Boeing may turn to outsider CEO to tackle its spiraling crisis
Boeing’s board has begun the search for a big hitter to take the helm of the troubled plane maker following the turbulent tenure of CEO Dave Calhoun, with many industry executives and analysts predicting it will seek an outside remedy.
Facing mounting pressure from airlines, regulators, and investors, Boeing on Monday announced a broader than expected shake-up, with Calhoun, 66, stepping down by year-end on the heels of the company’s commercial plane-making chief and its chairman.
The US plane maker has been wrestling with a growing crisis following a January mid-air panel blowout on a 737 MAX plane.
The new CEO will face numerous tasks, including improving the company’s safety culture, addressing quality issues, and regaining the trust of regulators, customers, and the public.
Boeing will also have to deliver on goals to ramp up production and boost cash flow as it tries to reduce debt and make up ground against European rival Airbus.
Just three months ago, Boeing appeared to anoint Stephanie Pope as a future leader after naming her chief operating officer, following a successful stint running its services division.
But on Monday, Pope was named head of Boeing’s commercial airplanes division, replacing Stan Deal, who is retiring, with responsibilities including the MAX factory.
Her new position makes a move into the top job less likely, at least for now, analysts said.
“The company was teeing up Stephanie Pope to likely succeed Calhoun, but that seems to have changed in favor of an external search for a new CEO,” Stifel analyst Bert Subin said. “This could result in a high-profile hire.”
GE, SPIRIT CEOS
Many investors say GE CEO Larry Culp has the star quality Boeing desperately needs to rebuild confidence, having split the historic conglomerate into three public companies.
But Culp recently told reporters he was fully focused on leading GE Aerospace as a standalone engine maker, and that he looked forward to continuing to serve Boeing as a key partner and supplier.
GE is due to complete the split next week.
Pat Shanahan, an ex-Boeing executive and once acting US defense secretary in the Trump administration who now heads struggling MAX fuselage supplier Spirit Aerosystems, is also cited as a possible front-runner.
Shanahan could be elevated once the plane maker completes talks to buy Spirit, which was a Boeing subsidiary until 2005.
“He is the perfect outsider,” said industry veteran Adam Pilarski, who in January questioned how long Calhoun could last. “He knows Boeing inside and out and now knows the people who produce fuselages and who look like they will be part of Boeing again.”
Shanahan might not want to commit to five years at Boeing, said a former company executive who worked with the former Boeing production chief.
“This is an endurance game,” the executive said.
Spirit said Shanahan’s “sole priority remains building a culture of safety at Spirit AeroSystems.”
OTHER OPTIONS
Another
Boeing
veteran tipped for a possible return, industry sources said, is former chief financial officer Greg Smith, who was edged out by Calhoun in 2021 and is now chairman of American Airlines.
Smith spent part of his career overseeing supply chains. American Airlines did not respond to a request for comment.
Boeing board member David Gitlin has been widely mentioned as a potential CEO candidate, but analysts said it was unclear whether he would be willing to give up his post as head of ventilation group Carrier Global. Boeing and Carrier declined to comment.
Several analysts said Boeing would prefer a clean break to stem a tide of safety criticism from regulators and Congress.
“[Boeing’s] culture of quality and manufacturing has been called into question over recent issues, and a new, outside perspective on operations could be encouraging for investors,” RBC Capital Markets analyst Ken Herbert said.
But unions, some of which are entering a new phase of contract negotiations, want a return to basics after widespread criticism that Boeing has promoted shareholder value over quality and safety.
Ray Goforth, executive director of a key union at Boeing and Spirit, said the plane maker’s next CEO should be an engineer.
“This company thrived under engineering leadership for decades but has lurched from crisis to crisis,” said the head of the SPEEA union, which counts engineers among its members.
(Reuters)