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Boeing has named Kelly Ortberg as its new chief executive, handing the former head of one of its suppliers the challenge of steering the plane maker through one of the biggest crises in its history.
The appointment of Ortberg, who will start on August 8 and join Boeing’s board, ends months of speculation after Calhoun said in March that he would step down by the end of the year.
Boeing has been reeling since January when a door panel blew off a 737 Max during a commercial flight. Though no one was killed, some passengers were injured, and the accident recalled twin fatal crashes in 2018 and 2019 that the company has struggled to put behind it.
Ortberg is an experienced leader “with a well-earned reputation for building strong teams and running complex engineering and manufacturing companies”, said Boeing’s chair Steven Mollenkopf, who led the search for Calhoun’s replacement. “Kelly has the right skills and experience to lead Boeing in its next chapter.”
The 64-year-old ran Rockwell Collins, which makes avionics and cabin equipment, for five years and helped oversee its $30bn tie-up in 2017 with United Technologies. Now known as Collins Aerospace, it is part of defence contractor RTX.
“I’m extremely honoured and humbled to join this iconic company,” said Ortberg. “There is much work to be done, and I’m looking forward to getting started.”
His appointment came as Boeing reported a $1.4bn second-quarter loss, larger than Wall Street expected. The quarter was blighted by $1bn in losses tied to fixed-price defence contracts and fewer plane deliveries.
Chief financial officer Brian West said the company, which reported free cash outflows for the first two quarters of the year, would burn cash again in the third. High inventory and advance payments to suppliers to support higher future production are hitting Boeing’s working capital.
“While commercial production and deliveries are improving, additional losses in [Boeing Defense, Space & Security] and working capital timing continue to weigh on near-term cash flow,” West said, adding that the impact on working capital would shrink later in the year.
Despite the losses, Boeing shares were up 3 per cent in midday trading as Ortberg’s recruitment ended months of speculation over who would take on the multiple challenges facing the company.
Ortberg began his career in 1983 as an engineer at Texas Instruments, before joining Rockwell Collins as a programme manager. Many in the aerospace industry had strongly favoured an engineer taking the top job at Boeing, with critics suggesting it had lost its way after prioritising shareholder returns over investment in engineering and innovation.
The new chief executive will be under immediate pressure to restore confidence in the quality and safety of Boeing’s manufacturing operations, as well as finding ways to ease the supply chain strains that have hobbled the industry since the pandemic.
Boeing’s airline customers have been angered by delays in plane deliveries during a period in which rival Airbus has won market share.
Rob Stallard, analyst at Vertical Research Partners, said Ortberg was a “very good hire”.
“While he may not be as well known as say Larry Culp (GE) or Dave Gitlin (Carrier), in our experience Kelly was an excellent CEO of Rockwell Collins,” Stallard said. “What he brings to the party is not only a wealth of [aerospace and defence] experience, but also a record of running a company with an excellent corporate culture. Clearly there are a massive number of problems at Boeing, but with Kelly as CEO we think there is at least a chance of fixing them.”
Ortberg will join after Boeing pleaded guilty on July 24 to a felony fraud charge for misleading the US Federal Aviation Administration. Boeing recorded a charge of $244mn in the second quarter tied to the penalty it expects to pay.
