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Boeing’s (BA) season of discontent may stretch into years before the newly appointed CEO Kelly Ortberg can right the ship.
“[They] have to think differently because they’ve been on the wrong track for 20 years,” said leadership guru Bill George during a conversation with Yahoo Finance Executive Editor Brian Sozzi on Yahoo Finance’s Opening Bid podcast (see the video above or listen below).
The former Medtronic (MDT) CEO has also sat on the boards of Target (TGT), ExxonMobil (XOM), and Goldman Sachs (GS). George says it could take Ortberg 10 years to put Boeing back on a flightpath toward success.
“You can get a lot done in five months or years, but you’ve got to change the culture back to aviation,” he added.
Boeing’s many missteps, fueled in part by a fractured culture and a C-suite obsessed with profits, have made global headlines.
One noteworthy incident this year involved its 737 Max 9 model, which experienced a door plug that blew out on an Alaska Air (ALK) plane after takeoff. Other happenings in recent years include operational issues with Max aircraft in 2018 and 2019, loose parts on aircraft, and the death of two whistleblowers.
Boeing’s financials and stock price have been hammered as a result of the bad headlines and subsequent market share gains by rival Airbus (AIR.PA).
Boeing’s stock is down 50% in the past five years compared to a 95% gain for the S&P 500 (^GSPC).
Second quarter sales plunged 15% from the prior year. The company burned through $3.9 billion in operating cash flow.
Enter Ortberg, who began officially as CEO on Aug. 8 after taking over for embattled Dave Calhoun.
Ortberg, 64, has spent more than 35 years in the aerospace industry. He was CEO of Rockwell Collins from 2013 to 2021, during which time he helped orchestrate the company’s acquisition by United Technologies.
His first order of business was to address employees in a letter. In it, he outlined plans to relocate his office from Chicago back to Seattle “so that I can be close to the commercial airplane programs.”
Boeing’s decision to move headquarters away from Seattle two decades ago raised eyebrows because it separated management and production. In returning management to Boeing’s roots, one hope is that the loopholes created by the distance between teams can close.
“I firmly believe that we need to get closer to the production lines and development programs across the country,” wrote Ortberg.
Transportation Secretary Pete Buttigieg spoke candidly to Sozzi about Ortberg’s new position.
“I want to know what steps he thinks can be taken to make sure Boeing puts safety and quality first,” he said.
Wall Street is hopeful that Ortberg is the right guy for the job, though time will tell.
“We think he is a credible leader who brings some key skills in demand at Boeing, though this remains a very challenging job,” JPMorgan analyst Seth Seifman said in a client note.
Three times each week, Yahoo Finance Executive Editor Brian Sozzi fields insight-filled conversations and chats with the biggest names in business and markets on Opening Bid. You can find more episodes on our video hub or watch on your preferred streaming service.
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