Boeing CEO to resign amid safety crisis

Boeing CEO Dave Calhoun's company is facing heavy regulatory scrutiny.

Boeing CEO Dave Calhoun's company is facing heavy regulatory scrutiny. Photo: AAP

Boeing CEO Dave Calhoun will step down by year-end in a broad management shake-up brought on by the plane maker’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 plane maker 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 plane maker 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 January 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 has had massive problems for years and he has not been able to fix those problems,” said Adam Sarhan, chief executive at investment firm 50 Park Investments.

“The CEO’s job is to fix the problem, and he hasn’t been able to do that.”

Heavy regulatory scrutiny

Boeing shares have lost roughly a quarter of their value since the incident.

They were up 1.2 per cent on Monday, well off earlier highs.

The company is facing heavy regulatory scrutiny and US authorities curbed production while it attempts to fix its safety and quality problems.

The company is in talks to buy its 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 on Monday the airline welcomed the “much-needed” management changes at Boeing, saying the shake-up was good for the US plane maker’s customers.

Calhoun’s decision was his own

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 on 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 US and foreign airline CEOs.

Scott Hamilton, managing director at aviation consulting firm Leeham Company, said the changes “speak to the depth of the crisis at the company following January 5’s accident … But it also speaks to the thin bench for executive ranks.”


Topics: Boeing
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