Boeing's defense chief is leaving, company says

By Bill Peters

'At this critical juncture, our priority is to restore the trust of our customers,' new Kelly Ortberg CEO says

Boeing Co. said that Ted Colbert - its head of defense, space and security - would leave the company on Friday, as the beleaguered aviation giant's new chief executive aims for big changes following a string of safety concerns and a deep slump in its financials.

Kelly Ortberg, who became Boeing's (BA) new CEO in August, said in a message to employees that Steve Parker would temporarily oversee the defense, space and security segment until the company could find a permanent replacement for Colbert, a 15-year veteran at Boeing.

"At this critical juncture, our priority is to restore the trust of our customers and meet the high standards they expect of us to enable their critical missions around the world," Ortberg said in his message.

"Working together we can and will improve our performance and ensure we deliver on our commitments," he continued.

The move in the defense segment - which develops military aircraft, weapons and surveillance systems - comes as Boeing tries to rebuild its reputation following a string of safety concerns in its commercial-jet business.

Revenue in Boeing's defense segment slipped in the second quarter, and executives expressed disappointment in those results. In recent weeks, they have said the segment was dealing with cost pressures related to fixed-price development programs and "disruption" across its fighter-jet programs, as it winds down its F-18 program and ramps up the F-15.

Brian West, Boeing's chief financial officer, said in July that the threat of military conflicts would still translate to demand.

"The demand for these products continue to be very strong, supported by the geopolitical threat environment confronting our nation and our allies," he said.

During a conference last week, West said that Boeing needed to "derisk" its defense business, adding that the third quarter would likely be "another challenging quarter" with negative margins.

Shares of Boeing were up 0.2% after hours. As of Friday's market close, they had fallen 22.5% over the past year.

-Bill Peters

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09-20-24 1831ET

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