Portugal Colonial - Eyeing a turnaround, Kelly Ortberg takes helm as Boeing CEO

In a message to workers, Ortberg expressed how "proud and excited I am to be a member of the Boeing team."

He added: "While we clearly have a lot of work to do in restoring trust, I'm confident that working together, we will return the company to be the industry leader we all expect."

Ortberg said he will be based in Seattle "so that I can be close to the commercial airplane programs."

"In fact, I'll be on the factory floor in Renton today, talking with employees and learning about challenges we need to overcome, while also reviewing our safety and quality plans," Ortberg said.

The appointment of 64-year-old Ortberg to succeed outgoing Boeing chief executive Dave Calhoun was announced on July 31, the day the US aerospace giant posted a second-quarter loss of more than $1.4 billion.

Ortberg takes the helm as Boeing attempts to pivot from its latest crisis, prompted by a January incident in which a Boeing 737 MAX flown by Alaska Airlines was forced to make an emergency landing after a fuselage panel blew out mid-flight.

The incident heaped new scrutiny on Boeing, which has struggled with quality control and manufacturing problems that have slowed its comeback after two fatal crashes in 2018 and 2019, and the Covid-19 pandemic.

Aviation insiders -- many of whom emphasized the need for a Boeing outsider after the late-March announcement of Calhoun's departure -- have welcomed the appointment.

"We see Kelly Ortberg as a win for Boeing," aviation experts at Melius Research wrote in an analyst note, adding that his experience as CEO of Rockwell Collins -- now an RTX subsidiary called Collins Aerospace -- "checks a lot of boxes."

"He has an engineering background, experience running a public company, a multi-decade tenure in the aerospace industry, and is a Boeing outsider, which should allow for a fresh approach to solving Boeing’s issues," they said.

Ortberg is "a positive hire" given his prior industry experience and his role managing a large supplier, CFRA Research senior equity analyst Angelo Zino wrote in a note to clients.

Calhoun will meanwhile remain a special adviser to Boeing's board of directors until March 2025.

- Moving on -

The most urgent issue on Ortberg's plate is undoubtedly restoring Boeing's production quality, which has been criticized in several audits. The firm has already drawn up a roadmap to achieve this, as it was required to do by the US Federal Aviation Administration (FAA).

To accomplish the necessary quality standards, Boeing will also be taking back control of Spirit AeroSystems, a company it spun off back in 2005.

The $4.7 billion purchase, announced in early July, is due to be completed by mid-2025.

Ortberg, who began his career in 1983 as an engineer at Texas Instruments, takes the helm just after two long days of hearings organized by the National Transportation Safety Board (NTSB) as part of its investigation into the January Alaska Airlines incident.

At the hearing, Boeing officials acknowledged lapses in how the fuselage panel was removed for work in Renton without proper documentation in company systems in a process that evaded other quality control checks. The hearing also pointed to fissures in the relationship between Boeing and the machinists union.

As a result of the incident, Boeing has reshuffled executives, slowed production of the 737 MAX and been confronted by a reactivation of an earlier criminal case against the company following the MAX crashes.

These are just some of the issues that Ortberg will have to tackle.

The IAM-District 751 workers' union, which represents more than 30,000 Boeing employees around Seattle, called Ortberg's decision to base himself in the city "a step in the right direction."

The union's approval is important at a time when Boeing is negotiating its next collective bargaining agreement, which is due to come into force in September.

The union has already approved strike action if no deal is reached by this deadline.

Another major issue for Boeing is its guilty plea, announced July 24, in the criminal case relating to the crashes; the company is still waiting for the judge's decision, and civil proceedings.

Robert Clifford, a lawyer representing the families of the victims, also reacted positively to Ortberg's appointment, noting his "well-regarded reputation" and the fact he came from outside the company.

E.Paulino--PC