Boeing Names New CEO Amid USD 1.4 Billion Loss

Chicago, Jul 31 (AP) Boeing named a longtime aerospace industry veteran on Wednesday as its next chief executive, who will take over a company that has been rocked by legal, regulatory and production problems.

Robert “Kelly” Ortberg, a former CEO at aerospace supplier Rockwell Collins, will succeed David Calhoun, 67, as CEO and president effective August 8, the company said. Calhoun announced in March that he would retire at the end of the year.

Boeing named its new CEO as it reported a loss of more than USD 1.4 billion on falling revenue during the second quarter. The loss was wider and revenue lower than Wall Street expected, as both Boeing's commercial-airplanes business and defence unit lost money.

The disappointing results come at a tumultuous time for Boeing. The company agreed to plead guilty this month to a federal fraud charge in connection with its 737 Max jetliner and two crashes that killed 346 people. The Federal Aviation Administration increased its oversight of the company after the blowout of a panel on an Alaska Airlines jet raised manufacturing quality concerns.

Boeing Chairman Steven Mollenkopf said Ortberg was chosen after a “thorough and extensive search process” and “has the right skills and experience to lead Boeing in its next chapter”.

Ortberg has earned a reputation for running complex engineering and manufacturing companies, Mollenkopf said.

The company waived the mandatory retirement age of 65 for Ortberg, a spokesperson said. Boeing did the same for Calhoun days after he turned 64 in 2021.

Ortberg emerged as a leading candidate only recently. Others who were reportedly considered for the job included Patrick Shanahan, a former Boeing executive and now CEO of its most important supplier, Spirit AeroSystems, and another longtime Boeing executive, Stephanie Pope, who recently took over the commercial airplanes division.

Like Calhoun, who took over as CEO in the wake of the two Max crashes, Ortberg will be inheriting the leadership of a company facing ongoing crises and criticism from both outside and internally. It is pushing back against whistleblower allegations of manufacturing shortcuts that crimp on safety.

The company, based in Arlington, Virginia, also is dealing with supply-chain problems that are hindering production, which it hopes to fix in part by re-acquiring Spirit AeroSystems, a key contractor. It is still trying to persuade regulators to approve two new models of the Max and a bigger version of its two-aisle 777 jetliner. And it faces a multi-billion-dollar decision on when to design a new single-aisle plane to replace the Max.

The quarterly earnings reported Wednesday reflect the significant challenges at Boeing. The company reported a loss of USD 1.44 billion for the second quarter, compared with a loss of USD 149 million a year earlier.

Excluding special items, the loss worked out to USD 2.90 per share. Analysts expected a loss of USD 1.90 per share, according to a FactSet survey.

Revenue dropped 15 per cent, to USD 16.87 billion, falling short of Wall Street's average forecast of USD 17.35 billion.

The commercial-airplanes division had an operating loss of USD 715 million and revenue plunged 32 per cent as Boeing delivered fewer passenger jets to airlines — 92 planes, compared with 136 a year earlier.

The FAA has limited Boeing's production of Max jetliners since shortly after the Alaska Airlines incident, but Boeing hasn't even hit the FAA limits as it seeks to fix its manufacturing process. The company said Wednesday that it is sticking with its plans to boost production of the Max to 38 per month by year end.

Boeing took a charge of USD 244 million to cover a fine that it would pay as part of an agreement with the Justice Department to plead guilty to fraud in connection with development of the Max. A federal judge in Texas will soon consider whether to approve the deal, which is opposed by many families of those who died in the two Max crashes.

Boeing's defence and space unit lost USD 913 million because of USD 1 billion in setbacks to four fixed-price government contracts, including a deal to build two new Air Force One presidential jets. The smaller services business earned USD 870 million.

Boeing shares added 2 per cent in premarket trading.