Boeing’s new CEO just landed the best (and worst) job in Corporate America

Analysis by Allison Morrow, CNN

New York (CNN) — Congratulations, Kelly Ortberg. You’ve just landed a job that is simultaneously the best and worst in Corporate America.

Hear me out. As the next CEO of Boeing, Ortberg is taking over a once-mighty American institution that’s languishing in its dirtbag era, like a star high school quarterback who let himself go after graduation and can’t shut up about the glory days.

There’s a laundry list of problems Ortberg will have to confront on Day One, and he’ll be operating under intense scrutiny from a rabid audience of shareholders, regulators, customers and even the FBI.

It might seem at first glance like the worst promotion in history. That is, of course, until you consider how bad his predecessor was at the job, and how rich that guy got doing it.

Dave Calhoun, who became CEO in 2020, took home nearly $33 million in total compensation last year, a 45% increase from the $22.6 million he received for 2022. And he stands to collect a $45 million retirement present in the form of stock awards and options that vest over time.

That’s all despite Calhoun’s tenure being “a master class in overpaid incompetence,” according to Richard Aboulafia, managing partner at AeroDynamic Consultancy. “I wish I knew more about other industries to say whether he was the worst aerospace CEO or the worst CEO, period.”

Under Calhoun’s watch, Boeing’s headaches have multiplied. The company’s stock has lost nearly half its value. The company is burning through cash and angering customers, and is the subject of multiple federal investigations, including a criminal probe into the near-disaster of a January 5 mid-air door plug blowout.

Boeing didn’t immediately respond to CNN’s request for comment on Calhoun’s tenure.

In a statement Wednesday, Boeing’s board chair Steven Mollenkopf thanked Calhoun “for his strong leadership at Boeing, first as Chair and then as CEO, when he stepped in to steer the company through the challenges of recent years.”

Boeing’s 737 Max problems — which include two crashes that killed 346 people in 2018 and 2019 — are extensive and well documented.

But its issues extend well beyond that problem-prone aircraft. The company also has problems with its defense business, which resulted in a $913 million loss in the second quarter. And, not least, two astronauts on Boeing’s Starliner space ship are currently stuck at the International Space Station, and it’s not clear when they’ll come back.

That’s just a snapshot of the mess Ortberg is stepping into.

But one thing he doesn’t have to worry about is tanking the business. Boeing’s only commercial aviation competitor in the world, Airbus, can barely keep up with its own orders, let alone absorb Boeing’s if it were allowed to fail. And even if Boeing’s airline customers all suddenly abandoned it for Airbus (which would be extremely costly and practically impossible), Boeing would still have its US government contracts, which generate nearly 40% of its revenue.

It is simply too big, and too globally important, to fail.

The good news, for Boeing and for the flying public, is that the industry really seems to like this guy.

Ortberg’s appointment is “Boeing’s best news in almost 20 years,” Aboulafia says. “Apparently, you can count on the board doing the right thing after exhausting all other possibilities. He’s exactly the executive that Boeing needed to appoint.”

Even one of Boeing’s harshest critics, Robert Clifford, an attorney for the families of 737 Max crash victims, appeared hopeful. “While this man is an industry insider, he comes from outside Boeing and, on the face of it, has a well-regarded reputation in the industry,” Clifford told my colleague Chris Isidore.

The quick rundown on Ortberg:

• He’s got a degree in mechanical engineering — notable in part because his predecessor, an accountant, has been accused of being hyperfocused on profit and out of touch with Boeing’s core engineering culture.
• Ortberg climbed the ranks at Rockwell Collins, an aviation tech supplier, from 1987 to 2013, when he became its CEO. He retired in 2021.
• Industry players respect him. “He ran an extremely well-respected company with a terrific culture,” Aboulafia says. And Ron Epstein, an aerospace analyst for Bank of America, said that although one person alone can’t turn around a company, “Kelly should be able to cast a wider net for talent than a Boeing insider could.”
• He will be based in Seattle, according to several news outlets. That decision is likely to go over well with Boeing’s rank and file, thousands of whom stayed in the Seattle area while the company’s headquarters moved farther and farther away, first to Chicago in 2001 and then to Arlington, Virginia, in 2022. Speculation is already swirling about whether Ortberg would move the company’s headquarters back to the Puget Sound area.

Boeing’s shares rose 2% Wednesday, even after Boeing announced its losses tripled in the second quarter, reflecting Wall Street’s optimism about Ortberg.

Bottom line: The next head of Boeing has the opportunity to orchestrate the turnaround of the century. If Ortberg pulls it off, he’ll be a legend. If he fails, he’ll merely be very rich.

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