Boeing’s Shares Rise as Kelly Ortberg is Officially Appointed as the New CEO

Boeing has announced Kelly Ortberg as its new Chief Executive, selecting the former head of one of its suppliers to navigate the company through one of the most challenging periods in its history. Ortberg will commence his role on August 8 and join Boeing’s Board, concluding months of speculation following Dave Calhoun’s March announcement that he would step down by the end of the year.

The company has been in turmoil since January when a door panel detached from a 737 Max during a flight, causing injuries but no fatalities. This incident evoked memories of the deadly crashes in 2018 and 2019 that Boeing has struggled to overcome.

Ortberg’s appointment follows Boeing’s recent guilty plea to a felony fraud charge for misleading the US Federal Aviation Administration, with a related charge of $244 million recorded in the second quarter.

Boeing’s chair, Steven Mollenkopf, who led the search for Calhoun’s successor, praised Ortberg as a seasoned leader known for building strong teams and managing complex engineering and manufacturing enterprises. He expressed confidence that Ortberg possesses the necessary skills and experience to lead Boeing forward.

Ortberg, aged 64, previously led Rockwell Collins, a manufacturer of avionics and cabin equipment, for five years and played a key role in its $30 billion merger with United Technologies in 2017, forming Collins Aerospace. He will relocate from Florida to Seattle for his new position. Although Boeing moved its headquarters to Chicago in 2001 and then to Arlington, Virginia, in 2022 to be closer to the Pentagon, Seattle remains a significant hub for the company.

Ortberg expressed his honor and humility in joining Boeing, acknowledging the extensive work ahead and his eagerness to begin. His appointment coincided with Boeing reporting a second-quarter loss of $1.4 billion, which exceeded Wall Street’s expectations. The loss was partly due to $1 billion in fixed-price defense contract losses and reduced plane deliveries.

Chief Financial Officer Brian West indicated that Boeing would experience additional cash outflows in the third quarter due to high inventory levels and advance supplier payments intended to support future production increases. However, he anticipated that the impact on working capital would lessen later in the year.

Despite the financial setbacks, Boeing’s stock rose by 3% as Ortberg’s appointment ended speculation about the new leadership. Ortberg, who started his career as an engineer at Texas Instruments in 1983 before joining Rockwell Collins, is seen by many in the aerospace industry as a suitable leader to restore Boeing’s focus on engineering and innovation. Critics have argued that the company had previously prioritized shareholder returns over these crucial aspects.

Ortberg will face immediate pressure to rebuild confidence in Boeing’s manufacturing quality and safety, as well as to alleviate supply chain issues that have plagued the industry since the pandemic. Boeing’s airline customers have been frustrated by delivery delays, allowing rival Airbus to gain market share.

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