New York:

Boeing on Wednesday named former aerospace veteran Robert “Kelly” Ortberg its next CEO, as the aviation giant reported a hefty loss on continued operational problems.

Ortberg, 64, helped lead aviation communications and electronics supplier Rockwell Collins and integrate it into United Technologies, which then merged with Raytheon to become RTX. He retired from RTX in 2021.

He is an engineer and is an outsider to Boeing, fulfilling key CEO requirements in the eyes of some aviation insiders.

His appointment, which will take effect August 8, comes as Boeing attempts to rebound from a series of safety and quality control problems that have sharpened scrutiny on the company.

Those difficulties were immediately visible in Boeing’s second-quarter results released Wednesday, a loss of $1.4 billion, compared with a loss of $149 million in the year-ago period.

Revenues fell 14.6 percent to $16.9 billion.

The quarterly results reflected a continued drag from Boeing’s commercial division, where it has lowered production while upgrading safety and quality control practices under the close watch of regulators.

The latest results also showed significant weakness in its defense business due to a number of fixed price contracts where it has experienced deep losses due to supply chain problems, as well as higher engineering costs and technical issues.

Boeing listed four defense contracts behind an operating loss of $913 million in the quarter.

– Leadership shake-up –

Boeing has been in the hot seat since a January incident in which a 737 MAX operated by Alaska Airlines made an emergency landing after a fuselage panel blew out mid-flight.

That incident raised fresh scrutiny on Boeing and the MAX following two fatal crashes in 2018 and 2019 that led to a lengthy grounding of the plane.

Outgoing leader Dave Calhoun ascended to CEO in January 2020 unexpectedly following the ouster of predecessor Dennis Muilenburg amid fallout from the MAX crashes.

Calhoun appeared poised to stay on as CEO to 2028 until the Alaska Airlines incident sparked outrage on Capitol Hill and concern among Boeing’s airline customers. Calhoun announced on March 25 that he would step down by the end of this year.

Aviation experts had hoped the next Boeing CEO would ideally have an aerospace background, experience managing big manufacturing projects, strategic smarts, a hands-on approach to safety and the ability to navigate congressional hearings.

In Wednesday’s statement, Boeing Chairman Steve Mollenkopf described Ortberg as “an experienced leader who is deeply respected in the aerospace industry.”

Ortberg said he was “extremely honored and humbled to join this iconic company,” adding: “There is much work to be done, and I’m looking forward to getting started.”

Some analysts have suggested that Boeing’s next CEO could remake the company’s executive ranks.

But Calhoun indicated he does not expect significant personnel changes, saying, “I don’t think this is intended to be a large leadership overhaul.”

Ortberg “knows full well that we’re in a recovery mode,” said Calhoun, adding that he was not deeply involved in the CEO selection process.

– ‘Very challenging job’ –

Immediate priorities facing Ortberg include negotiations with a machinists’ and aerospace union amid a potential September strike threat; and restoring production levels on the MAX and 787 Dreamliner to meet Boeing’s targets by late 2024.

Analysts at JPMorgan Chase praised the appointment, while noting the CEO post “remains a very challenging job,” according to a note.

“We believe he is highly respected in the industry, he has important operational and engineering experience, and we think he has the potential to do some of the things Boeing needs most, including restoring relationships with customers, suppliers, regulators, and legislators,” said the JPMorgan note.

Third Bridge analyst Peter McNally said Ortberg’s aviation experience will help at Boeing, but said “he and the organization face a long road ahead.”

Ortberg is set to take office just after a two-day hearing organized by the National Transportation Safety Board in Washington on the Alaska Airlines incident.

Boeing has agreed to plead guilty to a fraud charge as part of a plea deal with the US Department of Justice over the two fatal MAX crashes, according to a court filing last week.

The deal must be approved by a federal judge.

Shares of Boeing rose 3.0 percent near midday.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

New Delhi:

In a stunning admission before a US congressional panel, Boeing’s CEO Dave Calhoun admitted that the aerospace giant has retaliated against whistleblowers, contradicting its publicly stated policies.

