Former Collins Aerospace CEO to lead troubled Boeing

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.

Kelly Ortberg, 64, the former president of Boeing supplier Rockwell Collins, will succeed David Calhoun as CEO and president effective Aug. 8, the company said.

Calhoun announced in March that he would retire at the end of the year, and analysts generally praised the quicker transition.

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, who grew up in Dubuque and graduated in 1982 from the University of Iowa, emerged as a leading candidate only recently.

Others 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.

‘Great news’ for Boeing

Ortberg was president of Rockwell Collins in Cedar Rapids from 2013 to 2018 and led the company through its acquisition by United Technologies Corp. in 2018 that transformed Rockwell Collins into Collins Aerospace, where he was named CEO.

United Technologies and Raytheon merged to become Raytheon Technologies, which rebranded itself as RTX. In 2021, Ortberg became a special adviser to the CEO of Raytheon Technologies before retiring later that year.

Richard Aboulafia, a longtime aerospace analyst and consultant and recently a harsh critic of the company, said the hire is great news for Boeing.

“He is a deeply respected leader in the aerospace industry, and brings more hope for a better future than the company has enjoyed in decades,” Aboulafia said.

Deutsche Bank analyst Scott Deuschle said Ortberg “has an engineering background, experience in the aviation industry and experience as a public company CEO.”

In a statement issued by Boeing, Ortberg said, “There is much work to be done, and I’m looking forward to getting started."

Calhoun will serve as a special adviser to the Boeing board until next March.

Boeing shares rose 2 percent Wednesday after the Ortberg announcement.

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Ongoing crises

Boeing named its new CEO as it reported a loss of more than $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 defense 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.

Like Calhoun, who took over as CEO in the wake of the two Boeing Max crashes, Ortberg will inherit the leadership of a company facing ongoing crises and criticism from inside and outside the company. Boeing has lost more than $25 billion since the start of 2019.

Boeing, based in Arlington, Va., is pushing back against whistleblower allegations of manufacturing shortcuts that crimp on safety. It is dealing with supply-chain problems that are hindering production, which it hopes to fix in part by reacquiring Spirit AeroSystems, a key contractor.

And it faces a threatened strike this fall by its largest union, the International Association of Machinists.

The company still is 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 multibillion-dollar decision on when to design a new single-aisle plane to replace the Max.

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

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

Revenue dropped 15 percent, to $16.87 billion, falling short of Wall Street's average forecast of $17.35 billion.

The commercial-airplanes division had an operating loss of $715 million and revenue plunged 32 percent 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 $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 defense and space unit lost $913 million because of $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 $870 million.