Boeing on Wednesday named aerospace veteran Robert “Kelly” Ortberg as its new CEO.
Ortberg, who led Boeing supplier Rockwell Collins, will succeed Dave Calhoun, who announced earlier this year his intent to retire from the aerospace company. Shares rose 2.9% in premarket trading on the news.
“Kelly is an experienced leader who is deeply respected in the aerospace industry, with a well-earned reputation for building strong teams and running complex engineering and manufacturing companies,” Boeing’s board chair, Steven Mollenkopf, said in a statement. “We look forward to working with him as he leads Boeing through this consequential period in its long history.”
Boeing also announced Wednesday that it had lost $1.4 billion in the previous quarter.
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The leadership shakeup comes as the airplane manufacturing giant faces a reputational crisis and financial strain following a series of high-profile accidents involving its jets.
The most serious near-disaster happened on Jan. 5, when the door plug on a Boeing Max 9 operated by Alaska Airlines blew out in midair with 171 passengers aboard. The incident prompted the Federal Aviation Administration to temporarily ground some Boeing planes.
A National Transportation Safety Board investigation preliminarily found that no bolts had been installed to secure the plug. Boeing faces lawsuits from passengers on the plane who demand compensation for physical, mental and financial trauma.
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Former CEO Dave Calhoun resigned in the aftermath of the accident and regulators have increased scrutiny on the company’s safety culture, which was already thrown into question by previous crashes in 2018 and 2019.
Shortly after the incident on Jan. 5, the FAA barred Boeing from expanding production of its cash-cow 737 MAX family of jets without estimating how long the limitation would last.
The regulatory agency capped production of 737 MAX jets at 38 per month. Reuters has reported that Boeing has been producing jets at a much lower level for some weeks.
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The FAA on Feb. 28 gave Boeing a 90 day deadline to develop a comprehensive plan to address “systemic quality-control issues,” which the company submitted in May. However, FAA administrator Michael Whitaker has said Boeing will not be immediately allowed to increase 737 MAX production.
As a result, Boeing only delivered 92 aircraft in the second quarter, down 32% from last year.
Ortberg will be tasked with convincing regulators to allow Boeing to resume full-scale production and turning around billions in losses in its Defense, Space and Security unit, which executives said were the result of cost overruns on fixed-price defense contracts.
While such contracts can be profitable, they are vulnerable to inflation. Boeing has said it will shift away from fixed-price contracts to stem losses, which totaled $1.76 billion last year, Reuters reported.
In the short term, Boeing CFO Brian West said in May the planemaker will continue to burn cash in 2024 as it will deliver fewer jets compared to last year.
Reuters contributed to this report.
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