Boeing appoints new CEO amidst second quarter loss exceeding $1.4 billion

Boeing designated a longtime aerospace industry expert as its upcoming chief executive, who will assume control of a corporation that has been shaken by legal, regulatory, and production issues.

Robert “Kelly” Ortberg, 64, a former CEO at aerospace provider Rockwell Collins, will replace David Calhoun, 67, as CEO effective Aug. 8, the company revealed on Wednesday.

Boeing introduced its new CEO while disclosing a loss of over $1.4 billion on declining revenue in the second quarter. The loss was broader and revenue lower than anticipated by Wall Street, as both Boeing’s commercial-airplanes business and defense unit operated at a loss.

The unsatisfactory outcomes come at a chaotic period for Boeing. The company consented to plead guilty to deceitfulness regarding the Max, two of which crashed, leading to the tragic deaths of 346 individuals. The Federal Aviation Administration has heightened its supervision of the company following errors, such as the explosion of a panel on an Alaska Airlines aircraft. It is resisting whistleblower claims of production shortcuts that compromise safety.

The company is grappling with supply-chain obstacles that are impeding production, which it aims to resolve in part by re-acquiring Spirit AeroSystems, a critical contractor. It is still striving to convince regulators to authorize two new models of the Max and an expanded version of its two-aisle 777 jetliner. Additionally, it faces a significant decision worth billions on when to develop a new single-aisle aircraft to replace the Max.

Ortberg will assume the roles of CEO and president on Aug. 8, Boeing confirmed. He emerged as a leading contender only recently. Other individuals reportedly under consideration for the position included Patrick Shanahan, a former Boeing executive who now serves as CEO of its primary supplier, Spirit AeroSystems, and another experienced Boeing executive, Stephanie Pope, who recently assumed leadership of the commercial-airplanes division.

Chairman Steven Mollenkopf stated that Ortberg was selected after a “comprehensive and exhaustive search process” and “possesses the appropriate expertise and experience to guide Boeing in its subsequent phase.”

Mollenkopf mentioned that Ortberg has built a reputation for managing intricate engineering and manufacturing companies.

A spokesperson from Boeing revealed that the company waived the mandatory retirement age of 65 for Ortberg. Boeing took a similar step for Calhoun shortly after he turned 64 in 2021.

Boeing, headquartered in Arlington, Virginia, reported a loss of $1.44 billion for the second quarter, in contrast to a loss of $149 million a year earlier.

Excluding extraordinary items, the loss amounted to $2.90 per share. Analysts had projected a loss of $1.90 per share, as per a FactSet survey.

Revenue decreased by 15%, to $16.87 billion, falling short of the average forecast of $17.35 billion from Wall Street.

The commercial-airplanes division incurred an operating loss of $715 million, and revenue plummeted by 32% as Boeing delivered fewer passenger jets to airlines — 92 planes, compared to 136 the previous year.

The FAA has restricted Boeing’s production of Max jetliners since soon after the Alaska Airlines incident, but Boeing has not yet reached the FAA limitations as it works on rectifying its production process. The company affirmed on Wednesday that it is adhering to its plans to increase Max production to 38 per month by the end of the year.

Boeing recorded a charge of $244 million to cover a penalty that it will pay as part of an arrangement with the Justice Department to plead guilty to deceitfulness in connection with the development of the Max. A federal judge in Texas will soon decide whether to approve the agreement, which is opposed by many families of those who perished in the two Max crashes.

Boeing’s defense and space unit suffered a $913 million loss due to $1 billion in setbacks on four fixed-price government contracts, including an agreement to construct two new Air Force One presidential jets. Meanwhile, the smaller services division generated $870 million in earnings.

Boeing shares increased by 2% in premarket trading.