Boeing has designated Robert “Kelly” Ortberg, a seasoned aerospace industry expert, as the company’s next chief executive officer. Ortberg, formerly the CEO at aerospace supplier Rockwell Collins, will take over from current CEO David Calhoun, effective Aug. 8. This announcement comes as Boeing reported a loss exceeding $1.4 billion in the second quarter, with revenue declining. The company’s commercial-airplanes division and defense unit both experienced financial losses, with results falling short of expectations on Wall Street.
Boeing’s challenges extend beyond financial difficulties. The company faces legal and regulatory turmoil, highlighted by a plea deal to address fraud charges related to the 737 Max aircraft, which were involved in fatal crashes that claimed 346 lives. The Federal Aviation Administration has enhanced its oversight of Boeing, responding to issues such as a panel blowout on an Alaska Airlines jet and whistleblower claims of safety compromises in manufacturing processes.
Supply-chain disruptions have also complicated Boeing’s operations, prompting plans to regain control of key contractor Spirit AeroSystems to alleviate production issues. The company is working towards gaining approval for new aircraft models like the Max variants and an expanded version of its two-aisle 777 aircraft. Additionally, a significant decision looms regarding the development of a new single-aisle plane to succeed the Max.
Ortberg, set to assume the roles of CEO and president simultaneously, was selected following an extensive search process. Boeing Chairman Steven Mollenkopf emphasized Ortberg’s competence in managing complex engineering and manufacturing enterprises. Notably, Boeing waived the mandatory retirement age of 65 for Ortberg, mirroring a similar move for Calhoun when he turned 64 in 2021.
The financial outlook for Boeing remains challenging, evidenced by the reported second-quarter loss of $1.44 billion, a stark contrast to a $149 million loss in the previous year. Excluding special items, the loss translates to $2.90 per share, surpassing analysts’ expectations. Revenue dropped by 15%, falling short of Wall Street estimates at $16.87 billion.
Boeing’s commercial-airplanes segment felt the impact, with operating losses amounting to $715 million and a 32% revenue decline due to reduced aircraft deliveries to airlines. Despite production limitations on the Max imposed by the FAA, Boeing aims to enhance production to 38 aircraft per month by the year’s end.
The company incurred a $244 million charge to settle a fine related to the fraud plea deal over the Max development, pending approval by a federal judge. Boeing’s defense and space unit recorded a $913 million loss, attributed to setbacks on fixed-price government contracts, including the construction of new Air Force One jets. In contrast, the services business gained $870 million.
Boeing’s shares saw a 2% increase in premarket trading following these announcements.
Boeing Announces New CEO after Reporting Loss of Over $1.4 Billion in Q2
