The newly appointed CEO of Boeing BA, Kelly Ortberg, has decided to move to Seattle, the company’s original home, in a bid to address the ongoing safety crisis.
What Happened: Ortberg’s relocation to Puget Sound, Washington, from Boeing’s corporate headquarters in Washington D.C., follows criticism that the company had lost touch with its manufacturing roots. This criticism was triggered by an incident in January when a door plug on a 737 MAX jet fell off mid-flight due to missing bolts, Reuters reported on Friday.
On his first day, Ortberg, the former chief of aerospace firm Rockwell Collins, spent time at the Renton factory where the 737 MAX jet is manufactured. He underscored the importance of getting “closer to the production lines and development programs across the company,” as he stated in a letter to employees.
Ortberg’s challenges include ramping up the production of MAX jets from about 25 to 38 planes a month by year-end, negotiating a labor deal to avert a potential strike, and addressing supply-chain issues that have delayed deliveries. Airline industry executives have urged Ortberg to prioritize on-time plane deliveries.
The National Transportation Safety Board (NTSB) has criticized Boeing for disregarding repeated warnings about unauthorized production. NTSB Chair Jennifer Homendy said a probe into the flight would likely be completed by early next year.
Ortberg plans to visit employees at Boeing’s key supplier, Spirit AeroSystems SPR, in Wichita, Kansas, next week. Boeing has agreed to buy back the financially struggling Spirit for $4.7 billion in stock.
In a message to employees, Ortberg emphasized that “restoring trust starts with meeting our commitments,” whether in building safe commercial aircraft or delivering defense and space products.
Why It Matters: Ortberg’s appointment as CEO came after Boeing reported a 15% year-over-year decline in second quarter revenue to $16.866 billion, missing the consensus of $17.23 billion. The move is seen as a step towards addressing the safety issues that have plagued the company.
Boeing and Spirit AeroSystems executives testified at a hearing regarding the in-flight blowout on a Boeing 737-9 MAX in January. This incident led to a series of repercussions for Boeing, including a temporary grounding of the MAX 9, a halt on production expansion by the Federal Aviation Administration (FAA), a criminal investigation, and the departure of several key executives.
In response to the incident, Boeing announced plans to implement design changes aimed at preventing future mid-air cabin panel blowouts.
Price Action: Boeing was trading 0.25% higher at $169.30 during Friday pre-market after closing at $168.87 on Thursday, according to Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
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