Boeing has named Robert “Kelly” Ortberg to replace CEO Dave Calhoun, picking a longtime aerospace veteran from outside the company as the manufacturer struggles to regain its footing from its safety and manufacturing crises. He will start Aug. 8.
Ortberg, 64, previously led major aerospace supplier Rockwell Collins, which later became Collins Aerospace, leading major acquisitions, including one early in his tenure. The business is now part of industry behemoth RTX. He retired in 2021, though he was most recently on RTX’s board and resigned on Wednesday.
The appointment of the more-than-three-decade aerospace veteran shows Boeing is seeking a steady hand that knows the industry — but also a company outsider. Jefferies analyst Sheila Kahyaoglu said in a July 29 note that at Collins, Ortberg was a “tough negotiator dealing with a diverse set of customers and suppliers and managing the complexity of its diverse customer base,” including Boeing.
Ortberg, who has a mechanical engineering degree, will face a host of challenges to turn Boeing around: persistent losses, heightened regulator scrutiny, supply chain strains, a crisis of confidence from airline customers whose planes are delayed, and tense labor talks that now include the threat of a strike.
Boeing announced in March that Calhoun would step down by year’s end, part of a broader company shake-up that also included the departure of its then-chairman and the replacement of its head of commercial aircraft. The changes came after a door plug blew out of a nearly new 737 Max 9, reigniting federal scrutiny over Boeing just as it was trying to move on from two fatal crashes of its bestselling plane.
Boeing announced Ortberg’s appointment alongside a wider-than-expected quarterly loss and a 15% drop in sales.
“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 chairman Steven Mollenkopf said in note to employees on Wednesday.
Ortberg will also join Boeing’s board.
Boeing has in recent months tried to move past its production and safety crises, including the continued fallout from two deadly crashes of its Max planes in 2018 and 2019 that killed 346 people.
Earlier this month it pleaded guilty to a federal fraud charge that said it misled regulators about the Max planes before they were certified. The agreement with the Justice Department puts in place an independent corporate monitor at the company for three years.
As CEO, Ortberg will have to ensure quality of Boeing’s products that depend on a strained and massive supply chain.
The midair door plug blowout put Boeing’s leaders back in crisis mode, though there weren’t any serious injuries among passengers or crew. Bolts to hold the door panel in place weren’t installed at Boeing’s Renton, Washington, factory, according to early accident reports.
That accident was the most serious of a host of manufacturing flaws that also included misdrilled holes and incorrect spacing on fuselages, problems that have slowed deliveries, depriving the company of cash and customers of new planes.
Boeing reached a deal earlier this month to buy Spirit AeroSystems, its fuselage supplier where many of the problems originated, an acquisition Boeing’s leaders have said will help them get a better handle on quality.
“It’s a fair sentiment on the part of the supply base and the airlines to say that we failed our commitments to them in terms of being timely, in terms of predictability,” said Ihssane Mounir, Boeing’s senior vice president of global supply chain and fabrication, during a panel at the Farnborough Airshow last week.
“One person cannot turn around a company, but Kelly should be able to cast a wider net for talent than a Boeing insider could,” Bank of America aerospace analyst Ron Epstein said in a note Wednesday. “Also, we note that Rockwell Collins fostered a strong culture, something that we think Boeing is in dire need of now.”