Boeing (NYSE: BA) ditches accountant CEO for an engineer

In a sign that Boeing (NYSE: BA) may be finally ready to turn the corner after hitting rock bottom, the American aerospace giant has named a new CEO. This time it’s turning to an engineer with 35 years of experience in the aviation industry.

Kelly Ortberg, who previously headed avionics firm Rockwell Collins, is taking over the reins this week and will be tasked with bringing the company’s focus back to making great planes. Boeing is seeking a much needed reset after the crashes of two 737 Max models plunged the company into a quality control crisis that ultimately saw it agree to plead guilty to criminal fraud last month. 

“He knows full well we got to complete the recovery mode, and we got to get this stable and move forward,” current CEO Dave Calhoun, an accountant by training, said in an earnings call last week about the company’s new leader. “He’s a seasoned operator. He’s got experience. He knows what we do for a living, and he’ll bring that experience immediately to bear.”

Boeing shares lost as much as 78% from an all-time high seen shortly before the March 2019 crash of Ethiopian Airlines flight 302 that came just months after the similar loss of Lion Air flight JT 610 in Indonesia. Both tragedies were later blamed on a faulty Boeing flight control system. A blowout on an Alaska Airlines 737 Max earlier this year, meanwhile, left a large hole in the side of the fuselage and re-ignited worries about the company’s ability to make safe planes. While rival Airbus (CBOE: AIR) has seen shares gain 0.9% over the past year, Boeing shares are down 31%.

At the heart of criticism that’s been heaped on Boeing over the past five years is that it’s focused too much on “financialization,” cost-cutting and corporate management tricks as it turned away from engineering prowess to instead become a streamlined assembler of parts contracted out to third parties. As part of a process to reverse that practice, Boeing agreed last month to reacquire Spirit AeroSystems (NASDAQ: SPR) after it was first spun off from the company in 2005. Calhoun, who was called to testify before a Senate panel earlier this year, said the company’s culture was “far from perfect,” but improving. 

Boeing has been through a wringer largely of its own making, but it’s still one of only two companies in the world capable of designing and manufacturing the large jets that ferry billions of passengers around the world each year. Neither firm has been able to keep up with orders for new planes amid rising demand for travel, and backlogs are stretching into the thousands. As Boeing works to put its worst days behind it, a back to basics focus is just what the doctor ordered. There may be nowhere else to go but up.