Reeling under 737 MAX crisis, Boeing ousts CEO Muilenburg
David Calhoun, a GE veteran, will replace Muilenburg as CEO and president
CHICAGO/NEW YORK: Dennis Muilenburg was ousted as chief executive officer (CEO) of Boeing Co, a once-unthinkable turning point for a US industrial champion engulfed in turmoil after two deadly crashes of its top-selling 737 MAX jetliner
David Calhoun, a General Electric Co veteran who had served as chairman since October, will replace Muilenburg as CEO and president on January 13, Boeing said in a statement on Monday The move followed a rare public rebuke on December 12 by the US Federal Aviation Administration (FAA) Just last week, Boeing said it would temporarily halt output of the MAX, which has been grounded since March
Chief financial officer Greg Smith will serve as interim CEO during a brief transition period, Boeing said Director Larry Kellner will replace Calhoun as chairman Boeing is trying to regain its footing amid the MAX grounding, one of the worst crises of the modern jet era The planemaker’s reputation and finances have been battered after the MAX disasters killed 346 people and prompted the worldwide grounding Boeing’s design decisions and cozy relationship with the FAA are being scrutinised by Congress while the Justice Department is conducting a criminal probe
“A change in leadership was necessary to restore confidence in the company moving forward as it works to repair relationships with regulators, customers, and all other stakeholders,”
Boeing’s board said in the statement
Boeing climbed 33% to $33874 at 944am in New York after advancing as much as 38% for the biggest intraday gain in six weeks
Calhoun, 62, senior managing director and head of portfolio operations at Blackstone Group Inc, now faces the daunting task of extricating Boeing from one of the bleakest chapters in its 103year history He will exit his nonboeing commitments, the company said
“I strongly believe in the future of Boeing and the 737 MAX,” he said in the statement “I am honoured to lead this great company and the 150,000 dedicated employees who are working hard to create the future of aviation”
During more than two decades at GE, Calhoun ran the company’s jet-engine and lighting businesses Calhoun has been mentioned in years past as a contender for the Boeing CEO job
FALL FROM GRACE
Muilenburg’s departure caps an extraordinary fall from grace for an Iowa farmer’s son who had dreamed of turning Boeing into a globally admired corporate paragon, much as Jack Welch did for GE For two years as CEO, Muilenburg seemed to have the Midas touch Then a brand-new Lion Air 737 MAX plunged into the Java Sea on October 29, 2018
While the plane’s design was largely set before Muilenburg became CEO, he bore responsibility for the company’s initial muted response—and the media firestorm that ensued when a second MAX crashed less than five months later in Ethiopia He would later describe the MAX tragedies as the most difficult moments of a career spanning more than three decades, all at Boeing
The development of the MAX is under investigation by the US Department of Justice and Congress A high-ranking Boeing pilot working on the 737 Max three years ago during its certification expressed misgivings about a feature since implicated in the crashes, calling its handling performance “egregious,” according to 2016 messages revealed October 18
Muilenburg joined Boeing from Iowa State University as an intern in 1985 Over the next three decades, the aerospace engineer rose to increasingly prominent positions at the defence business of the Chicagobased manufacturer As head of the division, he drove deep cuts to maintain profits when Pentagon spending was stagnant
SALES BOOM
He succeeded Jim Mcnerney as CEO in mid-2015 amid the biggest sales boom in aviation history, fueled by low interest rates, readily available financing and the rapid expansion of low-cost airlines, particularly in Asia Boeing’s 787 Dreamliner started generating cash months after Muilenburg took office, after a decade of losses The plane, along with the highly profitable 737, funded the increasingly generous returns the company lavished on investors
Muilenburg brought an unapologetic, hard-charging edge to Boeing “Compete to win,” became a company mantra He demanded deeper discounts from suppliers while creating new businesses that poached sales from its partners in everything from cockpit electronics to the mini jet engines housed in an aircraft’s tail
The efforts helped turn Boeing into the most valuable US industrial company as the planemaker’s market capitalisation surged past $200 billion Under Muilenburg, Boeing’s shares more than tripled through early 2019, far outpacing the broader market