Boeing suddenly announced on Monday that it was overhauling its leadership amid its most significant safety crisis in years, announcing sweeping changes that included the departure of its chief executive, Dave Calhoun, at the end of the year.
The planemaker is under increasing pressure from regulators, airlines and passengers as the company struggles to respond to the fallout from an incident in early January in which a panel blew a Boeing 737 Max 9 plane mid-air during an Alaska Airlines flight.
The incident rocked the company, seen by many as a cherished American institution, and renewed concerns about its commitment to safety and quality five years after two 737 Max 8 plane crashes that killed a total of nearly 350 people.
In addition to Mr. Calhoun’s departure, Stan Deal, the head of the division that builds planes for airlines and other commercial customers, will retire immediately. He will be replaced by Stephanie Pope, Boeing’s chief operating officer, the company said in a statement.
Boeing also announced that its chairman, Larry Kellner, will not run for re-election. The board elected Steve Mollenkopf, an electrical engineer by training and former Qualcomm CEO, as its new chairman. In this role, he will lead the process of selecting Boeing’s next CEO.
The Federal Aviation Administration, which regulates the company, grounded 737 Max 9 planes across the United States after the Alaska Airlines incident. When the agency cleared the planes to fly again in late January, it also imposed restrictions on a planned increase in production of Boeing’s Max planes, thwarting the company’s latest effort to better compete with European rival Airbus.
A recent FAA audit of Boeing’s production Max found dozens of errors. The agency gave Boeing 90 days to address its problems. The Department of Justice has also contacted passengers on the Alaska Airlines flight, informing them that they may be “potential victims of crime,” according to a copy of one such notice.
Airline leaders publicly expressed frustration with the manufacturer after the incident. The chief executives of several major carriers in the United States were to meet with Mr. Kellner and other board members this week, according to a person familiar with the company’s plans. Mr. Calhoun supported these meetings but was not going to attend them. Mr. Mollenkopf will now participate.
Boeing’s board met this weekend to approve the leadership changes announced Monday, according to the person.
In a memo to employees Monday announcing the changes, Mr. Calhoun said the Jan. 5 incident involving Alaska Airlines Flight 1282 “was a watershed moment for Boeing.”
“The eyes of the world are on us, and I know that right now we’re going to have a better company, building on all the knowledge we’ve accumulated as we’ve worked together to rebuild Boeing over the last few years,” he said.
Discussions about changes in the company’s leadership have been ongoing for some time. Late last year, the company appointed Ms. Pope as its chief operating officer, a move that was seen as setting her up to take over from Mr. Calhoun in a few years.
Ms. Pope has had a relatively rapid rise in recent years. In early 2022, she was promoted from her role as chief financial services officer of the commercial airplane division to head Boeing Global Services, which provides aftermarket support to customers.
Mr. Calhoun said in an interview with CNBC that he would participate in the search for his successor. He also characterized all leadership changes, including his own, as “very deliberate.”
“Why now? I’m in year five,” he said. “At the end of this year, I’ll be almost 68. I always told the board — and the board was very prepared — I would give them enough notice to understand and plan the succession”.
The announcement was made on Monday ahead of the company’s annual meeting, expected in May, at which board members are elected.
Boeing’s board appointed Mr. Calhoun chief executive after firing his predecessor, Dennis A. Muilenburg, who had led the company through the crashes of 2018 and 2019. Mr. Calhoun, who took over leadership of the company in January 2020, he has been a member of its board of directors since 2009. He spent much of his career at General Electric, where he was once vice president and head of the company’s infrastructure division. When he took over at Boeing, he told employees that the company “would do better.”
His departure is all the more surprising because Boeing’s board in 2021 raised the mandatory retirement age for the chief executive to 70, from 65, to allow Mr Calhoun to remain in his post until April 2028.
The leadership shakeup raises urgent questions about Boeing’s succession planning. Mrs. Pope now has a big job trying to build up the commercial airplane division. Analysts said the company may be looking to attract a top executive from abroad, but the number of people with the experience needed to lead an engineering and manufacturing company with more than 170,000 employees is extremely limited.
Several Wall Street analysts welcomed the changes and the plan for Mr. Calhoun to stay on until the end of the year. His departure, along with that of Mr. Deal, was “ultimately necessary,” Nicholas Owens, an analyst at Morningstar, said in a note to clients on Monday.
“For Boeing’s key stakeholders, including customers, investors, managers and possibly the engineers’ union, their tenure was too closely tied to the back-to-back manufacturing defects revealed in the 737 Max and 787 series since 2019, in order to survive the mantle of their leadership. next chapter,” he said.
Since the plug incident in January, Mr. Calhoun has repeatedly reaffirmed the company’s commitment to quality and safety. But the pressure continued to mount on him and Boeing. The National Transportation Safety Board’s preliminary report on the incident said four bolts that were supposed to hold the door plug in place appeared to be missing before he exited the plane. It said the bolts were removed at a Boeing plant in Renton, Washington, where the 737 Max is made, so that the damaged rivets could be repaired.
The company’s announcement in February that the head of the 737 Max program was leaving the company did nothing to address the growing criticism. Even some travelers have grown wary of the company’s most popular plane line, the 737 Max. After the Alaska Airlines crash, flight booking service Kayak said it saw a marked increase in users filtering for flights scheduled to take place on 737 Max planes.
A union leader, which represents more than 19,000 engineers, scientists, pilots and other employees at Boeing and its supplier Spirit AeroSystems, said the plane maker’s management needed to make more sweeping changes to regain credibility.
“The problems in Boeing’s executive suite are systemic,” union leader Ray Goforth, executive director of the Society of Professional Aerospace Engineers, said in a statement. “Nothing is going to change for the better without the company’s leadership acknowledging their failures and fully committing to correcting them.”
Southwest Airlines, a major Boeing customer that only flies the company’s planes, said in a statement that it was “committed to working with Boeing’s new leadership team to ensure that each plane meets the highest standards of quality and safety.” Delta Air Lines and United Airlines issued similar statements.
Boeing stock rose about 1% on Monday afternoon after the company announced management changes.
