The disempowerment of Boeing management reveals the seriousness of the company’s crisis

The scale of management changes announced by Boeing is a sign that the company recognizes the serious situation in which it finds itself.

It’s pretty rare The CEO and CEO of an organization resign at approximately the same time like Larry Kellner and Dave Calhoun do.

The simultaneous announcement of the departure of another senior executive leading one of the company’s most important businesses is almost unprecedented.

Stan Deal, who immediately resigns as leader BoeingCommercial airline operations are clearly leading the way The crisis has hit the 737 MAX 9 jet There have been mass bans since the January incident in which a door plug was ripped out of one of the Alaska Airlines-operated jets in mid-air.

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Since then, Boeing has had to launch a thorough investigation into its fuselage production to ensure something like this doesn’t happen again.

The company also had to inform some of its customers, notably Ryanair in Europe and Southwestern Airlines in the US, that there would be delays in the delivery of the aircraft. This has led to customers rethinking their flight plans in the important summer months, and Ryanair is demanding compensation.

The worst thing about Mr. Calhoun’s departure is that he is now the second Boeing boss in a row to resign due to doubts about the poor quality of production and supply chains.

The man he replaced, Dennis Muilenberg, was fired in late 2019 after two crashes involving an earlier version of the 737 MAX — a Lion Air flight in Indonesia in October 2018 and an Ethiopian Airlines flight in March of that year claimed the lives of hundreds of people. On that occasion, Boeing was heavily criticized for not acting more quickly, as Mr. Muilenberg’s continued occupation of the CEO’s office distracted from the company’s attempts to rebuild its relationships with its customers and regulators.

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What’s going on at Boeing?

Mr. Calhoun’s decision to leave at the end of the year suggests that Boeing has learned from the experience, but also reflects the fact that he failed in his most important role – improving production quality – which clearly undermined the confidence of the company shocked investors.

A report in the Wall Street Journal last week that the chief executives of some of Boeing’s largest airline customers in the U.S. had requested a meeting with Boeing’s board to express their concerns about the Alaska Airlines accident and subsequent production may be expected Problems with the 737 MAX 9 have not improved their mood.

The outgoing CEO did his best today to indicate that this was an essential part of the normal succession process, telling CNBC’s Phil LeBeau that he would be 68 at the time of his departure, as he has already held the position for five years which made him a success. Clearly it is time to step down.

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January: Ryanair has “confidence” in Boeing

But this isn’t a normal CEO succession, not with Mr. Kellner and Mr. Deal – who spent nearly 40 years at the company – also stepping down. It is a symbol of a company in crisis.

The fact that Boeing – America’s largest and most important manufacturing company – was able to immediately announce a new CEO, like Steve Mollenkopf, the former CEO of Qualcomm, will at least provide some reassurance.

His first task will be to appoint a new CEO. Stephanie Pope, who was just named chief operating officer before being promoted to the fray for a second time this year to replace Mr. Deal, is clearly seen as a candidate.

But it’s likely Boeing investors will push him to appoint someone from outside the company, someone unaffected by the manufacturing disasters of recent years.

In some ways, however, Mr. Calhoun deserves some sympathy.

Read more:
Ryanair boss says passengers are safe despite Boeing problems
Boeing fires 737 MAX boss after mid-air panic
US regulator increases supervision of Boeing

Boeing used to be run by engineers who took great pride in the company’s performance. It was a key contractor on Apollo 11, NASA’s mission that put a man on the moon for the first time, as well as the Space Shuttle – the world’s first reusable spacecraft.

More recently, the focus has been on financial engineering, with share buybacks given greater priority than research and development. The 737 MAX family was emblematic of this – it was simply a reworking of the old 737 jet family, rather than a complete rethinking of what customers wanted.

In contrast, Airbus, which took a more conservative approach to its balance sheet, was more able to rethink its aircraft designs and invest in research and development. The European company’s reward is that it has now far surpassed Boeing in production and aircraft sales.

In an ideal world, this boardroom reset would be aimed at regaining Boeing’s past glory.

For now, however, the new management’s task is to restore the trust of regulators, customers, investors and employees. It’s such a serious situation.

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