How Boeing’s leadership has been ‘fired’ by its own customers

IT TOOK 80 days. But for the airline industry, enough was enough.

A revolt by US airline bosses helped topple Boeing's top leadership, including CEO Dave Calhoun this week, capping weeks of pressure after the freakish January 5 blowout of a door plug on an Alaska Airlines 737 Max 9 passenger jet, people familiar with the discussions said. With the company's major US customers agitating for a boardroom meeting without Calhoun, Boeing's board pre-empted their demands with a major upheaval.

Now, after the shakeup that took out the CEO, chairperson and head of Boeing's commercial airplanes business, airlines face prolonged uncertainty over jet supplies and are calling for deeper changes – starting with picking a manufacturing heavyweight as CEO. “It wouldn't surprise me that people said: ‘What exactly is the Boeing strategy to change this, not put a Band-Aid on it',” said former Air Canada CEO Calin Rovinescu.

“There's a point at which you cannot pretend that everything is fine. And I think this has been the call to action that you probably heard from the airline community.”

Boeing said it had nothing to add to comments from Calhoun, who told employees on Monday that he had been considering stepping down as CEO for some time. He added that the company would “fix what isn't working, and we are going to get our company back on the track towards recovery and stability.” The January 5 incident plunged Boeing into a new crisis five years after the second of two fatal crashes grounded the Max.

Regulators began curbing Boeing's already lagging production. Airlines strained to adapt their schedules to the ongoing delays that meant fewer planes available for delivery. Boeing struggled to convince customers it would be able to overcome the heavy scrutiny, particularly following safety board reports that focused on weaknesses in the production chain.

The catalysing moment was last week, when CEOs of major US Max customers Southwest, United, Alaska and American demanded to meet the board to express frustration at a lack of progress, sources said. Boeing chairperson Larry Kellner offered to set up bilateral meetings instead.

But over the weekend, Boeing's board pre-empted that action – agreeing to staggered departures of Calhoun, Kellner and planemaking CEO Stan Deal, whose post went to chief operating officer Stephanie Pope. A senior industry source described the shake-up as Boeing management being “fired by its customers”.

Insiders noted it was the broadest top-level clear-out since CEO Phil Condit resigned days after the company's finance director was fired in a defence-contract scandal in 2003.

“The US carriers were determined to force regime change,” said a source familiar with the discussions.

Some said Calhoun, who claimed the move was his decision, jumped before he was pushed, agreeing to leave by year-end.

But pressure from the industry and regulators had been growing for weeks, and boiled over when more loose bolts were found in late January.

United CEO Scott Kirby announced it would no longer wait for the delayed Max 10, Boeing's best hope of countering Airbus' hot-selling A321neo in the busiest part of the market.

“The Max 9 grounding is probably the straw that broke the camel's back for us,” Kirby told CNBC.

Kirby promptly flew to France to start talks with Airbus, with Boeing's rival hoping to win a 200-plane deal.

Alaska Airlines CEO Ben Minicucci, who is said to have played a particularly active role in pressuring Boeing, told NBC: “It makes me angry. Boeing is better than this.”

Such conversations more typically take place in private.

Industry unity had cracked after the Max groundings that followed crashes in 2018 and 2019 led to lawsuits over delays.

“The dynamic between supplier and customer in the case of Boeing has gone beyond extremes anyone has seen,” said independent aviation adviser Dick Forsberg