Boeing (BA) on Wednesday named former Rockwell Collins CEO Kelly Ortberg its new president and CEO, replacing outgoing head Dave Calhoun. The troubled airplane maker also reported a wider-than-expected second quarter loss and revenue miss and warned cash flow burn would be larger than previously forecast for the year.
“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 will start Aug. 8 and has been named to the Boeing board.
He will inherit an aerospace giant that has faced an extraordinarily turbulent year, which was reflected in its second quarter earnings report. Boeing reported revenue of $16.9 billion vs. $17.46 billion estimated per Bloomberg. The company also posted an adjusted loss per share of $2.90 vs. $1.82 estimated, resulting in a core operating loss of $1.392 billion.
Free cash flow burn hit $4.3 billion, topping the nearly $4 billion lost in Q1, meaning the company reported an astounding $8.256 billion in negative free cash flow for the first half of the year. On the analyst conference call, Boeing CFO Brian West warned the company would have “larger use of cash than previously forecast” for the rest of the year, again impacting free cash flow.
Boeing stock rolled over following West’s comments, with the stock lower in early trade. The stock is down over 25% this year.
Not surprisingly, Boeing’s commercial deliveries took a hit in the second quarter as well. Boeing delivered 92 commercial jets in Q2, down from the 136 planes delivered year ago, a 32% drop. The 737 Max program had 70 deliveries in Q2, down from the 103 delivered a year ago.
Before its recent issues, Boeing had monthly production target of 38 737 MAX jets, with a stretch goal of 50 planes per month. Boeing confirmed that it intends to hit the 38-plane goal by the end of the year.
Boeing also delivered nine widebody Dreamliner jets in Q2, down from 20 a year ago. The Dreamliner jet has been the subject of a few whistleblower complaints in 2024 alone, highlighting more issues with Boeing’s production and assembly processes. Boeing said it plans to return to producing five 787s per month.
Boeing pulled its full-year outlook at the start of the year given the issues it was facing, most seriously at the time the Alaska Airlines door plug blowout in January.
“Despite a challenging quarter, we are making substantial progress strengthening our quality management system and positioning our company for the future,” said Dave Calhoun, outgoing Boeing president and CEO.
He added, “We are executing on our comprehensive safety and quality plan and have reached an agreement to acquire Spirit AeroSystems. While we have more work ahead, the steps we’re taking will help stabilize our operations and ensure Boeing is the company the world needs it to be. We are making important progress in our recovery and will continue to build trust through action and transparency.”
Boeing also pleaded guilty last week 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, with the government alleging Boeing continued risky procedures in plane construction and didn’t keep accurate records following the two 737 MAX crashes in 2019 and 2020.
Families of the victims of the two 737 MAX crashes, who have been vocal about Boeing getting off too lightly given the seriousness of the charges, are challenging Boeing’s plea deal and have filed a motion to oppose it — meaning Boeing isn’t out of the legal jeopardy yet.
Pras Subramanian is a reporter for Yahoo Finance covering the auto industry. You can follow him on X and on Instagram.
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