By Joe Brock, David Shepardson and Tim Hepher
(Reuters) – Boeing (NYSE:) said on Friday the head of its troubled space and defense unit will leave the company immediately, in the first management change under new CEO Kelly Ortberg.
Ortberg, who took over in August, said Ted Colbert would leave and Steve Parker, the unit’s chief operating officer, would assume Colbert’s responsibilities until a replacement is named at a later date.
“At this critical moment, our priority is to restore our customers’ trust and meet the high standards they expect from us to enable their critical missions around the world,” Ortberg wrote in an email to employees. “By working together we can and will improve our performance and ensure we meet our commitments.”
Boeing’s space operations have suffered 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, a Reuters analysis of securities filings shows.
Colbert’s departure comes as Boeing has tried to save money by announcing furloughs for thousands of white-collar workers amid a strike by more than 32,000 of its workers.
Boeing has also faced significant problems after a new Alaska Airlines 737 MAX 9 suffered a mid-air emergency in January after four key bolts were missing.
Boeing agreed in July to plead guilty to a criminal fraud conspiracy charge and to pay at least $243.6 million after violating a 2021 deferred prosecution agreement. The government said Boeing knowingly made false statements before the Federal Aviation Administration regarding key software for the 737 MAX.
The FAA has tightened 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 just under two years ago to strengthen industry leadership and help resolve loss-making programs with a new operations management role. He had previously led Boeing’s bomber and fighter programs, as well as defense plants in St. Louis.
“Historically, Boeing has had a superior reputation 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 define our future, as well as some of the near-term hurdles engineering faces in initial quality and execution.”
Colbert, who joined Boeing in 2009 after stints at Citigroup and Ford Motor (NYSE:), took over the reins at Boeing Defense and Space in April 2022 after the former defense chief was ousted.
Boeing’s defense, aerospace and security unit, one of its three major business units, has lost billions of dollars in 2023 and 2022, which executives attribute in large part to cost overruns on fixed-price contracts.
Such contracts have high margins but leave defense contractors vulnerable to the inflationary pressures that have eroded U.S. corporate profits in recent years.
Boeing has lost more than $2 billion on its delayed program to deliver two heavily converted Boeing 747-8s for use as a US presidential plane known as Air Force One. The 747-8s are designed as a White House in the sky that can fly in the worst security scenarios, such as nuclear war.
Shares of Boeing fell about 1% on Friday and have lost about 41% so far this year.
