The period of dissatisfaction at Boeing (BA) could drag on for years before newly appointed CEO Kelly Ortberg can turn things around – in the truest sense of the word.
“(They) have to think differently because they’ve been on the wrong track for 20 years,” said leadership guru Bill George during a conversation with Brian Sozzi, editor in chief of Yahoo Finance, on his podcast Opening Bid (video above; listen here).
The former CEO of Medtronic (MDT) also served on the boards of Target (TGT), ExxonMobil (XOM) and Goldman Sachs (GS). George says it could take 10 years for Ortberg to get Boeing back on track.
“You can achieve a lot in five months or years, but you have to refocus the culture on aviation,” he added.
Boeing’s numerous missteps, partly due to a fragmented corporate culture and a profit-obsessed executive team, have made headlines around the world.
A notable incident this year involved the 737 Max 9 model, in which a door stopper on an Alaska Air (ALK) aircraft blew out after takeoff. Other incidents in recent years have included operational problems with Max aircraft in 2018 and 2019, loose parts on aircraft, and the deaths of two whistleblowers.
Boeing’s financial figures and share price have fallen sharply as a result of the bad headlines and the resulting market share gains by its competitor Airbus.
Boeing shares have fallen 50 percent over the past five years, while the S&P 500 has risen 95 percent.
In the second quarter, revenue fell 15% year-over-year. The company burned $3.9 billion in operating cash flow.
Enter Ortberg, who officially took over as CEO on August 8 after taking over from the controversial Dave Calhoun.
Ortberg, 64, has worked in the aerospace industry for more than 35 years. From 2013 to 2021, he was CEO of Rockwell Collins, where he organized a merger with United Technologies.
The first thing he did was write a letter to employees outlining plans to move his office from Chicago back to Seattle “so I can be close to the commercial aircraft programs.”
Boeing’s decision to move its headquarters out of Seattle two decades ago caused a stir because it separated management from production. By returning management to Boeing’s roots, one hope is that the loopholes created by the distance between teams can be closed.
“I firmly believe we need to get closer to production lines and development programs across the country,” Ortberg wrote.
Transportation Secretary Pete Buttigieg spoke openly with Sozzi about Ortberg’s new position.
“I want to know what steps he thinks can be taken to ensure that Boeing puts safety and quality first,” he said.
There is hope on Wall Street that Ortberg is the right man for the job, but time will tell.
“We believe he is a credible leader who brings some of the key skills Boeing is looking for, although this remains a very demanding job,” JP Morgan analyst Seth Seifman said in a note to clients.
Three times a week, Yahoo Finance Executive Editor Brian Sozzi hosts insightful conversations and chats with the biggest names in business and markets Opening bidYou can find further episodes on our Video Hub. See on your preferred streaming service. Or listen and subscribe on Apple Podcasts, Spotifyor wherever you find your favorite podcasts.
In the following episode of Opening Bid, CEO of industrial giant Ford, Jim Farley, reveals his concept for reinventing the icon for the age of electric vehicles.
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