April 24, 2024

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David Calhoun, CEO of Boeing, will step down from the management reshuffle

David Calhoun, CEO of Boeing, will step down from the management reshuffle

Boeing Co. suddenly said Monday it was overhauling its leadership amid the biggest safety crisis in years, announcing sweeping changes that included the departure of its CEO, Dave Calhoun, at the end of the year.

The plane maker has come under increasing pressure from regulators, airlines and passengers as the company has struggled to respond to the fallout from an accident in early January when a commission blew up a Boeing 737 Max 9 in mid-air during an Alaska Airlines flight.

The incident upset the company, viewed by many as a valued American institution, and renewed concerns about its commitment to safety and quality five years after two 737 MAX 8 crashes killed nearly 350 people.

In addition to Mr. Calhoun's departure, Stan Dale, head of the division that builds aircraft for airlines and other commercial customers, will retire effective immediately. He will be replaced by Stephanie Pope, Boeing's chief operating officer He said in a statement.

Boeing also announced that its president, Larry Kellner, will not run for re-election. The board of directors has elected Steve Mollenkopf, an electrical engineer by training and former CEO of Qualcomm, as its new chairman. In this role, he will lead the selection of Boeing's next CEO.

The Federal Aviation Administration, which regulates the aircraft industry, grounded the 737 Max 9 planes across the United States after the Alaska Airlines incident. When the agency allowed the planes to fly again in late January, it also imposed restrictions on a planned production ramp-up of Boeing's MAX jets, thwarting the company's latest attempt to better compete with European rival Airbus.

The FAA's recent review of Boeing Max production found dozens of lapses. The agency gave Boeing 90 days to address its issues. The Justice Department also contacted passengers on the Alaska Airlines flight, informing them that they may be a “potential victim of a crime,” according to a copy of one such notice.

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Airline leaders publicly expressed their frustration with the manufacturer after the incident. The CEOs of several major U.S. airlines are scheduled to meet with Mr. Kellner and other board members this week, according to a person familiar with the plans. Mr. Calhoun was a supporter of those meetings but would not attend them. Mr. Mollenkopf will now participate.

In a memo to employees on Monday announcing the leadership changes, Mr. Calhoun said the Jan. 5 incident involving Alaska Airlines Flight 1282 “was a watershed moment for Boeing.”

“The eyes of the world are on us, and I know that we will emerge from this moment into a better company, based on all the lessons we have accumulated as we worked together to rebuild Boeing over the past years,” he said.

Discussions about changes in the company's leadership have continued for some time. Late last yearthe company appointed Ms. Pope as chief operating officer, a move that was seen as positioning her to take over from Mr. Calhoun within a few years.

Ms. Pope has seen a relatively rapid rise in recent years. In early 2022, she was promoted from her position as chief financial officer of the Commercial Airplanes division to president of Boeing Global Services, which provides after-sales support to customers.

Mr. Calhoun said in an interview with CNBC that he would be part of the search for his successor. He also described all leadership changes, including his own, as “very intentional.”

“Why now? I’m entering my fifth year,” he said. “At the end of this year, I will be almost 68 years old. I've always said to the board — and the board has been very willing — that I will give them plenty of notice so they can understand and plan for succession.

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The announcement came Monday ahead of the company's annual meeting, expected in May, during which board members will be elected.

Boeing's board of directors appointed Mr. Calhoun as CEO after firing his predecessor, Dennis A. Muilenburg, who led the company through the crashes in 2018 and 2019. Mr. Calhoun, who took over leadership of the company in January 2020, has been a member of the manufacturer's board of directors since 2009. He spent most of his career at General Electric, where he was previously a vice chairman and headed the company's infrastructure division.

Adding to the astonishment, in 2021 Boeing's board raised the mandatory CEO retirement age to 70, from 65, to allow Mr. Calhoun to remain in his position until April 2028.

The leadership change raises pressing questions about Boeing's succession planning. Mrs. Pope now has the big task of trying to reform the commercial aircraft division. The company may look to hire a senior executive from outside the company, but the number of people with the experience needed to lead an engineering and manufacturing company with more than 170,000 employees is very limited, analysts said.

Since the door seal incident in January, Mr. Calhoun has repeatedly emphasized the company's commitment to quality and safety. But the pressure continued to mount on him and Boeing. The National Transportation Safety Board's initial report on the accident said four screws that were supposed to hold the door seal in place appeared to be missing before the plane got off the plane. She added that the bolts were removed at Boeing's factory in Renton, Washington, where the 737 MAX is manufactured, so that the damaged bolts could be repaired.

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The company's announcement last February that the head of the 737 MAX program was leaving the company was not enough to address the growing criticism. Some travelers are even becoming wary of the company's most popular aircraft series, the 737 MAX. After the Alaska Airlines incident, flight booking service Kayak said it saw a significant spike in users filtering out flights that were scheduled to be on 737 MAX planes.

One union leader, who represents more than 19,000 engineers, scientists, pilots and other employees at Boeing and its supplier Spirit AeroSystems, said the plane manufacturer's management needs to make more far-reaching changes to restore its credibility.

“The problems in Boeing’s executive suite are systemic,” union leader Ray Goforth, executive director of the Aerospace Professional Engineering Employees Association, said in a statement. “Nothing will change for the better without the company’s leadership acknowledging its failures and fully committing to fixing them.”

Southwest Airlines, a major Boeing customer that only flies the company's planes, said in a statement that it is “committed to working with Boeing's new leadership team to ensure that every aircraft meets the highest standards of quality and safety.” Delta Air Lines and United Airlines issued similar statements.

Boeing shares rose about 1 percent on Monday morning after the company announced changes in its management.