Boeing fires CEO Dennis Muilenburg, seeking stability after two high-profile crashes.
CFO will serve as interim CEO
Boeing Co said on Monday that it had fired its chief executive, Dennis Muilenburg, who was unable to stabilise the company after two crashes involving its best-selling 737 MAX plane killed 346 people and set off the worst crisis in the manufacturing giant’s 103-year history.
The plane has been grounded by regulators since March, and the company and its airline customers have lost billions of dollars. Boeing has faced a series of delays as it tries to fix the MAX, and the jetliner’s return to the air remains months away at best.
President Donald Trump recently called Muilenburg for an update on how the company was doing, underscoring its importance to the US economy.
Last week, Boeing said it would temporarily shut down production of the MAX, a decision that will force some of the 8,000 companies in the supply chain to scale back production and perhaps lay off workers.
Muilenburg’s performance during the crisis angered lawmakers, airlines, regulators and victims’ families. He repeatedly made overly optimistic projections about how quickly the plane would be allowed to fly again. That created chaos for airlines, which had to cancel thousands of flights.
The Federal Aviation Administration (FAA) saw the pronouncements as an attempt to pressure it to clear the MAX for service. Muilenburg’s attempts to offer sincere public apologies for the accidents, including at two congressional hearings in October, have been clumsy, inflicting further damage on Boeing’s reputation.
The firing of Muilenburg, 55, adds to Boeing’s challenges. The company said David Calhoun, its chairman, would replace Muilenburg on Jan 13.
Until then, chief financial officer, Greg Smith, will serve as interim CEO.
The grounding has already cost Boeing more than $8 billion, a figure that will rise sharply, and shaved 20% off the company’s stock price.
The last week was especially brutal for the company. In addition to announcing the production halt, Boeing botched the launch of a space capsule designed for the National Aeronautics and Space Administration.
With no timetable for the return of the MAX, the future of Boeing is unsettled. In the coming months, the company’s new leaders must prove to sceptical regulators that the plane is safe to fly.
It must also regain the trust of its principal MAX customers — the airlines that pay as much as $100 million per airplane — and ultimately the flying public.
In discussions among themselves in recent days, board members concluded that it was time to replace Muilenburg, according to two people familiar with the matter.
On Sunday morning, the board scheduled a call for 5 p.m. Eastern time to discuss Muilenburg’s future.
On the call, the board members, who were scattered around the country preparing for the holidays, made the unanimous decision to remove Muilenburg.
Calhoun, who was in New York, and Larry Kellner, a board member and former airline executive who is Calhoun’s immediate replacement as chairman, called Muilenburg to inform him of the decision, according to a person familiar with the situation. The call was brief.
It was a striking turnaround. At a board meeting last week in Chicago, where the MAX factory production shutdown was deliberated, there was no talk of removing Muilenburg, according to two people familiar with the matter.
Muilenburg is an engineer who had spent his entire career at Boeing, rising to become chief executive in 2015. He spent much of last week at Boeing’s headquarters in Chicago, taking calls and attending meetings related to the MAX crisis and the company’s decision to shut down the MAX factory.
Though executives viewed the production halt as a prudent step, it sent Boeing’s stock down and rippled through the national economy.
Days after that decision, the FAA became aware of more potentially damaging messages from Boeing employees that the company had not turned over to the agency, further straining the company’s relationship with the regulator.
Boeing waited months this year to disclose to the FAA that it had found messages from 2016 in which a Boeing pilot complained that the manoeuvring characteristics augmentation system (MCAS), which was new to the MAX, was acting unpredictably in a flight simulator.
On Friday morning, Muilenburg was in Florida to observe the predawn launch of the Boeing Starliner, a space capsule the company built for Nasa.
Soon after the spacecraft was launched, it went off track because a clock was not set correctly, failing to reach the correct orbit and rendezvous with the International Space Station.
The botched Starliner mission was a crushing blow to company morale, with employees desperate for good news after a difficult year.
Yet Muilenburg, who updated the board about the mission, remained positive and emphasised what had gone right, according to three people with knowledge of the matter. His response was seen as another sign of his being overly optimistic about the company’s challenges.
It was not immediately clear how much compensation Muilenburg would receive as he exited the company.
“Today is a turning point,” Sara Nelson, president of the Association of Flight Attendants union, said in an interview. “Public trust was lost, and Boeing only has the chance for redemption with new leadership.”