Boeing’s new CEO is already making an overdue change his first day on the job
Today is Kelly Ortberg’s first day as CEO of Boeing (BA). He’s already winning praise – for his work location.
Ortberg has decided he will work out of Boeing’s offices in Seattle, which had been the company’s home for its first 85 years before it moved its corporate headquarters to Chicago in 2001.
The new CEO said in a memo to staff Thursday that he decided to work 2,300 miles from the company’s current corporate offices in Arlington, Virginia, to help restore trust in the company’s commercial aircraft business.
“Because what we do is complex, I firmly believe that we need to get closer to the production lines and development programs across the company,” Ortberg said in the letter. “I plan to be based in Seattle so that I can be close to the commercial airplane programs.”
Ortberg said he’d be on the factory floor in Renton, Washington, Thursday, where the company makes its troubled 737 Max line of planes.
Boeing critics say moving headquarters away from its factories in the Puget Sound area more than 20 years ago underscored the company’s focus on financial results instead of production processes.
A Boeing 737 MAX aircraft is shown on the assembly line at the Boeing facility in Renton, Washington. – Jennifer Buchanan/Pool/The Seattle Times/AP
But Boeing has been plagued by serious quality issues in recent years, problems that resulted in two fatal crashes, deep losses and terrifying incidents, including a door plug that blew off the fuselage on a January 5 Boeing 737 Max flight operated by Alaska Airlines.
Richard Aboulafia, managing director at AeroDynamic Advisory and a long-time critic of Boeing management, praised Ortberg’s choice of office location.
“It’s incredibly promising,” he said. “It shows that he’s not afraid to go where the problem are and to put in some serious hard work solving them. The other great virtue of showing up is that you get an accurate picture of the situation, rather than news filtered through what people think you want to hear. He continues to look like the exact opposite kind of leader than the ones that plagued Boeing.”
Boeing previously insisted that moving headquarters was in the company’s best interests, noting Boeing builds products other than commercial aircraft, including from its defense and space business. And the executives in charge of commercial airplanes have always been based in Seattle, even if the corporate headquarters was elsewhere.
The company said it had no comment whether it is considering moving its entire headquarters back to Seattle along with Ortberg.
Ortberg will have his hands full, no matter where his office is located. The company has had almost nothing but problems for more than five years. A design flaw in its best selling 737 Max resulted in fatal crashes in 2018 and 2019, followed by a 20-month grounding of the jet. That in turn kicked off years of financial losses that topped $33 billion in core operating losses in the most recent quarter.
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In January a door plug blew off the side of an Alaska Airlines flight as it approached 16,000 feet, leaving a gaping hole in the side of the plane and bringing new attention to its production problems. Since that time it has agreed to plead guilty to deceiving the Federal Aviation Administration, a plea that will require it to work under the supervision of a court-appointed monitor.
It faces a series of other federal probes, including one by the National Transportation Safety Board, which just concluded two days of public hearings on the Alaska Air incident. Boeing executives admitted there they still don’t know how the plane in the door plug blowout left Boeing’s Renton, Washington factory without the four bolts needed to keep the door plug in place.
“We don’t know and neither do they, and that’s a problem,” NTSB Chair Jennifer Homendy told reporters during the hearing.
Ortberg, in his letter, acknowledged Boeing needs to do better.
“While we clearly have a lot of work to do in restoring trust, I’m confident that working together, we will return the company to be the industry leader we all expect,” he said.
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