Aerospace giant Boeing is reeling from a string of setbacks, and the latest blow comes from its defense division. In a surprise move, Ted Colbert, the 15-year veteran who headed Boeing Defense, Space & Security, is stepping down, effective immediately. This development comes hot on the heels of CEO Dave Calhoun’s retirement announcement, and the appointment of Robert K. “Kelly” Ortberg as his successor.
The news of Colbert’s departure was quietly disclosed in a filing with the Securities and Exchange Commission, with no fanfare from Boeing’s end. Instead, the company chose to highlight the maiden flight of a new British E-7 Wedgetail AWACS plane, built by its defense arm. This lack of transparency has raised eyebrows, particularly given the struggles faced by Boeing’s defense and space businesses.
Under Colbert’s leadership, the division’s revenues have stagnated, dipping 4.5% last year, while operating earnings plummeted from a $2.6 billion profit to a $1.8 billion loss. The unit’s woes are compounded by NASA’s criticism of Boeing’s inability to build reliable spaceships due to a shortage of skilled workers.
In the short term, Steve Parker, Colbert’s chief operating officer, will take the reins on an interim basis. However, this stopgap measure does little to instill confidence in investors, who are looking for a more permanent solution to the division’s problems. One potential fix could be to sell off the defense and space business, but Boeing’s decision to replace Colbert without a clear succession plan suggests this option may be off the table.
As Boeing searches for a new leader to turn around its struggling defense division, investors are left to wonder when the company will finally get its house in order. With years of underperformance to rectify, it’s clear that a quick fix is unlikely. Patience will be required, and investors would do well to exercise caution before buying into Boeing’s stock.
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