Embattled CEO steers Boeing to 787 comeback
Dave Calhoun was brought in as Boeing’s chief executive officer to steer it through a crisis that unfurled after the crashes of two of its 737 Max jets. Yet so far during his tenure, problems just keep piling up.
The company’s stock has plunged 58 percent since his January 2020 arrival as Boeing has struggled to execute on key programs such as the 787 Dreamliner and Air Force One. Investors are unnerved by the $28 billion in cash the company burned through during the pandemic, as well as its blown deadlines and quality lapses.
Calhoun has even endured public tongue-lashings from Boeing customers — a rare spectacle that suggests they are unusually exasperated.
That track record has led some on Wall Street to call for Calhoun’s ouster and has raised questions about his leadership style. The CEO prefers empowering top lieutenants rather than getting in the weeds himself, a sharp turn from the details-obsessed approach of his predecessor, Dennis Muilenburg.
“I haven’t talked to one investor who thinks Calhoun is doing a good job, not one,” said Ron Epstein, analyst with Bank of America Corp. and former Boeing scientist.
Even with all the frustration with Calhoun, some 20 analysts have buy ratings on Boeing’s stock, according to data compiled by Bloomberg, a reflection of some upcoming openings to change the company’s momentum and image.
The Federal Aviation Administration is close to clearing Boeing to deliver the first 787 jets in more than a year, a step toward unlocking nearly $10 billion in badly needed cash that is tied up in a stockpile of Dreamliners. The manufacturer is also expected to showcase a flurry of 737 Max orders at the Farnborough International Airshow this month, a display of might at the first major industry trade expo since the pandemic struck.
That may create a path for a turnaround that helps shareholders forgive Calhoun’s stumbles. But the embattled CEO will still face profound challenges, including rebuilding the trust of U.S. regulators and contending with punishing competition from Airbus.
The new CEO has made sweeping management changes that pushed accountability and decision-making back to the heads of Boeing’s main businesses, an approach that draws on his years in senior leadership at General Electric Co. He has been compared to a private equity fund manager minding a portfolio of companies, focusing on the numbers while leaving it to division leaders to deliver the results. In fact, that was Calhoun’s role at Blackstone Group Inc. before he took over the top job at Boeing.
At every turn, Calhoun has sought to differentiate himself from Muilenburg, an engineer by training who was ousted in 2019 for bungling the response to the Max crisis. Some contend he’s too hands-off, noting how minor issues can quickly blow up into debacles when building airplanes from hundreds of thousands of parts.
When a challenging issue flares in a Boeing factory, Calhoun doesn’t jet in to quiz workers, as Muilenburg often did. Calhoun also resisted suggestions to hold daily reviews when tiny structural flaws kept cropping up around the frames of the company’s marquee 787 Dreamliners, said three people familiar with the matter. Eventually, regulators halted deliveries of the jets as more of the socalled non-conformities were found.
A person close to the company counters that a hovering CEO would’ve been an unwelcome distraction that made things worse. Calhoun holds reviews weekly — and sometimes more often — on hot issues like the 787.
He has also rethought the monthly executive council reviews where previous CEOs had grilled their deputies in grueling day-long sessions. Instead, the “exco” meets just once a quarter, where updates from the company’s main divisions are allotted 20 minutes apiece.
Some see the changes as fruitful. The quarterly exco sessions are now more of a working meeting than a performance, said a person close to the company. Calhoun instead relies on frequent, impromptu check-ins with his deputies by phone.
“A lot of people have called me up and asked, ‘What is Dave Calhoun delivering and why is he in that seat?' ” said Robert Spingarn, analyst with Melius Research. “While his style may not resonate with everybody at Boeing and may not resonate with the investment community, it does sound like changes have been made. He’s a hardliner and is taking a no-nonsense role internally.”