Robert K. “Kelly” Ortberg is Boeing’s new president and chief executive officer, effective August 8, 2024. Ortberg will also serve on Boeing’s Board of Directors.
Source: Boeing
Aerospace veteran Robert “Kelly” Ortberg became BoeingA new CEO on Thursday with a single mission: restore the reputation of a US manufacturing icon.
That ambitious goal will involve thousands of daily decisions that will determine whether Boeing can earn the trust of regulators, airlines and the public; ending persistent production defects; deliver aircraft on time and consistently to customers large and small; and stop burning cash.
That cash burn has run about $8 billion so far this year and counting. Meanwhile, Boeing shares are down about 37% year to date in 2024, on Wednesday.
Ortberg’s Day 1 activity was running on Boeing’s factory floor in Renton, Washington, where it builds the best-selling 737 Max but has run into problems. He plans to talk to employees and review safety and quality plans, with similar visits to other Boeing factories.
“I can’t say enough how proud and excited I am to be a member of the Boeing team,” he said in a note to staff on Thursday. “While we clearly have a lot of work to do to restore confidence, I am confident that working together, we will turn the company into the industry leader we hope to be.”
Analysts and industry insiders are cautiously optimistic, painting the 64-year-old Ortberg — an industry veteran of more than three decades who spent years at the top of commercial and defense supplier Rockwell Collins after working his way up the ranks there — as a good listener. engineering background (he has a degree in mechanical engineering). Perhaps most importantly, he is a Boeing outsider.
“This guy has a great reputation and level of experience in the industry,” said Richard Aboulafia, managing director at AeroDynamic Advisory. “He has a reputation for listening and letting people back down.”
Problems between businesses
Those skills will be key as Boeing tries to stabilize production and eliminate manufacturing defects.
Boeing’s top safety executive for commercial aerospace told the National Transportation Safety Board earlier this week that the company is working on design improvements so the near-catastrophic door plug it faced earlier this year won’t happen again.
The hearing is part of the NTSB’s investigation into the explosion of a door plug from a Boeing 737 Max 9 that had been packed for months as it climbed out of Portland, Oregon. While no one was seriously injured in the crash, Boeing is back in crisis mode as it tries to move on from two fatal crashes of its best-selling 737 Max aircraft in 2018 and 2019.
Workers’ testimony at the NTSB hearings also pointed to the pressures of manufacturing and frequent aircraft repairs, a spotlight on Boeing’s factories.
“I will be transparent with you every step of the way, sharing news about progress as well as where we need to do better,” Ortberg said in the memo. He vowed to share the report with staff, “providing timely updates on what I’m seeing and hearing on the ground from my colleagues and stakeholders.”
Boeing last month agreed to plead guilty to defrauding the US government during Max certification, a deal that would have required an independent company monitor at the company for three years.
But Ortberg had to deal with problems not only in the commercial jet business, including the delayed certification of the new 737 and 777 models, but also in the defense unit.
The business segment is facing problems with the two 747s that will be the next Air Force One aircraft, but there is no schedule. Meanwhile, Boeing’s misfired Starliner capsule, which launched in early June, has NASA debating whether to use SpaceX instead to bring astronauts Butch Wilmore and Suni Williams back from the International Space Station.
There was also a decision to launch a new plane because Boeing lost out to Airbus.
The first 100 days of Ortberg’s time as CEO will be crucial, said Bank of America aerospace analyst Ron Epstein.
“The decisions he made early in his tenure will have a generational impact on the company,” he said in a Monday note.
Ortberg and his team must ensure that Boeing’s workforce is trained, with thousands of new workers at factories after more experienced staff members take buyouts or are laid off due to the pandemic. The union representing about 30,000 Boeing factory workers in Washington state and Oregon is seeking more than 40% raises and, last month, members authorized a strike if a deal is not reached by this September.
“The principles of safety and quality should be the same as manufacturing rates,” Jon Holden, local president of the International Association of Machinists and Aerospace Workers, said in a statement last week. “This potential collaboration with the new CEO could be a major opportunity for Boeing to prove its dedication to its workforce and recognize the manufacturing capabilities and capacity of skilled IAM Members on the shop floor.”
Last week, along with another quarterly loss, Boeing announced Ortberg would replace Dave Calhoun, who said in March he would step down at the end of the year.
It was part of a larger executive shakeup after the door plug explosion. Calhoun himself took over Boeing in crisis in early 2020, replacing Dennis Muilenburg, who was fired for handling two Max crashes.
While Boeing is still based in Arlington, Virginia – where it announced that it will move its headquarters in 2022 from Chicago – Ortberg will be based in the Seattle area, giving people a closer look at where the majority of Boeing’s commercial jetliner production is based.
“In speaking with our customers and industry partners so far, I can tell you that without exception, everyone wants us to succeed,” Otberg said in a Day 1 note to employees. “In many cases, they NEED us to succeed. This is a great foundation for us to build on.”
Getting off on the right foot with customers and hundreds of suppliers struggling from the whiplash of pandemic demand is important to Ortberg and his company. Boeing’s relationship with its bread-and-butter customers has suffered recently, and the leadership shake-up came after airline CEOs sought a meeting with the company’s board as plane delays piled up in the wake of a blowout door plug.
Southwest Airlines is one of Boeing’s biggest customers and, like other carriers, has scaled back its growth plans, due to delays in deliveries of Boeing’s new, more fuel-efficient jets. The CEO of the airline spoke about the great achievements that Ortberg had made.
“We look forward to working with Kelly Ortberg in his efforts to return Boeing to its place as America’s leading aerospace company,” CEO Bob Jordan said in a written statement. “A strong Boeing is good for Southwest Airlines and good for our industry.”
– CNBC’s Michael Sheetz contributed to this article.