Mr Calhoun’s acknowledgement came during a tense Senate hearing aimed at probing Boeing’s safety practices following two fatal crashes involving the 737 MAX aircraft in 2018 and 2019. These tragedies led to 346 deaths and exposed severe flaws in Boeing’s manufacturing and oversight processes. 

Moment Of Reckoning

Senator Richard Blumenthal, who chaired the hearing, was unyielding in his critique of Boeing’s leadership. “Boeing stands at a moment of reckoning and an opportunity to change a broken safety culture,” he said.

Watch Senator Hawley COOK the ass of the Boeing CEO.
Included pic of a cool cat cause he’s awesome pic.twitter.com/qHXSHTlCEo

— DR22 Ω (@DejaRu22) June 19, 2024

Mr Blumenthal revealed that the sub-committee overseeing the investigation had received testimony from over a dozen whistleblowers, many of whom described a workplace where safety concerns were often dismissed or punished.

When asked how many Boeing employees had been fired for retaliating against whistleblowers, Mr Calhoun confessed, “Senator, I don’t have that number on the tip of my tongue. But I know it happens.”

Whistleblower Testimonies

The hearing featured testimonies from current and former Boeing employees who painted a troubling picture of a company prioritising profits over safety. Among them was engineer Sam Salehpour, who alleged that the Dreamliner could suffer a catastrophic accident due to flawed manufacturing processes. 

Mr Salehpour, who worked at Boeing for nearly two decades compared a potential incident to repeatedly bending a paper clip. “You do it once or twice… it doesn’t break. But it breaks at some time,” he said in April this year. 

A memo from the sub-committee detailed new whistleblower complaints. One particularly alarming account came from Sam Mohawk, who alleged that Boeing ordered improperly stored parts to be hidden from federal aviation inspectors. According to Mr Mohawk, this was allegedly done to avoid costly increases in storage capacity and staff

Dave Calhoun’s Defence

Mr Calhoun began his testimony with an apology to the families of the victims of the 737 MAX crashes, stating, “Our culture is far from perfect, but we are taking action and making progress.” Despite his assurances, Mr Calhoun’s inability to provide specific numbers on whistleblower retaliation cases drew sharp criticism from lawmakers.

Republican Senator Josh Hawley, from the state of Missouri, accused Mr Calhoun of putting profit above safety. He slammed Mr Calhoun’s $33 million compensation package and questioned his leadership, saying, “You’re the problem. And I just hope to God that you don’t destroy this company before it can be saved.” 

Mr Hawley said it was a “travesty” that Mr Calhoun was still in his job and why he is not resigning.

“Senator, I’m sticking this through,” Mr Calhoun responded.

U.S. lawmakers pressed Boeing’s chief executive on June 18 about the company’s plans to fix its manufacturing problems and its willingness to heed whistleblowers’ warnings, while relatives of people who died in two crashes of Boeing 737 Max jetliners were in the room to remind him of what was at stake.

CEO David Calhoun appeared before the Senate investigations subcommittee, which is chaired by Sen. Richard Blumenthal, D-Conn., a Boeing critic. Blumenthal opened the hearing by recognizing the relatives of the crash victims and the family of a Boeing whistleblower who died by suicide earlier this year.

Also read: The controversy over Boeing’s bestselling 737 MAX and its impact in India | Data

“This hearing is a moment of reckoning,” the senator said. “It’s about a company, a once iconic company, that somehow lost its way.”

Mr. Calhoun’s appearance before Congress was the first by a high-ranking Boeing official since a panel blew out of a 737 Max during an Alaska Airlines flight in January. No one was seriously injured in the incident, but it raised fresh concerns about the company’s best-selling commercial aircraft.

Mr. Calhoun sat at the witness table and fidgeted with his eyeglasses as Blumenthal spoke. Sen. Ron Johnson, R-Wisc., thanked the CEO for coming to face “tough questions.” Before giving his prepared opening statement, Calhoun stood and faced the people in the audience holding poster-sized photos of some of the 346 people who died in the 2018 and 2019 crashes.

“I apologize for the grief that we have caused,” he said.

Hours before Mr. Calhoun arrived on Capitol Hill, the Senate panel released a 204-page report with new allegations from a whistleblower who said he worries that “nonconforming” parts — ones that could be defective or aren’t properly documented — are going into 737 Max jets.

