Boeing abruptly announced Monday that it is undergoing an overhaul of its leadership amid its most serious safety crisis in years, with major changes including CEO Dave Calhoun stepping down at the end of the year. announced personnel changes.
The aircraft manufacturer is struggling to respond to an accident in early January when a panel of a Boeing 737 Max 9 plane was blown off mid-air during an Alaska Airlines flight, and has faced criticism from regulators, airlines and passengers. Pressure is mounting.
The incident has shaken the company, considered by many to be a treasured American institution, and comes five years after two crashes of its 737 Max 8 planes killed a total of nearly 350 people. There was a renewed concern about gender and quality initiatives.
In addition to Mr. Calhoun's resignation, Boeing announced that Stan Diehl, head of the company's division that manufactures aircraft for airlines and other commercial customers, is retiring immediately. He will be succeeded by Stephanie Pope, Boeing's chief operating officer, the company announced in a statement.
Boeing also said Chairman Larry Kellner will not run for re-election. This weekend, the board elected Steve Molenkopf, an electrical engineer by training and former CEO of Qualcomm, as its new chairman. In his role, he will lead the process to select Boeing's next chief executive officer.
The Federal Aviation Administration, which regulates the airline, grounded its 737 Max 9 aircraft across the United States after the Alaska Airlines incident. When the agency allows the plane to return to service at the end of January, it also imposes limits on Boeing's planned production increase of Max planes, the company's latest move to better compete with European rival Airbus. thwarted the attempt.
A recent FAA audit of Boeing's Max production found dozens of deficiencies. The agency gave Boeing 90 days, or until late May, to address the issue. The Justice Department also contacted Alaska Airlines passengers to notify them that they “may be victims of a crime,” according to a copy of one notice.
Airlines leaders publicly expressed their dissatisfaction with the manufacturer after the incident. Chief executives from several of the largest U.S. carriers are scheduled to meet with Kellner and other board members this week, according to people familiar with the company's plans. Mr. Calhoun supported those meetings, but did not intend to attend them. Mr. Molenkopf will also participate in the future.
Prior to those meetings, Boeing's board held a conference call this weekend to approve the management changes announced Monday, the person said.
In a memo to employees announcing the changes Monday, Calhoun said the Jan. 5 disaster of Alaska Airlines Flight 1282 “was a turning point for Boeing.”
“The world's attention is on us, and we are determined to take this moment as a better company, building on all the learnings we have accumulated over the past years as we helped rebuild Boeing. I am confident that we can overcome this,” he said.
Discussions regarding a change in the company's management have been ongoing for some time. The company named Ms. Pope as chief operating officer late last year, with the expectation that she would succeed Mr. Calhoun within the next few years.
Ms. Pope has enjoyed a relatively rapid rise in recent years. In early 2022, she was promoted from her role as chief financial officer of the commercial aircraft division to head of Boeing Global Services, which provides aftermarket support to customers.
In an interview with CNBC, Calhoun said he would participate in the search for his successor. He also characterized all leadership changes, including his own, as “very planned.”
“Why now? We're in our fifth year.” “I will be approaching 68 years of age at the end of this year. I have always said to the board that we are very prepared, but that we need sufficient notice so that the board can understand and plan for succession.” I'm going to give you.”
Monday's announcement was made ahead of the company's annual general meeting scheduled for May, when board members will be elected.
Boeing's board appointed Mr. Calhoun as CEO after firing his predecessor, Dennis A. Muilenburg, who led the company through the 2018 and 2019 crashes. Mr. Calhoun, who assumed the leadership of the company in January 2020, had served as a member of the company's board of directors since 2009. He spent much of his career at General Electric Co., where he previously served as vice chairman and head of infrastructure. When he took over as Boeing's leader, he told employees the company would “be better.”
Calhoun's departure is all the more surprising because Boeing's board raised the retirement age for chief executives from 65 to 70 in 2021, allowing Calhoun to remain in the job until April 2028. is.
The leadership shakeup is raising urgent questions about Boeing's succession plans. Pope now has the big job of turning around the commercial aviation sector. Analysts say the company may be considering bringing in executives from outside, 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. states that it is limited.
Several Wall Street analysts welcomed the changes and the plan to keep Mr. Calhoun in the role through the end of the year. Morningstar analyst Nicholas Owens said in a note to clients Monday that his resignation, along with Diehl's, was “ultimately necessary.”
“For Boeing's key stakeholders, including customers, investors, board members, and perhaps the machinists' union, their tenure has been marked by a series of manufacturing defects revealed in the 737 Max and 787 lineups since 2019. “They are too closely tied to their leadership responsibilities to continue into 2019 and move on to the next chapter,” he said.
Since the door plug incident in January, Calhoun has reiterated the company's commitment to quality and safety. But pressure on him and Boeing continued to mount. The National Transportation Safety Board's preliminary report on the accident said four bolts that were supposed to hold the door plug in place appeared to be missing before it came off the plane. The bolt was removed to repair a damaged rivet at the Boeing factory in Renton, Washington, where the 737 MAX is manufactured, the company said.
The company announced in February that the head of the 737 Max program would be stepping down, but it did little to address mounting criticism. Even some travelers are becoming wary of the airline's most popular series of aircraft, the 737 Max. After the Alaska Airlines crash, flight booking service Kayak announced a significant increase in users opting out of scheduled flights on 737 Max planes.
One union leader representing more than 19,000 engineers, scientists, pilots and other employees at Boeing Co. and its supplier Spirit AeroSystems Inc. says the plane maker's management needs to rebuild trust. , said broader changes needed to be made.
“Boeing's boardroom problems are systemic,” Ray Goforth, a union leader and executive director of the Society of Aerospace Professional Engineers, said in a statement. “Nothing will change for the better unless company leaders admit their mistakes and work hard to fix them.”
Southwest Airlines, a large Boeing customer that operates only the company's aircraft, said in a statement that it will work with Boeing's new management team to ensure each aircraft meets the highest quality and safety standards. I will make every effort to do so.” Delta Air Lines and United Airlines issued similar statements.
Boeing stock rose about 1% Monday afternoon after the company announced management changes.