April 25th, 2024

Boeing CEO to exit in broader management shakeup as manufacturing issues plague storied plane maker

By David Koenig, The Associated Press on March 25, 2024.

FILE - Then-Nielsen Company CEO David Calhoun, center, watches progress as he waits for the company's IPO to begin trading, Jan. 26, 2011, on the floor of the New York Stock Exchange. Calhoun will be stepping down at the end of the year from the top job at Boeing, which is under pressure from major airlines wanting to know how the company plans to fix problems in the manufacturing of its planes. (AP Photo/Richard Drew, File)

Boeing CEO David Calhoun will step down from the embattled plane maker at the end of the year as part of a broad management shakeup after a series of mishaps at one of America’s iconic manufacturers.

Stan Deal, president and CEO of Boeing’s commercial airplanes unit, will retire immediately. Stephanie Pope, the company’s chief operating officer for less than three months, has taken over leadership of the key division.

The company said board Chairman Lawrence Kellner, a former airline chief, won’t stand for re-election in May and will be replaced by a former Qualcomm CEO.

Boeing has been under intense pressure since early January, when a panel blew off a brand-new Alaska Airlines 737 Max. Investigators say bolts that help keep the panel in place were missing after repair work at the Boeing factory.

The Federal Aviation Administration has stepped up its scrutiny of the company, including putting a limit on production of 737s. An FAA audit of Boeing’s 737 factory near Seattle gave the company failing grades on nearly three dozen aspects of production.

Airline executives have expressed their frustration with the company, and even minor incidents involving Boeing jets have attracted extra attention.

Fallout from the Jan. 5 blowout has raised scrutiny of Boeing to its highest level since two Boeing 737 Max jets crashed in 2018 in Indonesia and 2019 in Ethiopia. In all, the crashes killed 346 people.

In a note Monday to employees, Calhoun, 67, called the accident “a watershed moment for Boeing.” that requires “a total commitment to safety and quality at every level of our company.”

“The eyes of the world are on us, and I know we will come through this moment a better company, building on all the learnings we accumulated as we worked together to rebuild Boeing over the last number of years,” he said.

Boeing’s most significant effort to improve quality has the opening of 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.

Calhoun said the two companies are making progress in talks “and it’s very important.”

Calhoun said the decision to leave was his. Calhoun was a Boeing director 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.

The company has chosen former Qualcomm CEO Steven Mollenkopf to become the new board chairman and to lead the search for Calhoun’s replacement.

Richard Aboulafia, a longtime aerospace analyst and now a consultant at AeroDynamic Advisory, said the management shakeup “is likely to be a pivotal moment in Boeing’s history, and probably a very positive one,” but the outcome depends on the next CEO. He said Patrick Shanahan, a former Boeing executive and acting U.S. Defense secretary who has led Spirit AeroSystems since last fall, would be “a great choice.”

Cai von Rumohr, aerospace analyst at Cowen, said the management changes are “a partial step toward changing its culture to underscore safety and rebuild investor confidence in the company.” He said the fact that Calhoun gave more than eight months’ notice will help the Boeing board make “a considered decision” instead of “a knee-jerk reaction.”

Pope, the new head of the commercial-airplanes business, was promoted to Boeing chief operating officer only in January. Before that, she was president and CEO of Boeing’s services business and chief financial officer of the airplanes division.

Shares of The Boeing Co. rose about 1% in early trading.

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AP Business Writer Michelle Chapman contributed to this report from New York.

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