Sam Mohawk, a quality assurance investigator at the 737 assembly plant near Seattle, claims Boeing hid evidence of the situation after the Federal Aviation Administration informed the company a year ago that it would inspect the plant.

“Once Boeing received such a notice, it ordered the majority of the (nonconfirming) parts that were being stored outside to be moved to another location,” Mohawk said, according to the report. “Approximately 80% of the parts were moved to avoid the watchful eyes of the FAA inspectors.”

The parts were later moved back or lost, Mohawk said. They included rudders, wing flaps and tail fins — all crucial in controlling a plane.

A Boeing spokesperson said the company got the subcommittee report late Monday night and was reviewing the claims. “We continuously encourage employees to report all concerns as our priority is to ensure the safety of our airplanes and the flying public,” the spokesperson said.

The FAA said it would “thoroughly investigate” claims raised in the Senate report.

The Senate subcommittee said that newly uncovered documents and whistleblower accounts “paint a troubling picture of a company that prioritizes speed of manufacturing and cutting costs over ensuring the quality and safety of aircraft.”

The 737 Max has a troubled history. The Justice Department is considering whether to prosecute Boeing for violating terms of a settlement it reached with the company over allegations it misled regulators who approved the plane. Max jets crashed in 2018 in Indonesia and 2019 in Ethiopia. The FAA subsequently grounded the aircraft for more than a year and a half.

Mohawk told the Senate subcommittee that the number of unacceptable parts has exploded since production of the Max resumed following the crashes. He said the increase led supervisors to tell him and other workers to “cancel” records that indicated the parts were not suitable to be installed on planes.

The FAA briefly grounded some Max planes again after January’s mid-air blowout of a plug covering an emergency exit on the Alaska Airlines plane. The agency and the National Transportation Safety Board opened separate investigations of Boeing that are continuing.

The company says it has gotten the message. Boeing says it has slowed production, encouraged employees to report safety concerns, stopped assembly lines for a day to let workers talk about safety, and appointed a retired Navy admiral to lead a quality review. Late last month, it delivered an improvement plan ordered by the FAA.

“From the beginning, we took responsibility and cooperated transparently with the NTSB and the FAA,” Calhoun said in remarks prepared for the hearing. He defended the company’s safety culture.

“Our culture is far from perfect, but we are taking action and making progress,” Mr. Calhoun said in the prepared remarks. “We are taking comprehensive action today to strengthen safety and quality.”

The drumbeat of bad news for Boeing goes on, however.

In the past week, the FAA said it was investigating how falsely documented titanium parts got into Boeing’s supply chain, and federal officials examined “substantial” damage to a Southwest Airlines 737 Max after an unusual mid-flight control issue.

Boeing disclosed that it hasn’t received a single order for a new Max — previously its best-selling plane — in two months.

Blumenthal first asked Mr. Calhoun to appear before the Senate subcommittee after a whistleblower, a Boeing quality engineer, claimed that manufacturing mistakes were raising safety risks on two of the biggest Boeing planes, the 787 Dreamliner and the 777. He said the company needed to explain why the public should be confident about Boeing’s work.

Boeing pushed back against the whistleblower’s claims, saying that extensive testing and inspections showed none of the problems that the engineer had predicted.

Mr. Calhoun announced in late March that he would retire at the end of the year. The head of the company’s commercial-airplanes unit resigned the day of Calhoun’s announcement.

Families of people who died in the Boeing Max crash in Ethiopia plan to attend Tuesday’s hearing on Capitol Hill. They have pressed the Justice Department repeatedly to prosecute Boeing.

“We will not rest until we see justice.,” said Zipporah Kuria, whose father died in the crash. She said the U.S. government should “hold Boeing and its corporate executives criminally responsible for the deaths of 346 people.”

The Justice Department determined last month that Boeing violated a 2021 settlement that shielded the company from prosecution for fraud for allegedly misleading regulators who approved the 737 Max. A top department official said Boeing failed to make changes to detect and prevent future violations of anti-fraud laws.

Prosecutors have until July 7 to decide what to do next. Blumenthal said at the start of Tuesday’s hearing that he thinks the Justice Department should prosecute the company.