Boeing CEO resigns over 737
WASHINGTON: Boeing Co ousted Chief Executive Dennis Muilenburg as the world’s biggest planemaker sought to control an escalating crisis that has seen it halt production of its best-selling 737 MAX jetliner following two fatal crashes.
The sacking comes as Boeing struggles to mend strained relations with the regulators it needs to win over to get the grounded 737 back in the air, and seeks to regain trust with passengers and airline customers around the world.
Chairman David Calhoun will take over as CEO and president, effective from January 13, the company said, adding that a change in leadership was necessary to restore confidence.
The company’s shares, which have dropped more than 20 per cent over the past nine months, rose nearly 4 per cent in early trading.
The decision capped a week of dramatic setbacks for Boeing, from a decision to halt production of the 737, a public slap-down from the Federal Aviation Administration (FAA), a ratings downgrade and an embarrassing space launch glitch on Friday.
One source close to Boeing said the company needed to turn the corner and regain its stride as it faces what is widely seen as the worst crisis in its more than 100-year history
The 737 MAX has been grounded since March after two crashes in Indonesia and Ethiopia killed 346 people within five months.
It has been by far the biggest crisis of Muilenburg’s tenure at Boeing, where he started as an intern in 1985, rising through the company’s defence and services ranks to the top job in 2015.
Boeing said this month it would stop production of the jets in January, and the crisis also threatens to hit the US economy with House representative Rick Larsen calling the decision “a body blow to its workers and the region’s economy.”
A senior industry source called the sparse wording of Boeing’s statement on the 34-year veteran “brutal”.
Speculation that Muilenburg would be fired had been circulating in the industry for months, intensifying in October when the board stripped him of his chairman title — although he had also twice won expressions of confidence from Calhoun.
A Boeing official said the board deliberated over the weekend and decided to fire Muilenburg in a phone call on Sunday.
Aerospace analyst Richard Aboulafia of Teal Group said the appointment of Calhoun, who previously served as head of Blackstone Group’s private equity portfolio operation, would provide short-term stability, but not the longterm “emphasis on engineering” the company needs.
“Calhoun is respected in the industry,” Aboulafia said. “But longterm, does he bring the right tool kit? Private equity leans companies out. That’s not Boeing’s problem right now.”