Boeing’s board named Kelly Ortberg as the company’s new CEO. Photo: Boeing

Boeing on Wednesday wrapped up its search for its next top executive, naming long-time aerospace and defense industry veteran and executive Robert “Kelly” Ortberg as president and CEO, effective Aug. 8. Ortberg succeeds Dave Calhoun who announced in March he would retire this year.

Ortberg, 64, led the former Rockwell Collins for six years until the company was acquired by United Technologies Corp., where he continued to run UTC’s Collins Aerospace business before the company acquired Raytheon in 2020 and became RTX. Ortberg had been a director at RTX for five years, resigning that position yesterday.

At Rockwell Collins, where Ortberg had also served as president beginning in 2012, he oversaw an $8 billion company that supplied electronic systems for commercial, business, and military aircraft and defense systems. The company’s defense products include radios, data links, GPS-based systems, and simulation and training programs.

Ortberg also oversaw various acquisitions by Rockwell Collins, including a $6.4 billion deal for B/E Aerospace and the $1.4 billion purchase of ARINC Inc., in addition to smaller deals.

Ortberg will pilot Boeing as the company continues to reel from several aircraft accidents, including two catastrophic crashes of its 737 MAX passenger plane in 2018 and 2019, and the blowout of an aircraft section during a flight in January. The incidents led to a series of delivery halts, government safety and quality reviews worldwide, and to financial challenges.

Boeing on Wednesday reported second quarter results, posting wider losses stemming from fewer commercial aircraft deliveries and continued challenges on defense programs.

Despite the poor results, Boeing’s stock price was up 2% on the news of Ortberg’s appointment. The stock price closed at $190.60, up $3.74 from the close on Tuesday, and climbed as high as $196.72 before falling.

Ortberg, who has been in the aerospace and defense industry for more than 35 years, will also join Boeing’s board.

Boeing in a filing with the Securities and Exchange Commission said that Ortberg’s annual base salary will be $1.5 million and he will receive a cash award of $1.25 million payable in December if he is still employed by the company. Ortberg has an annual incentive target of $3 million in 2025 and a long-term incentive award target of $17.5 million in 2025 as well. Additional financial benefits include $8 million in restricted shares that will vest in three annual installments and an $8 million performance option that will also vest over three installments at his second, third, and fourth anniversaries.

Boeing Takes Another Commercial Crew Charge in Q2

A series of additional charges on four programs in Boeing’s defense group combined with further losses in the commercial segment led to wider earnings losses in the second quarter and sales also tumbled, the company reported on Wednesday.

Losses in the Defense, Space & Security segment expanded to $913 million versus $527 million a year ago due to $1 billion in various charges on four programs, including $391 million on the Air Force’s KC-46A aerial refueling tanker stemming from “a slowdown of commercial production and supply chain constraints,” Boeing said.

On top of the KC-46A charge, Boeing also absorbed losses on three fixed-price development programs, the Air Force T-7A jet trainer ($278 million), the VC-25B presidential aircraft ($250 million), and NASA’s Commercial Crew ($125 million) program due to “higher estimated engineering and manufacturing costs, as well as technical challenges.” In a government securities filing, Boeing said the charge for Commercial Crew is related to delays in the return to Earth of the company’s Starliner reusable spacecraft that is currently docked at the International Space Station. The four programs have racked up billions of dollars in charges over time.

Operating margin in the defense business was negative 15.2 percent. The company’s medium- to long-term goal of high-single digit margins is unchanged, CFO Brian West told investors, highlighting that 60 percent of the segment’s portfolio is “solid” and delivering mid- to high-single digit margin. Fighter aircraft and satellite programs make up 25 percent of the defense group and their margin trends are improving, West said.

Outgoing Boeing President and CEO Dave Calhoun called the defense results “disappointing.”

This story was first published by Defense Daily