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The head of Boeing’s defense business is leaving the company after years of losses from fixed-price contracts and a disaster involving a spacecraft that carried two astronauts into space.
CEO Kelly Ortberg said in a memo to employees Friday that Ted Colbert, who has run Boeing’s Defense, Space and Security division since 2022, will leave the company “effective immediately.” Boeing aircraft A spokesperson said Colbert has decided to leave.
Colbert’s departure is the first change in the company’s executive ranks since Ortberg took over the top job last month from Dave Calhoun. Steve Parker, the defense business’s chief executive, will take the lead on an interim basis until the company names a permanent successor to Colbert.
Boeing’s defense business has reported losses in 2022, 2023 and the second quarter of 2024. The division, which works on fixed-price contracts for several major programs, accounts for just 15 percent of revenue but has accumulated nearly $14 billion in costs over the past decade. Jefferies analyst Sheila Kahyaoglu estimates that fixed-price programs could cost $2.6 billion in cash this year and $1.8 billion in 2025.
Programs include the KC-46 refueling aircraft, the Air Force T-7A trainer and the MQ-25 refueling drone, as well as the US president’s Air Force One and the CST-100 Starliner spacecraft built to carry astronauts to the International Space Station.
Boeing suffered a blow last month when NASA decided to abandon plans to return astronauts Sunita Williams and Barry Wilmore to Earth on a Boeing spacecraft. Due to technical issues, the agency now plans to bring the pair home in February. on SpaceX spacecraft.
The company’s problems aren’t limited to its defense business. Boeing has been bleeding cash this year, the result of slowing commercial aircraft production as it tries to improve manufacturing quality after a series of crises. The company has been under scrutiny from all sides since January, when a door panel blew off a commercial jet mid-flight, and its stock has fallen nearly 40 percent this year.
The company’s ability to generate cash depends on delivering planes to airlines, but that is once again in doubt after 33,000 union workers walked out quit job Last week, Boeing sought better pay and benefits. Boeing is implementing furloughs and hiring freezes to save cash.
Credit rating firms say Boeing’s ability to generate cash is a key factor in whether they keep the company’s investment-grade rating or downgrade it to junk. The company is under pressure to raise more cash by selling shares, which could amount to as much as $10 billion.
