Sunday , 14 August 2022
Dennis Muilenburg

737 MAX Debacle: Boeing forces Muilenburg out as Calhoun steps in as CEO

BOEING Company on Monday ousted Chief Executive Dennis Muilenburg as the company continues its struggles with 737 MAX jetliner crisis caused by the two fatal crashes of 2019 and has appointed David Calhoun, as CEO from next year, January 13th, 2020.

Boeing’s board decided to remove Mr. Muilenburg on Sunday during a 5 p.m. Eastern Time conference call following weekend conversations, people familiar with the matter said. Mr. Muilenburg didn’t participate in the discussion of his fate, though before turning to that matter the board discussed other issues with him.

David Calhoun

Mr. Muilenburg learned of his dismissal from Mr. Calhoun and another board member that evening.

The leadership change is as a result of series of setbacks for Boeing that led to its recent decision to halt production of the 737 MAX starting next year, the aircraft manufacturers have over the months had friction with regulators over returning the grounded 737 MAX jetliner to service.

The grounding has already cost Boeing more than $8 billion, a figure that will rise sharply, and cut 20 per cent off the company’s stock price. The last week was especially brutal for the company. In addition to announcing the production halt, Boeing botched the launch of a space capsule designed for the National Aeronautics and Space Administration.

Mr. Calhoun and Boeing finance chief Greg Smith, who will serve as interim CEO, face the same challenges as Mr. Muilenburg: winning back the confidence of government officials, suppliers, airlines and the traveling public. Mr. Calhoun spent much of Monday phoning some of those constituents, including lawmakers, a Boeing spokesman said.

In a call with one U.S. airline CEO, Mr. Calhoun signaled Boeing would be taking a different tack, a person familiar with the call said. Airlines have lost hundreds of millions of dollars as they have been forced to adjust schedules that were dependent on a MAX fleet that should have numbered about 800 jets by now, only for all to be grounded.

Regulators had criticized Mr. Muilenburg’s efforts to reassure customers and the financial community that government approval of a fix for the MAX was coming soon—optimism that repeatedly proved misplaced. The new leadership team made it clear in public statements Monday that they won’t get ahead of regulators in predicting the return to service of the 737 MAX after its grounding in March following twin crashes that claimed 346 lives.

Frustration on the board had been increasing in recent weeks after the Federal Aviation Administration signaled that the MAX wouldn’t return to service until 2020, this person said. As the need to halt production became clear, there was concern that changing leadership while planning the factory shutdown could destabilize the company, this person said

Directors, who had affirmed their support for Mr. Muilenburg in October, were also dissatisfied at times with delays by management in providing them updates, this person said. “There were some surprises along the way,” this person said, one being Mr. Muilenburg’s rosy estimates for FAA approval that repeatedly proved inaccurate.

The malfunction of Boeing’s Starliner space capsule during its maiden flight on Friday, which left it unable to dock with the international space station, added to setbacks at the Chicago-based company. Mr. Muilenburg tweeted his congratulations to the Starliner team before the problem was disclosed on Friday.

Mr. Calhoun, 62, who started his career at General Electric and ran G.E.’s airplane-engine business in the aftermath of the Sept. 11, 2001, attacks, faces a daunting challenge. Before the Max can fly again, regulators must approve Boeing’s fix for an automated system, known as MCAS, that was found to have played a role in both crashes. The company still needs to provide the F.A.A. with all the documents needed to fully describe the software fix.

With Agency reports

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