Boeing CEO Dave Calhoun to step down in shakeup amid safety crisis By Reuters

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© Reuters. FILE PHOTO: Boeing CEO Dave Calhoun speaks to reporters before meeting with U.S. senators on Capitol Hill in Washington, U.S., January 24, 2024. REUTERS/Valerie Insinna/File Photo

By David Shepardson and Allison Lampert

(Reuters) – Boeing CEO Dave Calhoun will step down at the end of the year in a major shake-up that has fueled the planemaker’s safety woes that have been exacerbated by the mid-January explosion of a 737 MAX jetliner.

In addition, board chairman Larry Kellner and Stan Deal, head of the company’s aircraft business, are also leaving as the Boeing (NYSE: ) board tries to manage a series of problems that have shaken confidence in the plane maker for weeks. .

The January incident was the latest in a series of safety concerns that have shaken the airline industry’s confidence and hampered its ability to increase production. Calhoun, 66, was brought in as CEO following two crashes in 2018 and 2019 that killed nearly 350 people.

Just after the explosion of the Jan. 5, airline officials expressed support for Calhoun, but that positive sentiment waned after further production delays and as management described quality problems at its manufacturing facility outside Seattle.

Some investors said the shake-up may not be enough to deal with the ongoing problems.

Boeing shares have lost nearly a quarter of their value since the incident. They were up 1.4% on Monday, the biggest drop since earlier in the day.

“They need more than just a shakeup of the CEO and the chairman of the board … they’re going to be disabled in making decisions,” said Robert Pavlik, managing director of Dakota Wealth. “It will take more time for Boeing to improve.”

The company is amid a federal investigation and U.S. officials have halted production while Boeing tries to fix safety and quality issues. The company is in talks to buy former Spirit AeroSystems (NYSE: ) in an effort to streamline its operations.

Michael O’Leary, the Irish chief executive of Ryanair, Boeing’s biggest customer, said on Monday the airline had received “significant” changes from Boeing, calling the shakeup good for the airline’s customers.

Calhoun said he made the decision to quit. “I let them know that at the end of this year I plan to retire,” Calhoun told CNBC. He said he wants to stay until the end of the year to deal with the problems.

COO Stephanie Pope has been named to lead Boeing Commercial Airplanes, effective Monday.

Steve Mollenkopf, former CEO of technology company Qualcomm (NASDAQ:), has been named the new chairman of the board and is leading the search for the next CEO. A source told Reuters Mollenkopf will join Kellner in planned meetings with major US and foreign CEOs.

QUESTIONS ABOUT MANAGEMENT

The management review highlighted issues that caused investors and customers to lose confidence in the image maker.

US National Transportation Safety Board report of Alaska Airlines (NYSE:) investigation found that the public explosion was caused in part because several bolts securing the plug had been removed and not replaced – and there were no records detailing what happened to the bolts.

The head of the NTSB told lawmakers in early March that the company had not provided the records the agency had requested.

Following that, the FAA limited Boeing’s production to 38 jets per month, but CFO Brian West said last week that was not enough. He also said the planemaker was burning more cash than expected this quarter.

Last week, a group of US airline CEOs sought meetings with Boeing executives without Calhoun to express frustration over the accident and the management of Alaska Airlines.

Analysts and investors called the shakeup good for Boeing, but stressed that much depends on Calhoun’s successor and changing the company’s culture from the top.

“The problems in the Boeing group are permanent. Nothing will change for the better without the company’s leadership admitting their failures and committing to fix them,” said Ray Goforth, director of the Society of Professional Engineering Employees in Aerospace, which represents more than 19,000 employees in Boeing and Spirit AeroSystems.

Calhoun told CNBC Boeing will fix its problems. “They have to deal with this situation,” Calhoun said. “We’re going to settle down. We’re going to move forward.”

United said it “continues to be successful at Boeing and we look forward to working with them on their leadership transition.” Delta said it will “remain closely aligned with Boeing.”

Some say Spirit AeroSystems CEO Patrick Shanahan, a former Boeing executive and US government official who now holds a joint position with the US plane maker, was Calhoun’s successor.

“Shanahan’s top priority remains developing a culture of safety” at the Spirit, spokesman Joe Buccino said Monday.

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