Boeing chief sacked as scandal costs soar
Aerospace giant racks up $9.2bn bill as fallout from the 737 airliner disasters shows no sign of abating
Dennis Muilenburg has been ousted as chief executive of Boeing, as the US aerospace giant reels after two fatal crashes of its 737 Max jets – raising fears that the planes could be grounded for months. The company suspended its shares from trading yesterday as it announced Mr Muilenburg had resigned as chief executive with immediate effect. Boeing said the change in leadership was required to repair relationships with regulators and customers.
BOEING boss Dennis Muilenburg has been ousted as the US aerospace giant reels from a scandal after two fatal crashes of its 737 Max jets – sparking fears that it could be many months before the plane flies again.
The company shocked markets and briefly suspended its shares from trading yesterday as it announced Mr Muilenburg had resigned as chief executive with immediate effect.
It said the change in leadership was needed to fix broken relationships with regulators and customers after 346 people died in two crashes linked to safety flaws in its 737 Max airliner.
Mr Muilenburg’s departure comes a week after Boeing said it would halt production of the 737 Max in January, and has triggered speculation that it might be months before plants start work again. All Max jets were grounded in March, days after the second crash. Both disasters are thought to be related to a software problem with the plane’s control system.
Mr Muilenburg will be succeeded by David Calhoun, the chairman, from Jan 13, with Greg Smith, the chief financial officer, serving as interim chief until then. Giving Mr Calhoun time to free himself up from other commitments.
Boeing said: “A change in leadership was necessary to restore confidence in the company as it works to repair relationships with regulators, customers, and all other stakeholders.”
Only last month, Mr Muilenburg said he would not quit, adding that although he had considered it, he felt “obligated, responsible to stay on it, to work with the team to fix it, to see it through”. Insiders say that Mr Muilenburg – who offered to give up his multimillion dollar bonus as Boeing sought to recover from the crisis – is unlikely to have stepped down voluntarily.
One source said: “He believes he can fix this.” They described the engineer-turned-manager, who began his career with Boeing as an intern in 1985, as being “obsessive” about the company.
Mr Muilenburg’s departure comes amid uncertainty over how long it will take to develop a fix and return the Max to service. It has been turning out 42 of them a month since the grounding.
Almost 400 of the airliners have come off Boeing’s Seattle production line and gone straight into storage, with the company even forced to stash some in its car park. A similar number delivered to airlines have also been taken out of service. Boeing is losing cash as a result, so far racking up costs of $9.2bn (£7.1bn) since the grounding, including compensation to airlines.
Mr Muilenburg’s surprise exit and the decision to halt production have been seen as signs that the plane may remain grounded for much longer. One veteran Boeing watcher said: “This could mean the Max won’t fly again for some time.”
Boeing – and Mr Muilenburg in particular – has faced criticism for its handling of the Max crashes. However, Howard Wheeldon, an independent aerospace analyst, said Mr Muilenburg’s ousting could mark the start of the firm drawing a line under its troubles. Its problems were compounded last week with the public failure of its Starliner space capsule.