O’Leary welcomes ‘much-needed’ management changes at Boeing

CEO to leave at end of year, while another executive has been replaced immediately

Fixing Boeing is going to be an enormous challenge for its next chief executive. The beleaguered airplane maker has staggered from one crisis to another. Along the way, confidence in the company among regulators, airline customers and politicians has been seriously eroded.

And now two of its top brass are ejecting.

The only surprise in Boeing’s announcement that current CEO Dave Calhoun is to leave the company at the end of the year, is why he’s going to wait that long to go.

Stan Deal, the CEO and president of Boeing Commercial Airplanes, is also retiring. He has been succeeded – effective immediately – by Stephanie Pope, Boeing’s chief operating officer.

Steve Mollenkopf, the former chief executive of tech firm Qualcomm, has been named the new chair of Boeing and has started the hunt for a new CEO at the aircraft maker.

While the board needs time to find a successor, the deep repairs to Boeing’s culture need to begin immediately. No more so for customers such as Ryanair.

While its group CEO, Michael O’Leary, has in recent weeks publicly endorsed Mr Calhoun, he has been increasingly scathing in his criticism of the US plane maker. Last week, he said Mr Deal “needs to get his finger out” and solve the production issues at Boeing.

Yesterday, Mr O’Leary said the management changes were “much-needed”.

“We welcome these much-needed management changes in Seattle,” he said. “We look forward to working with Stephanie Pope to accelerate Boeing 737 aircraft deliveries to customers, including Ryanair in Europe, for summer and autumn 2024.

“We also look forward to continuing to work with Boeing CEO Dave Calhoun and CFO Brian West, and to helping Boeing recover its aircraft deliveries so that Ryanair can continue to grow strongly as Boeing’s number one customer here in Europe.”

Ryanair has already had to scale back its ambitions for the coming summer due to delivery delays.

Earlier this month, the airline said it will only receive 40 of the 57 Boeing 737 Max 8-200 jets it was expecting to get by the end of June.

An already shaken Boeing was further destabilised after a January incident where a panel on an Alaska Airlines Max 9 jet, with 171 passengers on board, flew off at 16,000 feet, not long after the aircraft had taken off.

What followed was a full-blown safety and reputational crisis for the iconic plane maker.

Boeing shares have lost roughly one-quarter of their value since the incident. They were up 2.3pc in early trading yesterday.

The January incident was only the most recent in a series of safety crises that have shaken the industry’s confidence in the plane maker and hampered its ability to increase production.

Mr Calhoun was brought in as CEO following a pair of Boeing Max jet crashes in 2018 and 2019 that killed nearly 350 people. A flawed flight-control system emerged as the cause, but behind it lay a litany of corporate errors at Boeing.

Justin Green, partner at Kreindler & Kreindler, who represents 34 families who lost family and friends on Ethiopian Flight 302, welcomed Mr Calhoun’s departure.

“The next CEO must know that his or her role will be to prioritise safety, not just profit,” he said. “Boeing must be fully transparent in every change it plans to make with regard to its manufacturing and quality control processes.”

Some investors expressed concern that the newest shake-up would not be enough to address these issues.

“We’ve long thought that the issues at Boeing have been seated in cultural challenges,” said Cameron Dawson, chief investment officer at NewEdge Wealth.

The company is facing heavy regulatory scrutiny and US authorities curbed production while it attempts to fix its safety and quality problems.

The company is in talks to buy its former subsidiary Spirit AeroSystems to try to get more control over its supply chain.

“Given the broad sweep here, big and overdue changes are likely,” said Boeing critic Richard Aboulafia.

Last week, a group of US airline CEOs sought meetings with Boeing directors without Mr Calhoun to express concern over the Alaska Airlines accident, saying it was an unusual sign of frustration with the manufacturer’s problems and Mr Calhoun.

Analysts and investors called the shake-up positive for Boeing, but stressed that much depends on Mr Calhoun’s successor and changing the company’s culture from the top.

Some suggested Spirit AeroSystems CEO Patrick Shanahan, a former Boeing executive and US government official, now tasked with a complex tie-up deal with the US plane maker, as a possible successor to Mr Calhoun.

“We think it will require someone with pedigree and patience, as fixing Boeing is probably a multi-year non-linear journey,” said Vertical Research Partners aerospace analyst Robert Stallard, in a note to clients.

Following the incident, the FAA curbed Boeing production to a rate of 38 jets per month, but CFO Brian West said last week it had not even reached that figure.

“For years, we prioritised the movement of the airplane through the factory over getting it done right, and that’s got to change,” Mr West said. The company’s main rival, Airbus, clinched orders for 65 jets from two of Boeing’s key Asian customers recently, in what some saw as a sign of executives’ concerns about Boeing.

“We look forward to working with Stephanie Pope to accelerate Boeing 737 aircraft deliveries to customers, including Ryanair”