By Joe Brock, David Shepardson and Tim Hepher
(Reuters) – Boeing said on Friday that the head of its troubled aerospace and defense unit is leaving the company effective immediately, the first management change under new CEO Kelly Ortberg.
Ortberg, who took over in August, said Ted Colbert would leave and that Steve Parker, the unit's chief operating officer, would assume Colbert's responsibilities until a replacement is later named.
“At this critical time, our priority is to restore our customers’ trust and meet the high standards they expect to enable their critical missions around the world,” Ortberg wrote in an email to employees. “Working together, we can and will improve our performance and ensure we deliver on our commitments.”
Boeing's aerospace business has faced significant setbacks, most notably NASA's recent decision to send Boeing's Starliner capsule home without astronauts after years of missteps. Starliner has cost Boeing $1.6 billion in overruns since 2016, according to a Reuters analysis of securities filings.
Colbert's departure comes as Boeing tries to save money by announcing thousands of office workers will be sent home while more than 32,000 employees are on strike.
Boeing also faced major problems after a new Alaska Airlines 737 MAX 9 plane suffered a mid-air emergency in January when it was missing four key bolts.
Boeing agreed in July to plead guilty to a criminal fraud conspiracy charge and pay at least $243.6 million after violating a 2021 deferred prosecution agreement. The government said Boeing knowingly made false statements to the Federal Aviation Administration about key software for the 737 MAX.
The FAA has tightened its oversight of Boeing, banning the company from expanding production of the MAX beyond 38 planes per month until significant quality and safety improvements are made.
Parker was brought in to bolster industry leadership and help repair losing programs with a new operations management role less than two years ago. He had previously led Boeing's bomber and fighter programs and defense plants in St. Louis.
“Boeing has historically been known for our ability to manage programs and we must ensure that this remains a key differentiator for us going forward,” Ortberg wrote in a separate email to employees on Friday.
Ortberg added that he “learned more about the future investments we need to make to be competitive and shape our future, as well as some of the more immediate obstacles engineering faces in terms of quality and execution.”
Colbert, who joined Boeing in 2009 after stints at Citigroup and Ford Motor, took over as chief of Boeing Defense and Space in April 2022 after the previous head of Defense was fired.
Boeing’s defense, aerospace and security division, one of its three major business units, is expected to lose billions of dollars in 2023 and 2022, with executives saying the losses are largely due to cost overruns on fixed-price contracts.
Such contracts offer high margins, but leave defense companies vulnerable to the inflationary pressures that have hit U.S. corporate profits in recent years.
Boeing has lost more than $2 billion on its delayed program to deliver two heavily modified Boeing 747-8s for use as the U.S. presidential jets known as Air Force One.
Boeing shares closed down about 1% on Friday and are down about 41% so far this year.
(Reporting by Utkarsh Shetti in Bengaluru, David Shepardson in Washington and Joe Brock in Los Angeles; Editing by Shounak Dasgupta, Marguerita Choy and Shri Navaratnam)
