SEATTLE--Boeing CEO Dave Calhoun will step down by year-end in a broad management shakeup brought on by the planemaker's sprawling safety crisis exacerbated by a January mid-air panel blowout on a 737 MAX plane.
In addition, board chair Larry Kellner and Stan Deal, head of the company's commercial planes business, are also leaving as Boeing's board tries to get control of the myriad issues that have shaken confidence in the iconic planemaker over several weeks. The January incident was the most recent in a series of safety crises that have shaken the industry's confidence in the planemaker and hampered its ability to increase production. Calhoun, 66, was brought in as CEO following a pair of crashes in 2018 and 2019 that killed nearly 350 people.
Immediately after the Jan. 5 panel blowout, airline executives expressed support for Calhoun, but those good feelings ebbed after additional production delays and as regulators detailed quality problems at its key manufacturing hub outside Seattle. Some investors said the shake-up would not be enough to address these persistent issues. Boeing shares have lost roughly a quarter of their value since the incident. They closed up 1.4% Monday, off highs hit earlier in the day. "They need more than just a shakeup at the CEO and the chairman of the board level... they're just paralyzed from making decisions," said Robert Pavlik, senior portfolio manager at Dakota Wealth.
"It's going to take a little bit more time for Boeing to get it straightened out." The company is in the midst of federal investigations and U.S. authorities curbed production while Boeing attempts to fix safety and quality problems. It is in talks to buy former subsidiary Spirit AeroSystems to try to get more control over its supply chain. Michael O'Leary, head of Ireland's Ryanair, a top Boeing customer, said Monday the airline welcomed the "much-needed" management changes at Boeing, calling the shakeup good for the planemaker's customers. Calhoun said he made the decision to step down.
"It was me giving them notice that at the end of this year I plan to retire," Calhoun told CNBC. He said he wanted to stay to the end of the year to address quality issues. COO Stephanie Pope has been appointed to lead Boeing Commercial Airplanes, effective Monday. Steve Mollenkopf, former CEO of tech company Qualcomm, has been appointed new chair of the board and is leading the search for the next CEO. A source told Reuters Mollenkopf will join Kellner on planned meetings with major U.S. and foreign airline CEOs. Regulatory scrutiny illuminated troubling issues that caused investors and customers to lose confidence in the iconic manufacturer. A U.S. National Transportation Safety Board report of the Alaska Air incident found that the panel blowout was caused in part because several bolts meant to hold the plug in place were removed and not replaced - and there was no paperwork detailing what happened to those bolts.
The head of the NTSB told lawmakers in early March that the company had not provided records the agency had requested. Following the incident, the FAA curbed Boeing production to 38 jets per month, but CFO Brian West said last week it had not reached that figure. He added the planemaker was burning more cash than expected this quarter. Last week, a group of U.S. airline CEOs sought meetings with Boeing directors without Calhoun to express frustration over the Alaska Airlines accident and management. Analysts and investors called the shakeup positive for Boeing, but stressed that much depends on Calhoun’s successor and changing the company’s culture from the top. Workers' representatives echoed that sentiment, pressing for a greater voice in management as one key union enters contract negotiations.
"Our livelihoods are at stake, and that's precisely why we are seeking a seat on the board," said Jon Holden, president of the International Association of Machinists and Aerospace Workers District 751, which represents Seattle-area workers. "We firmly believe our voice and the voice of the engineers must be heard at the highest level of the company's decision-making process." United said it “continues to root for Boeing’s success and we look forward to working with them during their leadership transition.”
Delta said it "will remain closely engaged with Boeing." Some suggested Spirit AeroSystems CEO Patrick Shanahan, a former Boeing executive and U.S. government official, now tasked with a complex tie-up deal with the U.S. planemaker, was a possible successor to Calhoun. Shanahan's "sole priority remains building a culture of safety" at Spirit, spokesperson Joe Buccino said Monday.
