Boeing CEO to step down as 737 Max crisis weighs on aerospace giant

Boeing CEO to step down as 737 Max crisis weighs on aerospace giant

Boeing CEO Dave Calhoun speaks to reporters as he departs from a meeting in Senator Mark Warner’s (D-VA) office on Capitol Hill on January 24, 2024 in Washington, DC.

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Boeing CEO Dave Calhoun will step down at the end of 2024 as part of a major management shakeup at the troubled aerospace giant.

Larry Kellner, CEO, will not run for re-election at Boeing’s annual meeting in May, Boeing said Monday. His successor as chairman will be Steve Mollenkopf, who has been a Boeing director since 2020 and is a former CEO of Qualcomm. Mollenkopf will lead the board in selecting a new CEO, Boeing said.

And Stan Deal, president and CEO of Boeing’s commercial aircraft division, is leaving the company effective immediately. Taking his place is Stephanie Pope, who recently became Boeing’s chief operating officer after previously leading Boeing Global Services.

The departures come as airlines and regulators increasingly call for major changes at the company following numerous quality and manufacturing defects on Boeing planes. Investigations intensified after an accident on January 5 in which a door plug from a nearly new Boeing 737 Max exploded after nine minutes Alaska Airlines Flight.

“As you all know, the Alaska Airlines Flight 1282 accident was a turning point for Boeing,” Calhoun wrote to employees on Monday. “We must continue to respond to this accident with humility and complete transparency. We must also instill a comprehensive commitment to safety and quality at all levels of our organization.”

“The eyes of the world are on us, and I know we will emerge from this moment as a better company, building on all the lessons we have learned as we worked together to rebuild Boeing over the last few years,” he wrote.

Calhoun said in an interview with CNBC on Monday that the decision to resign was “100%” his own decision.

“We have another mountain to climb,” Calhoun said. “Let us not avoid the call to action. Let’s not avoid the changes we need to make in our factory. Let’s not avoid the need to slow down and let the supply chain catch up.”

Calhoun, a Boeing board member for more than a decade, took the top job there in January 2020 after the company ousted former CEO Dennis Muilenburg over his handling of the aftermath of two fatal 737 Max crashes.

For months, Calhoun has been promising investors, airline customers and the public that Boeing will get its myriad quality problems under control. The Federal Aviation Administration has tightened oversight of Boeing, and the agency’s administrator, Mike Whitaker, said after the Alaska Airlines accident that Boeing would not be allowed to increase 737 production until the FAA was satisfied with the company’s quality control.

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Boeing’s share price compared to the S&P 500

Boeing’s production problems have delayed deliveries of new planes to customers and hampered growth plans. CEOs of some of the company’s largest customers, including United Airlines, Southwest Airlines And American Airlines have publicly complained about the delays.

Ryanair, Boeing’s largest airline customer in Europe, said in a statement on Monday that it welcomed the management changes.

“Stan Deal has done great sales work for Boeing for many years, but he is not the person who can turn around the Seattle operation, which is where the most problems have been in recent years,” said Ryanair CEO Michael O’Leary a video posted on the social media platform X.

United CEO Scott Kirby said earlier this month that he had asked Boeing to stop producing as-yet-uncertified Max 10 planes for the company because it was not clear when the FAA would clear those planes for flight.

Last week, airline CEOs began scheduling meetings with Boeing directors to express their displeasure over the lack of manufacturing quality controls and lower-than-expected production of 737 Max planes. Kellner and one or more other board members should take part in the meetings.

Also last week, Boeing Chief Financial Officer Brian West said at an industry conference that Boeing will burn more cash than expected due to limited 737 Max production.

Boeing shares rose 1.4% on Monday following the announcements. Its shares have fallen more than 26% so far this year.

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2024-03-25 20:45:18