In a significant move amidst growing financial challenges, Boeing has appointed aerospace veteran Robert Ortberg as its new Chief Executive Officer, effective August 8. This change comes as the company faces an unexpected increase in its second-quarter losses. Ortberg, who previously served as the CEO of Rockwell Collins and held the position of chair at the Aerospace Industries Association, takes over the reins from Dave Calhoun.
Calhoun had announced his intention to step down by the end of 2024. Boeing's Board of Directors emphasized the importance of this decision. "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," stated Chair Steven Mollenkopf.
He expressed optimism about Ortberg’s ability to navigate Boeing through this consequential period in its extensive history. However, the challenges confronted by Boeing are substantial. The company's core loss for the June quarter escalated to $2.90 per share, a notable increase from $0.82 per share the previous year.
This figure surpassed the consensus of Wall Street analysts, who projected a loss of $2.01 per share. Revenue also took a hit, dropping by 15% year over year to $16.87 billion, falling short of the expected $17.35 billion. The commercial airplane segment observed a staggering 32% decline in revenue, amounting to $6 billion, primarily due to fewer plane deliveries, which decreased to 92 from 136 compared to last year.
Despite these figures, Boeing indicated plans to enhance production of its 737 fleet throughout the quarter, aiming to ramp up production to 38 planes per month by year’s end. Additionally, the company intends to restore the 787 production rate to five planes monthly by 2024. In the defense, space, and security sector, revenue fell by 2% to $6.02 billion, and an operational loss was recorded at $913 million, up from $527 million a year ago.
This loss was exacerbated by $1 billion in setbacks linked to fixed-price development programs, particularly a significant loss of $391 million related to the KC-46A program. Conversely, Boeing’s global services revenue saw a rise of 3%, totaling $4.89 billion. "Despite a challenging quarter, we are making substantial progress strengthening our quality management system and positioning our company for the future," Calhoun remarked.
He added, "While we have more work ahead, the steps we're taking will help stabilize our operations." Boeing's operational losses swelled to $1.09 billion, a marked increase from $99 million in the same quarter last year. The operating cash flow turned negative at $3.92 billion this quarter, driven by reduced commercial deliveries and unfavorable working capital timings.
Furthermore, free cash flow also swung into negative territory at $4.33 billion, contrasting sharply with a positive cash flow of $2.58 billion recorded the previous year. As of the latest figures, Boeing’s stock price stood at $189.64, reflecting a change of +2.78, with a percent change of +1.49.
The ongoing developments underscore the critical nature of strategic leadership changes within the organization as it seeks to navigate through this tumultuous financial landscape..