Boeing in turbulence as Kelly Ortberg becomes new CEO

For a retiree to Florida, Robert "Kelly" Ortberg looks youngish and energetic on the official portrait Boeing distributed with news of his pick to take over the top post from August 8.

The 64-year-old aerospace veteran — whom everyone in the industry calls just Kelly — was a former CEO of aerospace supplier Rockwell Collins and a late entry into the race to replace current Boeing chief Dave Calhoun, after it had been dragging on without a clear favorite emerging.

Calhoun had intended to stay in office until the end of the year but clearly had become what Americans call a lame-duck executive, meaning he hasn't been able to push through any major new programs such as a narrow-body aircraft needed to replace the vintage Boeing 737 family, first operated by launch customer Lufthansa in 1967.

Commercial division a huge drag

The news of Kelly Ortberg's appointment, announced Wednesday last week (July 30), came on the same day as Boeing reported dismal results for the quarter. 

Boeing's second-quarter operating loss widened to $1.4 billion (€1.28 billion), compared with a loss of $149 million in the year-ago period. The result meant that Boeing hasn't had a profitable year since 2019, and since then it has accumulated whopping operating losses totaling $33.3 billion.

Currently the company is still struggling to convince regulators that it has finally fixed its major problems with safety and quality control issues on all of its current aircraft programs. 

The US aviation authority, FAA, has capped Boeing's output of 737 MAX production at 38 aircraft a month due to these unsolved issues, while Boeing aims at increasing it to 50 MAXs a month in order to satisfy high demand.

The inward-looking, subdued current state of Boeing was on stark display only in late July at the Farnborough Air Show outside London, one of the major industry events. While neither Airbus nor Boeing reaped a flood of major new orders, Boeing had severely curtailed its appearance altogether. Claiming it wanted to concentrate on the pressing safety and quality fixes, it hadn't sent a single commercial aircraft to the major air show, an unprecedented occurrence.

Boeing's CEO for the Commercial Airplanes Division, Stephanie Pope, appeared subdued and tight-lipped at their only official media appearance at the Farnborough event. She was among the candidates to take the top post from Dave Calhoun, but many voices and probably the board favored an outside expert to turn the aircraft maker's fortunes around.

Best selection for Boeing in 'consequential period' 

"Kelly is an experienced leader who is deeply respected in the aerospace industry, with a well-earned reputation for building strong teams and running complex engineering and manufacturing companies," said Boeing Chairperson Steven Mollenkopf in a statement following Ortberg's appointment. "We look forward to working with him as he leads Boeing through this consequential period in its long history."

Rarely had an appointment for a top job received such unanimous praise as Ortberg's. He is seen in the industry as an experienced expert and an efficient and likable leader.

"You couldn't ask for a better selection," aviation analyst Richard Aboulafia told industry publication Flightglobal.

Boeing share prices reacted immediately to the news of Ortberg's appointment. After initially falling on the financial results, they rose more than 1%. But Boeing shares are still languishing 28% below their value at the beginning of the year.

Focusing on share price rather than product quality and safety was exactly the recipe for disaster taking Boeing where it is now. Ever since the company merged with McDonnell Douglas in 1997, and adopting the strategy of that smaller company in the process, the famed aircraft manufacturer lost its engineering clout while recording record profits and dividends.

Bringing order to Boeing

Now hopes are huge for Kelly Ortberg to finally reverse course, and early signs are encouraging for workers, analysts — and even for the families of the victims of two fatal Boeing crashes in 2018 and 2019 that led to a lengthy grounding of the 737 MAX plane.

"The arrival of a new CEO at Boeing could not have happened at a more crucial and necessary time for the safety of the traveling public around the world," CNN quoted Robert Clifford, attorney for the families of crash victims, as saying.

Clifford noted that under recent Boeing CEOs, Dennis Muilenburg and Dave Calhoun, as well as Boeing's "do nothing" board, the company has been in a "nosedive." But now there is hope as Ortberg came from "outside of Boeing" and had a "well-regarded reputation."

In order for Ortberg to take over as Boeing CEO, the company's board is even waiving the mandatory CEO retirement age of 65.

US media reported that Ortberg has already taken a far-reaching decision, which could be of major psychological importance. He wants to base himself in Seattle, Washington, which industry experts interpret as indicating that the ill-fated 2001 move of corporate headquarters away from Boeing's center of engineering and production to first Chicago and then Virginia might be reversed as well.

That would not only be a big boost of confidence for Boeing's core workforce, it alone could even help avoid a looming strike by the International Association of Machinists and Aerospace Workers District 751 in Seattle.

Seattle Times aerospace reporter Dominic Gates told a local radio station that one of the machinists' demands is that Boeing "commit to building the next airplane here and to stop threatening them to take work away."

"I suspect he's going to give them what they ask for. And if he does, we could avoid a strike," he added, which would be a good start for the Ortberg era.

Edited by: Rob Mudge