Aerospace veteran Robert “Kelly” Ortberg becomes Boeing‘s new CEO on Thursday with a singular mission: restoring the reputation of a U.S. manufacturing icon.
That enormous goal will involve thousands of daily decisions that will determine whether Boeing can earn back the trust of regulators, airlines and the public; end persistent production defects; deliver aircraft on time and consistently to customers large and small; and stop burning cash.
That cash burn is running about $8 billion so far this year and counting. Meanwhile, Boeing shares are down some 37% so far this year, as of Wednesday.
Ortberg’s Day 1 activity is walking the floor of Boeing’s factory in Renton, Washington, where it builds its best-selling but problematic 737 Max. He plans to talk with employees and review safety and quality plans, with similar visits ahead at other Boeing plants.
“I can’t tell you how proud and excited I am to be a member of the Boeing team,” he said in a note to staff on Thursday. “While we clearly have a lot of work to do in restoring trust, I’m confident that working together, we will return the company to be the industry leader we all expect.”
Analysts and industry insiders are cautiously upbeat, painting the 64-year-old Ortberg — a more than three-decade veteran of the industry who spent years atop commercial and defense supplier Rockwell Collins after working up the ranks there — as a good listener with an engineering background (he has a mechanical engineering degree). Perhaps most importantly, he is a Boeing outsider.
“This guy has a fantastic reputation and level of experience in the industry,” said Richard Aboulafia, managing director at AeroDynamic Advisory. “He has a reputation for listening and for letting people push back.”
Trouble across businesses
Those skills will be key as Boeing tries to stabilize its production and eliminate manufacturing flaws.
Boeing’s top safety executive for commercial aerospace told a National Transportation Safety Board hearing earlier this week that the company is working on a design fix so the near-catastrophic door plug blowout it faced at the beginning of the year never happens again.
The hearing was part of the NTSB’s probe of the the midair blowout of a door plug from a packed, months-old Boeing 737 Max 9 as it climbed out of Oregon. While no one was seriously injured in the accident, it put Boeing back into crisis mode just as it was trying to move on from two fatal crashes of its best-selling 737 Max planes in 2018 and 2019.
Worker testimony at the NTSB hearing also showed manufacturing pressure and frequent fixes on planes, putting a spotlight on Boeing’s factories.
“I will be transparent with you every step of the way, sharing news on progress as well as where we must do things better,” Ortberg said in the memo. He vowed to share reports to staff, “giving you timely updates of what I’m seeing and hearing on the ground from our teammates and our stakeholders.”
Boeing last month agreed to plead guilty to defrauding the U.S. government during the Max certification, a deal that will require an independent corporate monitor at the company for three years.
But Ortberg will have to address issues not only in the commercial jet business, including the delayed certification of new 737 and 777 models, but also in its defense unit.
That segment of the business is facing issues with two 747s that will serve as the next 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 use SpaceX instead to bring astronauts Butch Wilmore and Suni Williams back from the International Space Station.
A decision is also looming over whether to launch a new aircraft as Boeing loses ground to rival Airbus.
The first 100 days of Ortberg’s time as CEO will be crucial, said Bank of America aerospace analyst Ron Epstein.
“The decisions made early in his tenure will have generational impacts on the company,” he said in a note on Monday.
Ortberg and his team will need to ensure Boeing’s workforce is trained, with thousands of new workers in factories after more experienced staff members took buyouts or were laid off in the pandemic. A union representing some 30,000 Boeing factory workers in Washington state and Oregon is seeking more than 40% raises and, last month, members authorized a strike if a deal isn’t reached this September.
“The principles of safety and quality should be equally important as the manufacturing rates,” Jon Holden, local president of the International Association of Machinists and Aerospace Workers, said in a statement last week. “This potential collaboration with the new CEO could be a prime opportunity for Boeing to prove its dedication to its workforce and acknowledge the exceptional manufacturing capability and capacity of skilled IAM Members on the shop floor.”
Last week, alongside another quarterly loss, Boeing announced Ortberg would replace Dave Calhoun, who had said in March he would step down by year’s end.
That was part of a larger 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 two Max crashes.
While Boeing is still based in Arlington, Virginia — where it announced it would move its headquarters in 2022 from Chicago — Ortberg will be based in the Seattle area, giving him a close eye on where the majority of Boeing’s commercial jetliner production is based.
“In speaking with our customers and industry partners leading up to today, I can tell you that without exception, everyone wants us to succeed,” Otberg said in his Day 1 note to employees. “In many cases, they NEED us to succeed. This is a great foundation for us to build upon.”
Getting off on the right foot with customers and the hundreds of suppliers that are struggling from pandemic-demand whiplash is important for Ortberg and the company. Boeing’s relationships with its bread-and-butter customers has suffered recently, and its leadership shakeup came after airline CEOs sought a meeting with the company’s board as delays of aircraft piled up in the wake of the doorplug blowout.
Southwest Airlines is among Boeing’s biggest customers and, like other carriers, has scaled back its growth plans, citing delivery delays of new, more-fuel efficient jets from Boeing. The airline’s CEO hinted at the big feat Ortberg has ahead of him.
“We look forward to working with Kelly Ortberg in his efforts to return Boeing to its place as the leading American aerospace company,” CEO Bob Jordan said in a written statement. “A strong Boeing is great for Southwest Airlines and it’s great for our industry.”
— CNBC’s Michael Sheetz contributed to this article.