Beleaguered Boeing dismisses CEO
Ouster comes amid crisis over Max jet crashes and after flawed test flight of space capsule
Boeing on Monday fired CEO Dennis Muilenburg, whose handling of the company’s 737 Max crisis had angered lawmakers, airlines, regulators and victims’ families.
The company has been mired in the worst crisis in its 103-year history since the crashes of two Max jets killed 346 people. The plane has been grounded since March, and Boeing has faced cascading delays as it tries to return the Max to the air.
The company said Chairman David Calhoun would replace Muilenburg on Jan. 13. Until then, Chief Financial Officer Greg Smith will serve as interim CEO, effective immediately, the company said.
Boeing’s board had stood by Muilenburg for months, but after a recent string of bad news for the company, his ouster came swiftly.
On Sunday morning, the board scheduled a call of its independent directors, which would exclude Muilenburg, for 4 p.m. Central time. It had been a disastrous week, including Boeing’s announcement that it would temporarily shut the Max factory and the botched test flight of a Boeing space capsule designed for NASA.
The Sunday call was not so unusual; as the Max crisis has dragged on, the board has often scheduled calls Sunday, often the only time the group could gather on short notice. The board — which includes Washington power players such as Nikki Haley, the former ambassador to the U.N.; and Caroline Kennedy, the former ambassador to Japan; as well as several executives — was scattered around the country, preparing for the holidays.
On the call, the board made the unanimous decision to remove Muilenburg. After the decision was made, Calhoun, who was in New York, and Larry Kellner, a board member who was elevated to chairman of the company effective immediately, called Muilenburg to inform him of the deci
sion, according to a person familiar with the situation. The call was brief, and Muilenburg accepted the board’s choice.
Muilenburg’s firing underscores the extent of the challenges facing Boeing. Before the Max can fly again, regulators must approve Boeing’s fix for an automated system that was found to have played a role in both crashes. The company still needs to provide the Federal Aviation Administration with all the documents needed to fully describe the software fix. Boeing stock has fallen 20 percent during this crisis, costing the company more than $8 billion and affecting a supply chain that extends to 8,000 companies.
Muilenburg has repeatedly made overly optimistic projections about how quickly the plane would return to service. That has created chaos for airlines, which have had to cancel thousands of flights and sacrifice billions of dollars in sales.
The development of the Max, an updated version of Boeing’s popular 737, was begun under pressure in 2011 as the company sought to fend off competition from its European rival, Airbus. The two crashes have prompted investigations by prosecutors, regulators and two congressional committees.
“What is most dispiriting is appointing Calhoun as CEO after he said that Dennis was doing everything right,” Sen. Richard Blumenthal, D-Conn., said Monday, calling for a new Boeing hearing with Calhoun as soon as possible. “That certainly leaves the impression that it will be business as usual. What’s needed now is a complete housecleaning, not only in personnel but in culture.”
Muilenburg’s relationship with the FAA was particularly tattered after he was seen in recent months to be pressuring the agency to return the planes to service.
The FAA said Monday that it did not comment on personnel decisions but that it was continuing work on approving the plane and had “set no time frame for when the work will be completed.”
After the decision was made to suspend Max production, Muilenburg spent much of last week at Boeing’s headquarters in Chicago, taking calls and attending meetings related to the plane’s crisis.
During the week, the FAA became aware of more potentially damaging messages from Boeing employees that the company had not turned over to the agency, further straining an already tense relationship. Earlier this year, Boeing waited months to disclose to the FAA that it had found messages from 2016 in which a Boeing pilot complained that the automated system in question, which was new to the Max, was acting unpredictably in a flight simulator.
By Friday morning, Muilenburg was in Florida to observe the launch of the Boeing Starliner, a space capsule the company built for NASA. At a viewing location inside Cape Canaveral, Fla., Muilenburg gathered with NASA officials and other Boeing executives, including Leanne Caret, head of Boeing’s defense and space business; Tim Keating, head of its Washington office; and Jim Chilton, a top space executive.
Soon after the spacecraft launched, it went off track because a clock was not set correctly, failing to reach the correct orbit and rendezvous with the International Space Station. The botched Starliner mission was a crushing blow to company morale, with employees desperate for good news after a difficult year.
Yet Muilenburg, who updated the board about the mission after it had gone awry, remained positive and emphasized what went right, according to three people with knowledge of the matter. Muilenburg’s response was seen as another sign of his being overly optimistic about the challenges facing the company.
Over the weekend, the simmering frustration with Muilenburg’s performance came to a head, leading to his ouster and the elevation of Calhoun, who is viewed internally as a more natural public communicator than Muilenburg.
Boeing said in a statement that its board “decided that 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.”
The pressure on the new CEO will be intense.
Muilenburg’s attempts to offer sincere public apologies for the accidents have been clumsy, leaving lawmakers irate and the families of victims feeling as if the company did not care about their loss.
“They’ve crushed the trust relationship,” said Dennis Tajer, a spokesman for the American Airlines pilot union. “This changes nothing when it comes to ensuring this aircraft is safe and that pilots are properly trained.”
Calhoun has been calling government officials, members of Congress, the CEOs of major airlines, Boeing investors and executives of the company’s suppliers, pledging to keep the lines of communication open, a Boeing spokesman said.
Some of those who were frustrated with Muilenburg welcomed the news.
“Today is a turning point,” said Sara Nelson, president of the Association of Flight Attendants union. “Public trust was lost and only has the chance for redemption with new leadership.”