Robert K. “Kelly” Ortberg will become The Boeing Company’s new president and chief executive officer, effective Aug. 8, 2024. Ortberg will also join The Boeing Company’s board of directors.
Courtesy of Boeing
Aerospace veteran Robert “Kelly” Ortberg Boeing‘s new CEO took office on Thursday with the sole mission of restoring the company’s reputation as an icon of American manufacturing.
That lofty goal will involve thousands of daily decisions that will determine whether Boeing can regain the trust of regulators, airlines and the public; whether it can eradicate manufacturing defects; whether it can deliver planes on time and consistently to customers big and small; and whether it can stop burning through cash.
Boeing’s cash burn has reached about $8 billion so far this year and continues to grow, while its shares were down about 37% so far this year as of Wednesday.
Mr. Ortberg’s first day’s activity will be a walk through the floor of the Boeing factory in Renton, Washington, where the company makes the best-selling but troubled 737 Max. He’ll talk with employees and review safety and quality plans, with plans for similar visits to other Boeing factories in the coming days.
“Words cannot express how proud and excited I am to be part of the Boeing team,” he said in a memo to employees on Thursday. “It’s clear we have much work to do to restore trust, but I am confident that together, we can once again return this company to the industry leader we all expect from it.”
Analysts and industry observers are cautiously optimistic, portraying the 64-year-old Mr. Ortberg as a good listener and someone with an engineering background (he has a mechanical engineering degree) and is a 30-plus year industry veteran who rose through the ranks at commercial and defense aircraft supplier Rockwell Collins Inc. before taking on the role of head of the company. Perhaps most importantly, Mr. Ortberg is an outsider to Boeing.
“This guy has a great reputation and experience in the industry,” says Richard Aboulafia, managing director at Aerodynamic Advisory. “He has a reputation for listening well and being tolerant of disagreement.”
Troubles between companies
Those skills will be crucial as Boeing tries to stabilize production and eliminate manufacturing defects.
Boeing’s civil aviation chief safety officer said at a National Transportation Safety Board hearing earlier this week that the company is working on design changes to ensure a near-catastrophic door plug explosion earlier this year never happens again.
The hearing was part of the NTSB’s investigation into an incident in which a door plug on a months-old, packed Boeing 737 Max 9 exploded in mid-air during takeoff from Oregon. No one was seriously injured in the accident, but it put Boeing back into crisis mode as it was recovering from two fatal crashes of its best-selling jet in 2018 and 2019.
Worker testimony at the NTSB hearing also highlighted manufacturing pressures and frequent repairs to planes, putting Boeing factories in the spotlight.
“I will be transparent and share information every step of the way about our progress and areas for improvement,” Ortberg said in the memo. He vowed to share reports with staff and provide “timely updates on what we see and hear on the ground from our teammates and stakeholders.”
Boeing last month agreed to plead guilty to misleading the U.S. government while certifying the MAX, a deal that will see the company have an independent corporate monitor for three years.
But Ortberg will have to deal with problems in the defense sector as well as problems in the commercial jet business, including delays to certify the new 737 and 777 models.
The division is facing problems over a years-long delay in the delivery of the two 747s that will power the next Air Force One fleet, while NASA is debating whether to use SpaceX to return astronauts Butch Wilmore and Suni Williams from the International Space Station after problems with Boeing’s Starliner spacecraft that launched in early June.
Boeing also faces a decision on whether to launch new planes as it faces pressure from rival Airbus.
Bank of America aerospace analyst Ron Epstein said Ortberg’s first 100 days as CEO will be crucial.
“Decisions made during his tenure will have an impact on the company for generations to come,” he said in a Monday memo.
Ortberg and his team will have to ensure that Boeing employees are trained as thousands of new workers fill the plants after experienced staff were bought out or laid off during the pandemic. The union representing about 30,000 Boeing workers in Washington and Oregon is seeking a wage increase of more than 40%, and last month, members authorized a strike in September if no agreement is reached.
“The principles of safety and quality should be just as important as production rates,” John Holden, local president of the International Union of Machinists and Aerospace Workers, said in a statement last week. “This potential collaboration with a new CEO would be a great opportunity for Boeing to demonstrate its commitment to its employees and recognize the exceptional manufacturing capabilities and caliber of its skilled IAM members in the field.”
Last week, alongside a new quarterly loss, Boeing announced that Ortberg would succeed Dave Calhoun, who said in March he would step down at the end of the year.
It was part of a larger executive shake-up following the door plug incident: Calhoun himself had taken over as president of embattled Boeing in early 2020, replacing Dennis Muilenburg, who was fired for his handling of the two Max crashes.
Boeing remains headquartered in Arlington, Virginia, and announced it would relocate there from Chicago in 2022, but Ortberg will be based in the Seattle area, closely overseeing where most of Boeing’s commercial jetliner production takes place.
“Today, having spoken with our customers and industry partners, I can say with confidence that, without exception, they all want us to succeed,” Ottberg said in a memo to employees on his first day. “In many cases, they need us to succeed. This is a great foundation for us to build on.”
Building good relationships with customers and hundreds of suppliers struggling with sudden swings in demand because of the pandemic is important to Ortberg and the company. Boeing’s relationships with major customers have deteriorated recently, and the management shakeup came after airline CEOs sought meetings with the company’s board amid a series of flight delays triggered by a burst door plug.
Southwest Airlines The airline is one of Boeing’s biggest customers but, like other airlines, has scaled back growth plans due to delivery delays for newer, more fuel-efficient jets from Boeing. The CEO hinted that Ortberg could achieve great things in the future.
“I look forward to working with Kelly Ortberg in his efforts to return Boeing to being America’s leading aerospace company,” CEO Bob Jordan said in a statement. “A strong Boeing is great for Southwest Airlines and for our industry.”
—CNBC’s Michael Sheets contributed to this article.
