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Interface News reporter | Xue Bingbing

After being mired in a quality crisis for more than half a year and with its net losses expanding by 212.54% year-on-year, Boeing's board of directors announced on July 31 that it would replace the current Chief Executive Officer (CEO) Calhoun with former Rockwell Collins CEO Kelly Ortberg as the company's new president and CEO.

According to the news released in March this year, Calhoun was originally scheduled to resign as CEO at the end of 2024, and will continue to lead Boeing to complete the key ongoing work before then. This is five months earlier than the previously planned schedule, and the new CEO Ortberg will take office on August 8.

Boeing said in the announcement that the board of directors had conducted a comprehensive and extensive search over the past few months to select the next CEO. Ortberg has extensive experience in the aerospace industry, having built strong teams and operated complex engineering and manufacturing companies. "We look forward to working with him to lead Boeing through this critical period in its long history," the board said.

Image source: Boeing official website

Kelly Ortberg said that she will focus on safety and quality when she takes office and will start working on a lot of things.

Influenced by the news, Boeing's stock price rose. Wind data showed that as of the close of July 31, local time, Boeing (BA.US) stock price rose 2% to close at $190.6 per share. Over the past five days, the company's stock price has risen by 5.85%.

Engineering culture may return

The 737MAX9 cabin door falling off in mid-air at the beginning of this year was the direct cause of the management change at Boeing. Since the accident, multiple US regulatory agencies have been conducting continuous reviews of Boeing, which undoubtedly exposed the quality control and quality issues of the 737MAX passenger aircraft.

Looking back at Calhoun's resume, it is not difficult to find that when he served as CEO of Boeing, the company was also in a critical moment. In October 2018 and March 2019, Boeing 737MAX aircraft operated by Lion Air in Indonesia and Ethiopian Airlines crashed successively, killing all the people on board. Since then, the 737MAX has been grounded worldwide, and Boeing has suffered huge losses.

In order to save its reputation and regain the trust of regulators, customers and the public, Boeing asked then-CEO Dennis Muilenburg to resign. On January 13, 2020, Dave Calhoun, then chairman of the board, was appointed as Boeing's new CEO. Unfortunately, the good times did not last long. In his fifth year in office, Calhoun also took the initiative to resign due to 737MAX quality control issues.

Due to repeated violations of safety red lines, Boeing has been criticized by the outside world for "losing its original intention" and abandoning its engineering culture over the years.

Peter Robison, a senior American journalist and writer, pointed out in his book Flying Blind that after Boeing acquired its competitor McDonnell Douglas in 1997, it replaced its previous culture of engineering excellence with a focus on capital and profit. The profit-centered orientation led Boeing to compress and simplify its management, R&D, and production, laying hidden dangers for future aircraft manufacturing quality and flight safety.

Judging from the background of the new CEO selected by the board of directors, Boeing seems to be inclined to return to its engineering culture.

Kelly Ortberg, 64, has more than 35 years of aerospace leadership experience, according to his resume. He started as an engineer at Texas Instruments in 1983, joined Rockwell Collins as a project manager in 1987, and held increasingly important leadership positions at the company, eventually becoming president and CEO in 2013. After five years at the helm of Rockwell Collins, he led the company's integration with United Technologies and RTX until his retirement from RTX in 2021.

In addition, Ortberg has held many important leadership positions in the industry, including director of RTX, etc. He also served as a director of Aptiv PLC, a vehicle system architecture technology company, and served as chairman of the board of directors of the Aviation Industry Association (AIA).

According to the US current affairs magazine Newsweek, industry experts believe that Boeing's new appointment "sends a strong message to the market and will hopefully help Boeing get back on track."

Boeing's performance suffered a setback in the first half of the year

While announcing the new appointment, Boeing also released its first half performance report. Unsurprisingly, Boeing's revenue and net profit performance declined significantly throughout the first half of the year.

Financial data showed that Boeing's revenue shrank from US$37.672 billion in the same period last year to US$33.435 billion, a year-on-year decrease of 11%; it recorded a net loss of US$1.794 billion in the first half of this year, while the net loss in the first half of last year was only US$574 million, a year-on-year increase of 212.54%; operating cash flow also turned from positive to negative. The operating cash flow in the first half of last year was US$2.557 billion, but it turned to -US$7.285 billion in the first half of this year.

In terms of commercial aircraft deliveries, Boeing delivered a total of 175 aircraft in the first half of this year, a 34% decrease from 266 last year. Among them, 137 737 series narrow-body aircraft were delivered, a decrease of 79 compared with last year; 22 787 series wide-body aircraft were delivered, a decrease of 9 compared with last year. Correspondingly, commercial aircraft revenue also decreased by 31%, from US$15.544 billion in the same period last year to US$10.656 billion this year.

Boeing said the decline in commercial aircraft revenue mainly reflects a decrease in deliveries and increased costs such as research and development. In the second quarter, Boeing submitted a comprehensive safety and quality plan to the Federal Aviation Administration (FAA), planning to increase the production of 737 series aircraft to 38 per month by the end of the year and the production of 787 series aircraft to 5 per month by the end of the year.