CEO of Boeing to resign in shakeup
Problems continue to plague plane-maker, major S.A. employer
The Boeing Co. abruptly overhauled its leadership Monday amid its most significant safety crisis in years, announcing sweeping changes that include the departure of CEO Dave Calhoun at the end of the year.
The aircraft maker — which employs about 3,000 people at Port San Antonio — has been under mounting pressure from regulators, airlines and passengers as it has struggled to respond to fallout from an incident in early January in which a panel blew off a Boeing 737 Max 9 plane midair during an Alaska Airlines flight.
Investigators say bolts that help keep the panel in place were missing after repair work at the Boeing factory.
The incident has roiled the storied plane-maker and renewed concerns about its commitment to safety and quality five years after two crashes of 737 Max 8 planes killed a total of nearly 350 people.
In addition to Calhoun’s departure, Stan Deal, head of the unit that makes planes for airlines and other commercial customers, will retire immediately. Stephanie Pope, the company’s chief operating officer for less than three months, has taken over leadership of the key division.
The company also said board Chairman Lawrence Kellner, a former airline chief, will not stand for reelection in May and will be replaced by a former Qualcomm CEO.
In San Antonio
Boeing is easily the largest employer on Port San Antonio’s South Side campus and one of the largest in the city. The local workforce is among about 5,700 employees across the state.
The giant aerospace company opened the world’s largest military aircraft maintenance, repair and overhaul facilities at the former Kelly AFB in 1998. By early 2023, the company had spent more than $240 million on its facilities at Port San Antonio, according to data from Boeing and
the Texas Comptroller’s Office. That includes 1.9 million square feet of building and hangar space and 3.5 million square feet of aircraft ramps, run-up areas and parking pads.
Boeing also developed Building No. 375 — the world’s largest free-standing, high-bay aircraft hangar — at the port.
The company’s facility at Port San Antonio is the service depot for the military’s Boeing C-17 Globemaster transport planes and for maintenance of the Air Force One fleet. The company also has upgraded F/A-18 Super Hornet fighter jets at the site.
Boeing stored 737 Max jets at a port facility in 2019 after they were grounded in the wake of crashes in Indonesia and Ethiopia. Combined, the crashes killed 346 people.
The company also has had trouble with its program to build a new presidential jet, a 2018 contract that includes work being done at the port.
In late 2021, Boeing said it was investigating two empty tequila bottles found on one of its new Air Force One planes under development. In spring 2022, it said factory problems disrupted production of the new presidential fleet, which was already far behind schedule, with the planes not expected to be delivered until 2026.
Increased scrutiny
The Federal Aviation Administration has stepped up its scrutiny of the company, including putting a limit on production of 737s. An FAA audit of Boeing’s 737 factory near Seattle gave the company failing grades on nearly three dozen aspects of production.
Airline executives have expressed their frustration with
the company, and even minor incidents involving Boeing jets have attracted extra attention.
Fallout from the Jan. 5 panel blowout raised scrutiny of Boeing to its highest level since the two 737 Max jet crashes in 2018.
In a note to employees Monday, Calhoun, 67, called the accident “a watershed moment for Boeing” that requires “a total commitment to safety and quality at every level of our company.”
“The eyes of the world are on us, and I know we will come through this moment a better company, building on all the learnings we accumulated as we worked together to rebuild Boeing over the last number of years,” he said.
Boeing’s most significant effort to improve quality has been the opening of discussions about bringing Spirit Aerosystems, which builds fuselages for the Max and many parts for that and other Boeing planes, back into the company.
Mistakes made at Spirit, which Boeing spun off nearly 20 years ago, have compounded the company’s problems. Bringing
the work of key supplier Spirit back in-house would, in theory, give Boeing more control over the quality of manufacturing key airplane components.
Calhoun said the two companies are making progress in talks “and it’s very important.”
Calhoun’s legacy
He also said the decision to leave was his own. Calhoun was a Boeing director when he became CEO in January 2020, replacing Dennis Muilenburg, who was fired in the aftermath of the Max crashes.
In 2021, Boeing’s board raised the mandatory retirement age for CEO to keep Calhoun in the job.
He oversaw the Max’s return to service after a worldwide grounding that lasted nearly two years, and orders for the plane quickly picked up. Since then, however, a series of manufacturing flaws have delayed deliveries of new 737s and larger 787 Dreamliners to airlines, forcing the carriers to reduce growth plans.
While Boeing has not filed its proxy statement for 2023, previous filings show Calhoun received
compensation valued at more than $64.6 million from 2020 through 2022. Almost all of it was in the form of stock awards, options and bonuses.
Boeing, based in Arlington, Va., has lost more than $23 billion since he took over, although most of that is residual damage from the two crashes. Boeing shares have fallen more than 40% in that time — a little more than 23% since the Alaska incident, through trading on Monday.
Last week, Chief Financial Officer Brian West warned that the company burned $4 billion to $4.5 billion more cash than it expected in the first quarter as it slowed airplane production after the Alaska Airlines accident.
The company tapped former Qualcomm CEO Steven Mollenkopf to become the new board chairman and lead the search for Calhoun’s replacement.
‘Predictable’ shakeup
The growing pressure on Boeing took some of the surprise out of Monday’s news. Citi analyst Jason Gursky called the shakeup “both predictable and thoughtful.”
Some analysts had viewed the fast-rising Pope a likely successor to Calhoun. Gursky said her move to lead commercial airplanes opened the way for an outsider to become CEO.
Pope, 51, was promoted to Boeing chief operating officer only in January. Before that, she was president and CEO of Boeing’s services business, where she dealt with airline and military customers, and she was chief financial officer of the airplanes division before that.
Richard Aboulafia, a longtime aerospace analyst and now a consultant at Aerodynamic Advisory, said the management shakeup “is likely to be a pivotal moment in Boeing’s history, and probably a very positive one,” but the outcome depends on the next CEO.
He said Patrick Shanahan — a former Boeing executive and acting U.S. defense secretary during the Trump administration who has led Spirit Aerosystems since last fall — would be a “great choice.”
Cai von Rumohr, aerospace analyst at Cowen, said the management changes are “a partial step toward changing its culture to underscore safety and rebuild investor confidence in the company.” He said the fact Calhoun gave more than eight months’ notice will help the Boeing board make “a considered decision” instead of “a knee-jerk reaction.”
Michael O’leary, CEO of Irish airline Ryanair, a major Boeing customer, said he welcomed the management changes, including the replacement of Deal at the head of commercial airplanes. O’leary said in a video posted on X that although Deal did a good job at Boeing sales, “He’s not the person to turn around the operation in Seattle, and that’s where most of the problems have been in recent years.”
Boeing shares were up about 1.4% at market close.