the company vulnerable to inflationary pressures, is expected to help stem the losses in this business unit.
In addition to financial challenges, Boeing is also grappling with a quality crisis that has led to production issues and a slowdown in the production of its top-selling 737 MAX jets. The U.S. aviation regulator has capped production of these jets at 38 per month, and Boeing has been producing them at a much lower level for some weeks. The company's troubles were compounded by a mid-air blowout of a panel on a 737 MAX 9 jet operated by Alaska Airlines in January 2024, which reignited concerns about the quality of Boeing's planes. This incident led to a management shakeup and increased regulatory and legal scrutiny.
Ortberg's appointment is seen as a crucial step in Boeing's efforts to rebuild trust with regulators, the flying public, and its customers. He has emphasized that safety and quality will be at the forefront of his leadership, stating that he is committed to working with Boeing's more than 170,000 employees to continue the company's tradition of excellence. While Ortberg's appointment has been met with cautious optimism, industry experts and analysts have noted that it will be a wait-and-see story to determine whether he can successfully turn the company around. The challenges facing Boeing are significant, and Ortberg will need to navigate a complex landscape of financial, operational, and reputational issues. Despite the challenges, Boeing has taken steps to address its problems, including the acquisition of Spirit Aerosystems and the submission of a plan to regulators related to its manufacturing process. The company has also managed to increase production of commercial planes over the three months to June, although it still faces a cap on output imposed by the federal government. As Ortberg prepares to take the helm at Boeing, the aerospace industry and the public will be watching closely to see if he can steer the company through its current turbulence and return it to a position of stability and growth.