Dave Calhoun speaks during a 2017 interview in New York. (Christopher Goodney/Bloomberg)

Dave Calhoun speaks during a 2017 interview in New York. (Christopher Goodney/Bloomberg)

Boeing CEO to exit in broad management shakeup

Boeing has been under intense pressure since early January, when a panel blew off a brand-new Alaska Airlines 737 Max.

  • By Wire Service
  • Monday, March 25, 2024 10:28am
  • Local News

By David Koenig / The Associated Press

Boeing CEO David Calhoun will step down from the embattled plane maker at the end of the year as part of a broad management shakeup Monday after a series of mishaps at one of America’s iconic manufacturers.

Stan Deal, president and CEO of Boeing’s commercial airplanes unit, will retire immediately. Stephanie Pope, the company’s chief operating officer for less than three months, has taken over leadership of the key division.

The company said board Chairman Lawrence Kellner, a former airline chief, won’t stand for re-election in May and will be replaced by a former Qualcomm CEO.

Boeing has been under intense pressure since early January, when a panel blew off a brand-new Alaska Airlines 737 Max. Investigators say bolts that help keep the panel in place were missing after repair work at the Boeing factory.

The Federal Aviation Administration has stepped up its scrutiny of the company, including putting a limit on production of 737s. An FAA audit of Boeing’s 737 factory near Seattle gave the company failing grades on nearly three dozen aspects of production.

Airline executives have expressed their frustration with the company, and even minor incidents involving Boeing jets have attracted extra attention.

Fallout from the Jan. 5 blowout has raised scrutiny of Boeing to its highest level since two Boeing 737 Max jets crashed in 2018 in Indonesia and 2019 in Ethiopia. In all, the crashes killed 346 people.

In a note Monday to employees, Calhoun, 67, called the accident “a watershed moment for Boeing” that requires “a total commitment to safety and quality at every level of our company.”

“The eyes of the world are on us, and I know we will come through this moment a better company, building on all the learnings we accumulated as we worked together to rebuild Boeing over the last number of years,” he said.

Boeing’s most significant effort to improve quality has been the opening of discussions about bringing Spirit AeroSystems, which builds fuselages for the Max and many parts for that and other Boeing planes, back into the company.

Mistakes made at Spirit, which Boeing spun off nearly 20 years ago, have compounded the company’s problems. Bringing the work of key supplier Spirit back in-house would, in theory, give Boeing more control over the quality of manufacturing key airplane components.

Calhoun said the two companies are making progress in talks “and it’s very important.”

Calhoun said the decision to leave was his. Calhoun was a Boeing director when he became CEO in January 2020, replacing Dennis Muilenburg, who was fired in the aftermath of the Max crashes. In 2021, Boeing’s board raised the mandatory retirement age for CEO to keep Calhoun in the job.

The company has chosen former Qualcomm CEO Steven Mollenkopf to become the new board chairman and to lead the search for Calhoun’s replacement.

The growing pressure on Boeing took some of the surprise out of Monday’s news. Citi analyst Jason Gursky called the shakeup “both predictable and thoughtful.”

Some analysts had viewed the fast-rising Pope a likely successor to Calhoun. Gursky said her move to lead commercial airplanes opened the way for an outsider to become CEO.

Pope, 51, was promoted to Boeing chief operating officer only in January. Before that, she was president and CEO of Boeing’s services business, where she dealt with both airline and military customers, and she was chief financial officer of the airplanes division before that.

In a statement Monday, U.S. Rep. Rick Larsen, D-Everett, said, “The Boeing Company needs to get back to what it has done best: designing and engineering the safest and best airplanes in the world. That starts with Boeing getting back to its roots as an engineering company and away from its multi-decades focus of being a financial services company.”

Larsen is the lead Democrat on the House Transportation & Infrastructure Committee.

Richard Aboulafia, a longtime aerospace analyst and now a consultant at AeroDynamic Advisory, said the management shakeup “is likely to be a pivotal moment in Boeing’s history, and probably a very positive one,” but the outcome depends on the next CEO. He said Patrick Shanahan, a former Boeing executive and acting U.S. Defense secretary who has led Spirit AeroSystems since last fall, would be “a great choice.”

Cai von Rumohr, aerospace analyst at Cowen, said the management changes are “a partial step toward changing its culture to underscore safety and rebuild investor confidence in the company.” He said the fact that Calhoun gave more than eight months’ notice will help the Boeing board make “a considered decision” instead of “a knee-jerk reaction.”

Shares of The Boeing Co. rose about 1% in midday trading.

AP Business Writer Michelle Chapman contributed to this report from New York.

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