Boeing announced Wednesday that Kelly Ortberg, former CEO of Rockwell Collins, will take the helm as the new president and CEO starting August 8. Ortberg succeeds Dave Calhoun, who stepped down following a tumultuous period for the aerospace giant. Boeing also reported a wider-than-expected second-quarter loss and revenue miss, reflecting the numerous challenges Ortberg will face as he steps into his new role.
"The Board conducted a thorough and extensive search process over the last several months to select the next CEO of Boeing, and Kelly has the right skills and experience to lead Boeing in its next chapter," said Boeing chairman Steven Mollenkopf in a statement. Ortberg's appointment is seen as a move to stabilize the company, which has struggled with production issues and regulatory scrutiny.
Boeing's second-quarter results highlighted the severity of its current struggles. The company reported revenue of $16.9 billion, falling short of the $17.46 billion estimated by analysts. The adjusted loss per share was $2.90, significantly worse than the $1.82 loss projected. This resulted in a core operating loss of $1.392 billion.
The company also faced a significant cash flow problem, with free-cash flow burn reaching $4.3 billion in Q2, exceeding the nearly $4 billion lost in Q1. This puts Boeing's negative free cash flow at $8.256 billion for the first half of the year. Despite these troubling numbers, Boeing's stock saw a slight uptick of about 3% in pre-market trading, although it remains down over 25% for the year.
Commercial deliveries suffered a considerable blow as well. Boeing delivered 92 commercial jets in Q2, down from 136 planes a year ago, marking a 32% drop. The 737 Max program saw only 70 deliveries, down from 103 in the same period last year. Boeing confirmed it aims to hit a production target of 38 737 MAX jets per month by the end of the year, despite current challenges.
The company's Dreamliner program also faced setbacks, with only nine widebody Dreamliner jets delivered in Q2, down from 20 a year earlier. The Dreamliner has been plagued by production and assembly issues, highlighted by several whistleblower complaints in 2024. Boeing plans to ramp up production to five 787s per month.
Boeing's defense and space business added to its financial strain, with the unit posting substantial losses in 2023 and 2022. The company has faced cost overruns on fixed-price contracts, which have become increasingly challenging due to inflationary pressures. As a result, Boeing has indicated it will pivot away from such contracts to mitigate further losses.
Outgoing CEO Dave Calhoun acknowledged the difficult quarter but emphasized progress in improving Boeing's quality management system. "Despite a challenging quarter, we are making substantial progress strengthening our quality management system and positioning our company for the future," Calhoun said. He added that the company's comprehensive safety and quality plan is aimed at stabilizing operations and building trust.
In addition to financial woes, Boeing recently pleaded guilty to a criminal fraud conspiracy charge and agreed to pay at least $243.6 million after breaching a 2021 consent decree with the Department of Justice. The government alleged that Boeing continued risky procedures in plane construction and failed to maintain accurate records following the two 737 MAX crashes in 2019 and 2020. Families of the crash victims are challenging Boeing's plea deal, indicating that the company remains in legal jeopardy.
Boeing's new CEO, Kelly Ortberg, will inherit these challenges and more. Ortberg, 64, brings over 30 years of experience in aerospace and defense, including leading Rockwell Collins through its integration with United Technologies and RTX until his retirement in 2021. Analysts have praised Ortberg as a "tough negotiator" and capable leader who is well-liked within the industry.
"There is much work to be done, and I'm looking forward to getting started," Ortberg said in a statement. His appointment comes as the Federal Aviation Administration (FAA) has limited Boeing's 737 MAX production to 38 jets per month, following a January incident that led to the resignation of Calhoun and intensified regulatory scrutiny.
