Boeing chooses a new CEO, who reportedly plans to lead company from Seattle area

We found out early this morning that Boeing has chosen a new CEO. Aerospace veteran Robert “Kelly” Ortberg was formerly the CEO of Rockwell Collins, an Iowa-based aviation supplier. He's coming out of retirement to take over from Dave Calhoun next week, and there's reporting that he's expected to lead the company from the Seattle area, not the current headquarters in Arlington, Virginia.

Dominic Gates covers the aerospace industry for the Seattle Times. He told KUOW’s Kim Malcolm about the new post and expected changes.

This interview has been edited for clarity.

Kim Malcolm: What are the early industry reactions to this choice for a new Boeing CEO?

Dominic Gates: Well, it's been universally positive. He's obviously well respected. He used to work for Rockwell Collins, which became part of United Technologies, which then became part of Raytheon, now called RTX. So, it's a much bigger company. But when he was CEO of Rockwell Collins, he was very well respected by the people there.

It's a big job that he's going to be stepping into. They're trying to fix their safety issues. They're dealing with ongoing financial losses. And now there's a possible strike looming this fall if the company can't reach a labor deal with the machinists. What are Boeing union leaders saying about this news?

Well, they certainly welcomed the news. And, you know, I think this gives Boeing a possible way to help perhaps settle those contract negotiations without a strike. One of the machinists’ demands is that Boeing leadership commit to building the next airplane here in the Puget Sound area, and to stop threatening them to take work away. If they hadn't appointed the CEO until after those negotiations concluded, I think Boeing would have said, "Oh, we can't make that kind of commitment. It has to be done by the next CEO."

But now the next CEO is effectively in place. And by making this gesture, that he's going to be based in Seattle, I think he's effectively telling the workers here, "I get it." And I suspect he's going to give the machinists what they're asking for in terms of that commitment, and possibly even moving the headquarters officially back here. At least, he has the opportunity to do that. And if he does, we could avoid a strike.

And that would be big news, indeed, if the headquarters are officially moved back to the Seattle area. What would it mean for the Boeing CEO to be based here?

Well, it's a symbolic gesture. The fact is, they moved to Chicago. That didn't really take. And then in 2022, they moved to Arlington, Virginia, right beside the Pentagon, to be near their government customer. But the fact is, during Covid, many of the leaders of Boeing weren't actually going to the office in Arlington. There's only a few hundred employees at the corporate headquarters. It wouldn't be a huge deal to move it in logistical terms.

In symbolic terms, it would be enormous for this area. It would mean reversing mistakes that have been made over 20 years — devaluing this region, devaluing this workforce — and signaling that they're ready to work with the unions and the workers here who build the planes and design the planes.

It's a pretty staggering pile of tasks that he's going to be facing as he steps into this new job. What is he going to need to do to get Boeing back on track?

The first thing is to deal with this current crisis that started with the blowout of the door plug on the Alaska Airlines jet in January, proving to regulators and to the public that their quality control is perfect, and that we can trust flying in airplanes. And that's going to take a lot of time.

I mean, the FAA forced Boeing to slow down production, way down, which has resulted in really heavy financial losses. They announced today $1.4 billion lost in the last quarter. They're bleeding cash. $4 billion cash outflow in the last three months. So, they have to convince the regulators that they have control of the quality and then be allowed to ramp up, so that they can start getting some money in the door again. That's task number one.

But they've also got a lot of other things, a lot of balls in the air. The new CEO has to finalize the acquisition of Spirit AeroSystems, where of course they had lots of quality problems, and now they have to buy it back after selling it 20 years ago, and reintegrate it into the company. That is a huge endeavor.

And they've got to settle the machinist negotiations, hopefully without a strike, and move forward, and then try to regain market share against Airbus, which has been lost. These are the two big giants of the aviation world. They used to be on par with one another. And Boeing wants to get back to that. And they have to do all this in a pretty difficult financial situation where they're bleeding cash. They've got enormous debt, $45 billion. They're going to bring on another $3.6 billion when they acquire Spirit.

So it's not easy for this new guy. And it's going to take time to turn things around. This gesture at the beginning indicates a desire to look back to the legacy of Boeing, the legacy culture of Boeing, the Seattle-based culture of Boeing, and so it's probably a good start.

Listen to the interview by clicking the play button above.