News Article

Boeing CEO David Calhoun says planemaker can be better

The new chief executive of Boeing Co, David Calhoun, takes over the role on Monday as the U.S. planemaker struggles to rebound from two fatal crashes of 737 MAX planes that killed 346 people in five months and contributed to the global suspension of the type in March.

Calhoun, 62, a long-time Boeing director named Chairman in October after the board stripped Dennis Muilenburg of the title, was appointed Chief Executive on 23 Dec following the firing of Muilenburg by the board amid growing concerns over the company’s relationship with regulators and its handling of the MAX.

Boeing has reported MAX grounding costs to date over US$ 9 billion and is scheduled to report high additional costs during its announcement of results for the fourth quarter on Jan 29.

This month, Boeing faces rising costs from halting the MAX’s production, compensating airlines for lost flights, and assisting its supply chain. It is also contemplating adding additional debt.

Calhoun, a retired Blackstone private equity group director, and an accomplished business crisis strategist is already trying to improve the company’s ties with investors, airlines, and policymakers.

He formerly led a division of General Electric, which included airplane engines.

Calhoun told employees in an email on Monday that he sees “opportunities to be better. Much better. That includes engaging one another and our stakeholders with greater transparency, holding ourselves accountable to the highest standards of safety and quality, and incorporating outside-in perspective on what we do and how we do it.”

Managers also authorized the release of more than 100 pages of harmful internal messages that revealed the company’s efforts to avoid costly simulator training for the MAX amid troubling culture questions.

An employee in one email said the 737 MAX was “designed by clowns who in turn are supervised by monkeys.”

A source close to Calhoun said the emails that Boeing identified last week as “completely unacceptable” were seen by important employees.

Calhoun wants to “get rid of the culture of arrogance,” which has led to messages written by a few staff, the source said.

Calhoun said in his Monday email that the company “will foster an inclusive environment that embraces oversight and accountability and puts safety, quality, and integrity above all else.”

U.S. Rep. Peter DeFazio, Chairman of the House Transportation and Infrastructure Committee, told reporters on Friday that he advised Calhoun in a conversation that he needed to “to do something to relieve the pressure from Wall Street on your organization, which ultimately drove all this.”

Richard Aboulafia, Teal Group’s vice president of analysis, said in an essay for Leeham News that Calhoun had to decide “either to be a fantastic nine-month CEO, or he will stay on, becoming a potentially disastrous multi-year CEO.”

He argues that “Boeing needs a CEO with an understanding of aviation markets, program management, and most of all, engineering.”

Calhoun will be at Boeing’s headquarters in Chicago and its facilities in Washington state this week, the source said so that the new CEO can talk to lots of staff.

On Friday, the board accepted an annual salary of US$ 1.4 million for Calhoun and a long-term bonus of US$ 26.5 million if he reached multiple goals, including the return of the 737 MAX to operation.

Reuters also stated that it is not anticipated that the Federal Aviation Administration will allow the return of the MAX to operate until at least February and possibly March or later. US airlines have canceled early April or then MAX flights.

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