By Joe Brock, David Shepardson, and Tim Heffer
Boeing Co said Friday the head of its embattled space and defense unit will leave the company immediately, in the first management shakeup under new CEO Kelly Ortberg.
Ortberg, who took over in August, said Ted Colbert will step down and Steve Parker, the unit’s chief operating officer, will assume Colbert’s responsibilities until a replacement is named at a later date.
“At this critical time, our priority is to restore our customers’ trust and meet the high standards they expect from us to enable them to perform their critical missions around the world,” Ortberg wrote in an email to employees. “By working together, we can improve our performance and ensure we meet our commitments.”
Boeing’s space business has suffered major setbacks, most notably NASA’s recent decision to send Boeing’s Starliner capsule back to Earth without astronauts after years of missteps. Starliner has cost Boeing $1.6 billion in overruns since 2016, according to a Reuters analysis of financial filings.
Colbert’s departure comes as Boeing is trying to save money by announcing thousands of layoffs amid a strike by more than 32,000 of its workers.
Boeing also faced major problems after Alaska Airlines’ new 737 Max 9 suffered a mid-air emergency in January after losing four key rivets.
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 FAA about a key program for the 737 Max.
The Federal Aviation Administration has tightened controls on Boeing and barred it from expanding Max production to more than 38 planes a month until it makes significant improvements in quality and safety.
Parker was appointed to support industrial leadership and help turn around loss-making programs in a new operating management role less than two years ago. He previously led Boeing’s bomber and fighter programs as well as its defense plants in St. Louis.
“Historically, Boeing has had a superior reputation for our ability to manage programs, and we need to ensure that this will remain a 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 more immediate hurdles facing engineering in terms of quality and first-time execution.”
Colbert, who joined Boeing in 2009 after working at Citigroup and Ford Motor Co. (NYSE:F), took the reins at Boeing Defense and Space in April 2022 after the ouster of the previous defense chief.
Boeing’s Defense, Space & Security unit, one of its three main businesses, lost billions of dollars in 2023 and 2022, which executives attributed largely to cost overruns on fixed-price contracts.
Such contracts have high profit margins but leave defense companies vulnerable to inflationary pressures that have hurt U.S. corporate profits in recent years.
Boeing has lost more than $2 billion due to delays in its program to deliver two Boeing 747-8 aircraft that have been heavily modified for use as the US presidential aircraft known as Air Force One. The 747-8 is designed to serve as the White House in the air and is capable of flying in the worst-case scenarios, such as nuclear war.
Boeing shares fell about 1% in late trading Friday, and have lost about 41% so far this year.