Boeing CEO to step down in management shake-up as manufacturing issues plague storied plane maker
A leadership shake-up at Boeing, including news Monday that its top executive plans to step down, highlights the difficult path facing the iconic aircraft manufacturer as it tries to navigate through yet another safety crisis.
CEO David Calhoun, who has been under unrelenting pressure since a panel blew off a Boeing 737 Max jetliner during a January flight, said he would retire at the end of the year. He said the decision to leave was his and the timing would allow for an orderly transition.
The head of the company’s commercial airplanes unit, Stan Deal, is already out. Boeing said he was replaced immediately by Stephanie Pope, a fast-rising insider who just became chief operating officer on Jan. 1.
In a third high-profile decision, board Chairman Lawrence Kellner, a former Continental Airlines chief, won’t stand for reelection in May, Boeing said. A former Qualcomm CEO who was appointed to succeed Kellner will lead the search for Calhoun’s replacement.
Calhoun was on the Boeing board during its worst time — the crashes of two 737 Max planes in 2018 and 2019 that killed 346 people. He leaves with the company under intense scrutiny from regulators and lawmakers since a door-plug panel blew off a brand-new Alaska Airlines Max jet in midflight on Jan. 5.
Investigators say bolts that help keep the panel in place were missing after repair work at the Boeing factory.
The Federal Aviation Administration reviewed Boeing’s 737 factory near Seattle and gave the company failing grades on nearly three dozen aspects of production. The company has until late May to give the FAA a plan for improvement. In the meantime, the federal agency is limiting production of 737s.
The FBI recently told passengers from the Alaska Airlines flight that they might be victims of a crime.
Airline executives have expressed their frustration with Boeing, and even minor incidents involving jets the company produced are attracting extra attention.
In a note to employees on Monday, Calhoun 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.”
Boeing’s most significant effort to improve quality has been opening 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 the supplier back in-house would, in theory, give Boeing more control over the quality of manufacturing key airplane components.
Calhoun said the two companies were making progress in talks “and it’s very important.”
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.
He 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.
The company, based in Arlington, Virginia, has lost more than $23 billion since Calhoun took over, although most of that is residual damage from the two Max crashes in Indonesia and Ethiopia. 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 Boeing 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.
Some Boeing critics in Congress said the shake-up in the top ranks is not enough and that Boeing needs to worry more about safety and less about producing more airplanes. That view is shared by a leading Boeing whistleblower.
“It is going to be hard to fix the culture, but the people at Boeing (who build planes) are capable of it,” said Ed Pierson, a former manager at Boeing’s 737 factory who is now director of a safety foundation. “Those employees need to feel valued and supported instead of (management) just directing them and pressuring them to produce planes.”
