3 things the new Boeing CEO needs to do to turn things around at the troubled company

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3 things the new Boeing CEO needs to do to turn things around at the troubled company

By Emma Burleigh and Azure Gilman | Fortune Magazine | August 1, 2024

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Troubled airplane manufacturer Boeing made a big announcement on Wednesday: after a monthslong search, the company has chosen a new CEO, Robert “Kelly” Ortberg, to take the helm on Aug. 8. 

Ortberg, the former chief executive of aviation component manufacturing company and Boeing supplier Rockwell Collins, now known as Collins Aerospace, is inheriting a company struggling to recover from an unrelenting series of disasters over the last few years. 

Two plane crashes involving the 737 Max 8 jet—one in Indonesia in 2018, and the other in Ethiopia in 2019—killed a total of 346 people and prompted regulators to ground that plane model. Then-CEO Dennis Muilenburg was ousted, and current CEO David Calhoun took over in January of 2020 to try to turn the company around. But in January of this year, the panel of a 737-9 Max flew off an Air Alaska plane midflight, putting the company in the spotlight once more. The Federal Aviation Administration (FAA) responded to the incident by capping the manufacturing rate of Max planes at 38 per month, in order to improve safety. It also withheld approval on a new production line at its facility in Everett, Washington. Consequently, in May, the company said it expected to lose money this year.   The company has already paid hefty fines, and shares in the company are down more than 20% this year. 

Fortune reached out to Boeing analysts to hear what they think it will take to turn the company around. The analysts say three changes:

1. Change the company culture.  Boeing’s repeated missteps have highlighted a critical weakness within the company—its culture. The company’s troubles don’t come down to one or two instances of failure, but rather managerial decisions spanning decades that allowed for catastrophic results. They eed to return to a single purpose, single focus: ‘Build the best airplanes and sell them.’”
2. Innovate.  Boeing was once on the cutting edge of aerospace engineering with plane models like the 727, 747, and 767, according to Safran. But no longer. “Boeing has been talking about new products now for, like, 15 years. They haven’t had anything since [2008], when they announced the 787,” he says.  This is not a quick-fix situation—it will take decades of hard work.
3. Build better communication and transparency .  Another one of Ortberg’s most important executive missions—and perhaps one of the most difficult—is to improve the company’s communication and transparency. Boeing has a lot to make up for after pleading guilty to misleading regulators.  “He needs to rebuild trust. They have lost the confidence of the government and the regulators, of the general public, and most importantly of customers,” says Safran. 

3 key takeaways from the article

1. Troubled airplane manufacturer Boeing made a big announcement on Wednesday: after a monthslong search, the company has chosen a new CEO, Robert “Kelly” Ortberg, to take the helm on Aug. 8. 
2. He would be inheriting a company struggling to recover from an unrelenting series of disasters over the last few years.   Two plane crashes involving the 737 Max 8 jet and in January of this year, the panel of a 737-9 Max flew off an Air Alaska plane midflight, putting the company in the spotlight once more. The company faced criminal investigations, paid hefty fines, and shares in the company are down more than 20% this year. 
3. Boeing analysts think three changes can take to turn the company around:  a cultural change (They need to return to a single purpose, single focus: ‘Build the best airplanes and sell them.), renewed emphasis on innovation, and improved communication and transparency (be credible, be open and be honest about the issues) are the key issues Ortberg must take on in order to succeed. 

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Topics:  Strategy, Innovation, Culture, Communication, Leadership, Crisis Management