Boeing on Wednesday named aerospace industry veteran Kelly Ortberg as its new president and CEO after a months-long search, tasking the former Rockwell Collins executive with the monumental job of turning around the struggling plane maker.
Ortberg will start on August 8 facing a multitude of issues, including reviving the company’s jet production and rebuilding trust with regulators, the industry and the flying public.
Boeing, one of two global planemaking giants, has been mired in a reputational and safety crisis after a January 5 midair panel blowout on an Alaska Airlines-operated MAX 9 jet carrying 171 passengers. The company said Wednesday that it had also lost $1.4bn in the quarter as it continues to burn cash.
The January 5 incident led to the eventual resignation of CEO Dave Calhoun and departure of the company’s previous board president as regulators took aim at the safety culture that was already shaken by previous crashes in 2018 and 2019.
Shortly after the incident on January 5, the US Federal Aviation Administration (FAA) barred Boeing from expanding production of its cash-cow 737 MAX family of jets without estimating how long the limitation will last.
The US aviation regulator capped production of 737 MAX jets at 38 per month, though Reuters has reported that Boeing has been producing jets during some weeks at a much lower level.
The regulator on February 28 gave Boeing 90 days to develop a comprehensive plan to address “systemic quality-control issues,” which the company submitted in May. However, the FAA’s administrator has said Boeing would not be immediately allowed to increase 737 MAX production.
Shares rose 2.9% in premarket trading.
That has led to lower deliveries, frustrating customers. During the second quarter, Boeing delivered a total of 92 aircraft, down 32% from 2023.
The company posted a loss of $2.33 a share in the second quarter, as its troubled defence and space business worsened the financial strain on the US plane maker that has already scaled back commercial aircraft production.
Boeing’s defence, space and security unit, one of its three main businesses, has lost billions of dollars in 2023 and 2022, which executives attributed to cost overruns on fixed-price contracts.
Such contracts have high margins but leave defence contractors vulnerable to inflationary pressures that have dented US corporate earnings in the last few years.
The plane maker used to bid aggressively for fixed-price contracts before the pandemic, but has now said it would pivot away from such contracts to stem losses at the business, which amounted to $1.76bn in 2023.
Ahead of last week’s Farnborough Air Show, the unit’s head had said it was “significantly challenged” during the quarter.
Boeing CFO Brian West said in May the plane maker will burn rather than generate cash in 2024, hamstrung by lower jet deliveries compared to 2023.
Reuters
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