Boeing’s new CEO has vital copilot training to do
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Robert Cyran
NEW YORK, July 31 (Reuters Breakingviews) -Kelly Ortberg will soon be a very busy man. Airplane maker Boeing BA.N hired him on Wednesday to take the yoke and help guide the company out of a tailspin starting in about a week. All the flashing lights and alarm bells will make it easy to overlook one of the most important items on the to-do list: train a copilot to replace him.
It’s hard to understate how gnarly Boeing’s difficulties have become. Its manufacturing operations are a mess, the company recently pled guilty to conspiring to defraud the U.S. government over two crashes,and it just burned through another $3.9 billion in the second quarter. Aviation regulators have capped the number of 737 MAX jets it can deliver, rival Airbus AIR.PA is gaining market share and Boeing may need to design a new aircraft, which could cost up to $50 billion.
Ortberg, the former Rockwell Collins CEO who Boeing dragged out of retirement, brings engineering, aviation and leadership experience. He also can lean on some recently recruited deputies for help. Steve Mollenkopf was appointed as independent chairman in March after having delivered excellent returns to shareholders by investing in long-term R&D during his long stint atop Qualcomm QCOM.O and fending off a hostile takeover bid. Stephanie Pope, a 30-year veteran of multiple Boeing divisions, was named chief operating officer and to oversee the commercial airplanes unit earlier this year.
A turnaround may take years. It’s hard to fix multiple safety, manufacturing and strategic problems simultaneously, and Boeing’s are deep-rooted and longstanding ones. The two crashes that signaled the crisis occurred five years ago, but the corporate misjudgments and cultural rot started before then.
Ortberg is 64, so he may not be around long enough to see $120 billion Boeing complete a tortuous turnaround. His two predecessors lost their jobs after failing to do so. Regardless of the progress he makes, he will need a successor sooner or later.
Outgoing CEO Dave Calhoun said he would step down in March, and it took months to nail down a replacement. Troubled companies can ill-afford such leadership gaps. One of the smartest things for Ortberg to prioritize is working with the board to ensure he can eject safely.
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CONTEXT NEWS
Boeing said on July 31 that Robert “Kelly” Ortberg, the former chief executive of aerospace company Rockwell Collins, would become its next CEO, replacing Dave Calhoun on Aug. 8.
Ortberg, 64, started his career as an engineer at Texas Instruments, before joining Rockwell Collins in 1987. As CEO, he spearheaded the company’s sale to United Technologies for $30 billion in 2018, and retired in 2021.
Separately, Boeing reported revenue of $16.9 billion in the second quarter, a decrease of 15% from the same period last year. The company said operations burned $3.9 billion of cash. Its commercial airplanes division delivered 92 aircraft during the quarter and has a backlog of more than 5,400 airplanes.
The U.S. Federal Aviation Administration has limited the company to producing 38 of its 737 MAX airplanes a month following a string of quality control problems. Boeing agreed on July 8 to plead guilty on July 8 to one charge of conspiracy to defraud the United States, for its role in two crashes. As part of the settlement, it agreed to pay $244 million in fines and spend $455 million over three years to boost safety and compliance programs.
Editing by Jeffrey Goldfarb and Sharon Lam
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