Boeing CEO to Step Down Amid Shakeup Following 737 Max Blowout

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By Staff
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Boeing CEO David Calhoun will step down from the embattled plane maker at the end of the year as part of a broad management shakeup Monday after a series of mishaps at one of America’s iconic manufacturers.

Stan Deal, president and CEO of Boeing’s commercial airplanes unit, will retire immediately. Stephanie Pope, the company’s chief operating officer for less than three months, has taken over leadership of the key division.

The company said board Chairman Lawrence Kellner, a former airline chief, won’t stand for re-election in May and will be replaced by a former Qualcomm CEO.

Boeing has been under intense pressure since early January, when a panel blew off a brand-new Alaska Airlines 737 Max. Investigators say bolts that help keep the panel in place were missing after repair work at the Boeing factory.

The Federal Aviation Administration has stepped up its scrutiny of the company, including putting a limit on production of 737s. An FAA audit of Boeing’s 737 factory near Seattle gave the company failing grades on nearly three dozen aspects of production. Boeing has until late May to give FAA a plan for improvement.

Airline executives have expressed their frustration with the company, and even minor incidents involving Boeing jets have attracted extra attention.

Scrutiny of the company has reached its highest level since two Boeing 737 Max jets crashed in 2018 in Indonesia and 2019 in Ethiopia. In all, the crashes killed 346 people.

In a note Monday to employees, Calhoun, 67, called the Alaska Airlines blowout a “watershed moment for Boeing.” that requires a “total commitment to safety and quality at every level of our company.”

“The eyes of the world are on us, and I know we will come through this moment a better company, building on all the learnings we accumulated as we worked together to rebuild Boeing over the last number of years,” he said.

Boeing’s most significant effort to improve quality has been the opening of discussions about bringing Spirit AeroSystems, which builds fuselages for the Max and many parts for that and other Boeing planes, back into the company.

Mistakes made at Spirit, which Boeing spun off nearly 20 years ago, have compounded the company’s problems. Bringing the work of key supplier Spirit back in-house would, in theory, give Boeing more control over the quality of manufacturing key airplane components.

Calhoun said the two companies are making progress in talks “and it’s very important.”

Calhoun said the decision to leave was his. Calhoun had been a Boeing director since 2009 when he became CEO in January 2020, replacing Dennis Muilenburg, who was fired in the aftermath of the Max crashes. In 2021, Boeing’s board raised the mandatory retirement age for CEO to keep Calhoun in the job.

Calhoun oversaw the Max’s return to service after a worldwide grounding that lasted nearly two years, and orders for the plane quickly picked up. Since then, however, a series of manufacturing flaws have delayed deliveries of new 737s and larger 787 Dreamliners to airlines, forcing the carriers to reduce growth plans.

Boeing has not filed its proxy statement for 2023, but previous filings show that Calhoun received compensation valued at more than $64.6 million from 2020 through 2022. Almost all of it was in the form of stock awards, options and bonuses.

Boeing, based in Arlington, Virginia, has lost more than $23 billion since Calhoun took over, although most of that is residual damage from the two crashes. Boeing shares have fallen more than 40% in that time – 24% since the Alaska incident, through trading on Friday.

Last week, Chief Financial Officer Brian West warned that the company burned between $4 billion and $4.5 billion more cash than it expected in the first quarter as it slowed down airplane production after the Alaska Airlines accident.

The company tapped former Qualcomm CEO Steven Mollenkopf to become the new board chairman and lead the search for Calhoun’s replacement.

The growing pressure on Boeing took some of the surprise out of Monday’s news. Citi analyst Jason Gursky called the shakeup “both predictable and thoughtful.”

Some analysts had viewed the fast-rising Pope a likely successor to Calhoun. Gursky said her move to lead commercial airplanes opened the way for an outsider to become CEO.

Pope, 51, was promoted to Boeing chief operating officer only in January. Before that, she was president and CEO of Boeing’s services business, where she dealt with both airline and military customers, and she was chief financial officer of the airplanes division before that.

Richard Aboulafia, a longtime aerospace analyst and now a consultant at AeroDynamic Advisory, said the management shakeup “is likely to be a pivotal moment in Boeing’s history, and probably a very positive one,” but the outcome depends on the next CEO. He said Patrick Shanahan — a former Boeing executive and acting U.S. Defense secretary during the Trump administration who has led Spirit AeroSystems since last fall — would be a “great choice.”

Cai von Rumohr, aerospace analyst at Cowen, said the management changes are “a partial step toward changing its culture to underscore safety and rebuild investor confidence in the company.” He said the fact that Calhoun gave more than eight months’ notice will help the Boeing board make “a considered decision” instead of “a knee-jerk reaction.”

The CEO of Irish airline Ryanair, a major Boeing customer, welcomed the management changes, including the replacement of Deal at the head of commercial airplanes. Michael O’Leary said in a video posted on X that Deal did a good job at Boeing sales, “but he’s not the person to turn around the operation in Seattle, and that’s where most of the problems have been in recent years.”

Shares of The Boeing Co. rose about 1% in afternoon trading.

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AP Business Writer Michelle Chapman contributed to this report from New York.

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