Boeing Co. announced sweeping changes to its management with its chief executive officer, head of commercial airplanes and chairman all stepping down as the company grapples with a crisis centered on its most important product, the 737 Max jetliner.
Dave Calhoun, the company’s CEO will leave the company at the end of 2024, while Chairman Larry Kellner will not stand for re-election, Boeing said in a statement Monday. Stan Deal, who leads Boeing’s commercial airplanes division, will also retire immediately. Chief Operating Officer Stephanie Pope will take on Deal’s role, the company said.
Calhoun, a long-time Boeing director and veteran of General Electric Co. and Blackstone Group LP, stepped into the top role in early 2020 as the planemaker was reeling from a global grounding of the 737 Max following two crashes. He is ending a four-year stint as CEO dealing with the fallout from another near-catastrophe with the same model.
“I have been considering for some time, in discussion with our board of directors, the right time for a CEO transition at Boeing,” Calhoun said in a message to employees. “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.”
The changes come amid growing customer frustration with Calhoun and Deal as a crisis centering on the planemaker’s manufacturing quality and safety shows no signs of receding. Kellner, Calhoun and Deal mark the highest-profile departures after a near-catastrophic mid-air incident in January involving its 737 Max jetliner plunged it into an ever-deepening crisis.
Suspicion over whether Calhoun and Deal would keep their jobs started bubbling up after the Alaska Airlines incident, but questions over their leadership reached a crescendo last week when chief executives of major airlines sought to bypass Calhoun and meet with the board of directors directly.
“While someone losing their job is rarely something to celebrate, we think that this is probably a wise move by the Boeing board of directors,” Robert Stallard, an analyst with Vertical Research Partners, told clients Monday. “Many of Boeing’s customers, suppliers and other stakeholders have arguably lost faith in the company, while its relations with the FAA and NTSB are clearly strained.”
A sweeping audit of Boeing and its suppliers by the US Federal Aviation Administration raised concerns about the company’s safety culture, the agency’s top official said last week.
Boeing’s shares rose 4% as of 9:05 a.m. Monday before regular trading in New York. The stock had tumbled 28% this year through March 22, the worst performer in the Dow Jones Industrial Average.
Production Struggle
On Calhoun’s watch, Boeing returned the 737 Max to commercial service in 2020 following a lengthy global grounding in the wake of two accidents in 2018 and 2019. But the planemaker has struggled to raise production levels in the wake of Covid pandemic as it grappled with worker turnover and with a series of quality lapses within its factories and those of suppliers.
Now Boeing faces a makeover of its senior leadership team and board as it works to re-establish quality controls and win back consumer and regulators trust.
Former Qualcomm CEO Steve Mollenkopf, who was elected to replace Kellner as chairman of the board, will lead the search for Calhoun’s successor. Calhoun told CNBC in an interview that he’d be involved in the search for his replacement.
“A change in senior management is a good first step in addressing the company’s myriad of problems, but the major piece that is missing from the puzzle is who will be the next CEO?” Stallard said. “It will require someone with pedigree and patience, as fixing Boeing is probably a multiyear non-linear journey.”
