Robert K. “Kelly” Ortberg is the Boeing’s latest president and chief executive officer, effective August 8, 2024. Ortberg can even serve on Boeing’s Board of Directors.
Courtesy: Boeing
Aerospace veteran Robert “Kelly” Ortberg becomes Boeing‘s latest CEO on Thursday with a singular mission: restoring the fame of a U.S. manufacturing icon.
That big goal will involve 1000’s of day by day decisions that can determine whether Boeing can earn back the trust of regulators, airlines and the general public; end persistent production defects; deliver aircraft on time and consistently to customers large and small; and stop burning money.
That money burn is running about $8 billion up to now this 12 months and counting. Meanwhile, Boeing shares are down some 37% up to now this 12 months, as of Wednesday.
Ortberg’s Day 1 activity is walking the ground of Boeing’s factory in Renton, Washington, where it builds its best-selling but problematic 737 Max. He plans to speak with employees and review safety and quality plans, with similar visits ahead at other Boeing plants.
“I can not let you know how proud and excited I’m to be a member of the Boeing team,” he said in a note to staff on Thursday. “While we clearly have lots of work to do in restoring trust, I’m confident that working together, we’ll return the corporate to be the industry leader all of us expect.”
Analysts and industry insiders are cautiously upbeat, painting the 64-year-old Ortberg — a greater than three-decade veteran of the industry who spent years atop business and defense supplier Rockwell Collins after working up the ranks there — as a superb listener with an engineering background (he has a mechanical engineering degree). Perhaps most significantly, he’s a Boeing outsider.
“This guy has a unbelievable fame and level of experience within the industry,” said Richard Aboulafia, managing director at AeroDynamic Advisory. “He has a fame for listening and for letting people keep off.”
Trouble across businesses
Those skills will likely be key as Boeing tries to stabilize its production and eliminate manufacturing flaws.
Boeing’s top safety executive for business aerospace told a National Transportation Safety Board hearing earlier this week that the corporate is working on a design fix so the near-catastrophic door plug blowout it faced in the beginning of the 12 months never happens again.
The hearing was a part of the NTSB’s probe of the the midair blowout of a door plug from a packed, months-old Boeing 737 Max 9 because it climbed out of Oregon. While nobody was seriously injured within the accident, it put Boeing back into crisis mode just because it was attempting to move on from two fatal crashes of its best-selling 737 Max planes in 2018 and 2019.
Employee testimony on the NTSB hearing also showed manufacturing pressure and frequent fixes on planes, putting a highlight on Boeing’s factories.
“I will likely be transparent with you each step of the way in which, sharing news on progress in addition to where we must do things higher,” Ortberg said within the memo. He vowed to share reports to staff, “supplying you with timely updates of what I’m seeing and hearing on the bottom from our teammates and our stakeholders.”
Boeing last month agreed to plead guilty to defrauding the U.S. government in the course of the Max certification, a deal that can require an independent corporate monitor at the corporate for 3 years.
But Ortberg may have to handle issues not only within the business jet business, including the delayed certification of recent 737 and 777 models, but in addition in its defense unit.
That segment of the business is facing issues with two 747s that can function the following Air Force One aircraft but are years behind schedule. Meanwhile, Boeing’s misfiring Starliner capsule, which launched in early June, has NASA debating whether to make use of SpaceX as an alternative to bring astronauts Butch Wilmore and Suni Williams back from the International Space Station.
A choice can also be looming over whether to launch a latest aircraft as Boeing loses ground to rival Airbus.
The primary 100 days of Ortberg’s time as CEO will likely be crucial, said Bank of America aerospace analyst Ron Epstein.
“The selections made early in his tenure may have generational impacts on the corporate,” he said in a note on Monday.
Ortberg and his team might want to ensure Boeing’s workforce is trained, with 1000’s of recent staff in factories after more experienced staff members took buyouts or were laid off within the pandemic. A union representing some 30,000 Boeing factory staff in Washington state and Oregon is looking for greater than 40% raises and, last month, members authorized a strike if a deal is not reached this September.
“The principles of safety and quality needs to be equally necessary because the manufacturing rates,” Jon Holden, local president of the International Association of Machinists and Aerospace Employees, said in a press release last week. “This potential collaboration with the brand new CEO might be a chief opportunity for Boeing to prove its dedication to its workforce and acknowledge the exceptional manufacturing capability and capability of expert IAM Members on the shop floor.”
Last week, alongside one other quarterly loss, Boeing announced Ortberg would replace Dave Calhoun, who had said in March he would step down by 12 months’s end.
That was part of a bigger executive shakeup after the door plug blowout. Calhoun himself took over a Boeing in crisis in early 2020, replacing Dennis Muilenburg, who was ousted for his handling of the 2 Max crashes.
While Boeing continues to be based in Arlington, Virginia — where it announced it might move its headquarters in 2022 from Chicago — Ortberg will likely be based within the Seattle area, giving him a detailed eye on where the vast majority of Boeing’s business jetliner production relies.
“In speaking with our customers and industry partners leading as much as today, I can let you know that without exception, everyone wants us to succeed,” Otberg said in his Day 1 note to employees. “In lots of cases, they NEED us to succeed. That is a terrific foundation for us to construct upon.”
Getting off on the appropriate foot with customers and the a whole bunch of suppliers which are struggling from pandemic-demand whiplash is very important for Ortberg and the corporate. Boeing’s relationships with its bread-and-butter customers has suffered recently, and its leadership shakeup got here after airline CEOs sought a gathering with the corporate’s board as delays of aircraft piled up within the wake of the doorplug blowout.
Southwest Airlines is amongst Boeing’s biggest customers and, like other carriers, has scaled back its growth plans, citing delivery delays of recent, more-fuel efficient jets from Boeing. The airline’s CEO hinted at the large feat Ortberg has ahead of him.
“We sit up for working with Kelly Ortberg in his efforts to return Boeing to its place because the leading American aerospace company,” CEO Bob Jordan said in a written statement. “A robust Boeing is great for Southwest Airlines and it’s great for our industry.”
— CNBC’s Michael Sheetz contributed to this text.
