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Boeing Starts New Year With a New CEO Trying to Solve Big Problems

Bill Koenig
By Bill Koenig Senior Editor, SME Media

COMMENTARY

Boeing Co. is looking for a new start with a new CEO trying to resolve big problems – getting the 737 Max back into the air and repairing relations with regulators.

The aircraft maker said Dec. 23 it fired chief Dennis Muilenburg. David Calhoun, who became chairman in October, was named the new president and CEO, effective Jan. 13. Lawrence Kellner, a board member and former CEO of Continental Airlines, took over as non-executive chairman.

Muilenburg, who was born in 1964 and was a Boeing lifer, ultimately was done in by the grounding of the 737 Max. It’s one of Boeing’s most important aircraft. Major customers such as Southwest Airlines and United Airlines depend on it.

Two 737 Max crashes killed 346 people, spurring regulators to remove the plane from the skies. Muilenburg tried to project calm and concern – that Boeing took the situation seriously and was moving to make software fixes to ensure safety.

The executive didn’t convince regulators, congressmen, senators and – in the end – Boeing’s board that he was the man to get the job done. The board signaled in October that Muilenburg was in trouble. That’s when it stripped the chairman title from Muilenburg. That resulted in Calhoun becoming chairman.

In the release announcing the move, Calhoun was quoted as saying the board had “full confidence” in Muilenburg. That didn’t last.

Things got worse at the end of October. Muilenburg testified before House and Senate panels about the 737 Max. That didn’t go well. The executive was grilled, including questions about why he didn’t forgo his compensation until the 737 Max problem was solved.

Finally, Muilenburg kept talking about trying to get the 737 Max back in the air by the end of 2019. The CEO had to take that off the table last month. Boeing now is suspending 737 Max production pending recertification of the aircraft. The move likely will have a major impact on Boeing suppliers.

The end for Muilenburg came just days later.

Now it’s up to Calhoun to repair the damage to the company’s reputation and its relations with regulators, customers, and the flying public.

Calhoun’s Challenges

The day he was named the incoming CEO, Calhoun called Steve Dickson, administrator of the U.S. Federal Aviation Administration, CNBC reported. The message: Boeing wants to be regulated, according to CNBC, which cited people familiar with the conversation it didn’t identify.

Calhoun, 62, is a former executive of General Electric Co. who also has a private equity background.  He had been on Boeing’s board for 10 years. He’s not a fresh face. Boeing critics likely will cite that fact as the company tries to rebuild trust.

The 737 Max often is referred to as the biggest crisis in Boeing’s history. The company’s way of doing business has been called into question.

The impact continues to grow. Airbus delivered 863 aircraft in 2019, surpassing Boeing for the first time since 2011, Reuters reported, citing airport and tracking sources. One of the main reasons was Boeing’s 737 Max troubles.

It may be a new year. But Boeing’s new CEO has familiar problems. Calhoun now has the chance to demonstrate he can address them better than his predecessor.

 

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