How Boeing’s leadership was ‘fired’ by its own customers
It took 80 days. But for the airline industry, enough was enough.
A revolt by US airline bosses helped topple Boeing’s top leadership including CEO Dave Calhoun this week, capping weeks of pressure after the freakish Jan 5 blowout of a door plug on an Alaska Airlines 737 MAX 9 passenger jet, people familiar with the discussions said.
With the company’s major US customers agitating for a boardroom meeting without Calhoun, Boeing’s board pre-empted their demands with a major upheaval.
Now, after the shakeup that took out the CEO, chairman and head of Boeing’s commercial airplanes business, airlines face prolonged uncertainty over jet supplies and are calling for deeper changes – starting with picking a manufacturing heavyweight as CEO.
Boeing said it had nothing to add to comments from Calhoun, who told employees on Monday that he had been considering stepping down as CEO for some time. He added that the company would “fix what isn’t working, and we are going to get our company back on the track towards recovery and stability.”
The Jan 5 incident plunged Boeing into a new crisis five years after the second of two fatal crashes grounded the MAX.
Regulators began curbing Boeing’s already lagging production. Airlines strained to adapt their schedules to the ongoing delays that meant fewer planes available for delivery.
Boeing struggled to convince customers it would be able to overcome the heavy scrutiny, particularly following safety board reports that focused on weaknesses in the production chain.
The catalyzing moment was last week, when CEOs of major US MAX customers Southwest, United, Alaska and American demanded to meet the board to express frustration at a lack of progress, sources said. Boeing chairman Larry Kellner offered to set up bilateral meetings instead.
But over the weekend, Boeing’s board preempted that action – agreeing to staggered
departures of Calhoun, Kellner and planemaking CEO Stan Deal, whose post went to chief operating officer Stephanie Pope. A senior industry source described the shakeup as Boeing management being “fired by its customers.”
Insiders noted it was the broadest top-level clear-out since CEO Phil Condit resigned days after the company’s finance director was fired in a defense-contract scandal in 2003.
“The US carriers were determined to force regime change,“said a source familiar with the discussions.
Some said Calhoun, who claimed the move was his decision, jumped before he was pushed, agreeing to leave by year-end.
But pressure from the industry and regulators had been growing for weeks, and boiled over when more loose bolts were found in late January.
United CEO Scott Kirby announced it would no longer wait for the delayed MAX 10, Boeing’s best hope of countering Airbus’ hot-selling A321neo in the busiest part of the market.
“The Max 9 grounding is probably the straw that broke the camel’s back for us,“Kirby told CNBC.
Kirby promptly flew to France to start talks
with Airbus, with Boeing’s rival hoping to win a 200-plane deal.
Alaska Airlines CEO Ben Minicucci, who is said to have played a particularly active role in pressuring Boeing, told NBC: “It makes me angry. Boeing is better than this.”
“The dynamic between supplier and customer in the case of Boeing has gone beyond extremes anyone has seen,“said independent aviation adviser Dick Forsberg, who helped found one of the largest aircraft leasing firms, Dublin-based Avolon.
Another person familiar with the talks said major US airlines – apart from Delta, which publicly stayed out of the fray – had resolved to get Boeing leaders “off the stage.”
The plan gathered speed at an Airlines for America meeting this month, sources told Reuters, confirming a report on the coordinated airline action by The Air Current.
Boeing is not alone in facing post-pandemic disruption. Airbus is delaying deliveries due to missing parts and insiders say the volume of quality reports is above target. Engine firm Pratt & Whitney has had a slew of publicised problems. – Reuters