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By Allison Lampert
(Reuters) -Kelly Ortberg, the former Rockwell Collins boss tapped to lead Boeing, has a background that threads a delicate needle for the planemaker - a company outsider untethered to Boeing's past, but an industry insider with an engineering background.
Ortberg will have a lengthy to-do list when he comes out of retirement and starts on Aug. 8. He plans to be based in Seattle where the 737 MAX and 777 jets are produced, a source familiar with the matter told Reuters, in an apparent nod to Boeing's engineering roots far from its Arlington head office.
He'll have to strengthen relations between Boeing and its airline customers, and earn trust with the regulators and lawmakers that have put the company under a microscope following a January 5 mid-air panel blowout that turned into a full-blown safety crisis.
Ortberg, a mechanical engineer, took over as head of key aerospace supplier Rockwell Collins in 2013 and steered the company's integration with United Technologies and RTX until his retirement in 2021. Still, questions remained about whether he would drive radical change favored by some politicians and industry analysts.
"While we hold Kelly in high regard, we note that it has been some time since he was a public company CEO, and as he is 64 it will probably fall to others to continue the work of fixing Boeing," said Vertical Research Partners analyst Rob Stallard.
Bob Jordan, CEO of Southwest Airlines said the company looks forward "to working with Kelly Ortberg in his efforts to return Boeing to its place as the leading American aerospace company."
Ortberg also served as chair of the U.S. aerospace advocacy group Aerospace Industries Association (AIA) during the COVID-19 pandemic.
"I think Mr. Ortberg is likely a great choice for CEO. He has an impressive resume with an engineering background, which is crucial for operating in a complex technical environment," said Tony Bancroft, portfolio manager at Gabelli Funds, which holds shares of Boeing.
Industry insiders had previously hoped Boeing would hire someone on the younger side, in the expectation that it will take years to turn the company around. Ortberg is 64, however, and Boeing said it waived the mandatory retirement age of 65 just like it did for CEO Dave Calhoun, who is departing after a management shakeup earlier this year.
AeroDynamic Advisory analyst Kevin Michaels, who first met Ortberg at Rockwell Collins in 1996, said Ortberg is young-looking and energetic and he didn't see his age as a barrier for the top job.
“We all thought that he retired too young,” Michaels said.
Ortberg is said to have beaten out Boeing Commercial Airplanes CEO Stephanie Pope and Spirit AeroSystems boss and former Boeing executive Pat Shanahan for the job.
“I think it’s a positive," said one portfolio manager that holds Boeing stock. "The narrative had been, 'I can’t believe only Boeing insiders wanted this job.'”
GE Aerospace CEO Larry Culp, Carrier Global CEO and Boeing board member Dave Gitlin and American Airlines Chairman and former Boeing CFO Greg Smith were seen as potential contenders but all indicated they were unwilling to be considered for the role, industry watchers said
Boeing had faced pressure from industry executives and U.S. lawmakers to choose new leadership with an engineering background and without lengthy ties to the company. Whether that is enough for lawmakers scrutinizing Boeing's operations remains to be seen.
"Mr. Ortberg is a mechanical engineer. I hope that means he will ensure that his top message for everyone is building the best airplane means building the safest airplane in the world," said Rep Rick Larsen, top Democrat on the House Transportation Committee who represents a district in Washington State home to major Boeing operations.
Analysts and acquaintances described Ortberg as being a good listener, honest and willing to take decisive action. "We believe during his leadership at Collins he was well liked by employees and direct reports and very personable," said Jefferies analyst Sheila Kahyaoglu in a note.
"This was while being a tough negotiator dealing with a diverse set of customers and suppliers and managing the complexity of its diverse customer base."
(Reporting By Allison Lampert in Montreal. Additional reporting by Tim Hepher in Paris, Rajesh Kumar Singh in Chicago and David Shepardson in Washington. Editing by Nick Zieminski)
