Boeing Is Experiencing More 'Air Turbulence' With Its CEO's Departure

As the quality and safety issues sparked by the Alaska Airline incident continue to ferment, Boeing may be facing the most severe PR crisis since its inception. However, the sudden resignation of the CEO and the ensuing personnel earthquake are adding insult to injury to an already dire situation.

On Monday, Boeing's current president and chief executive officer, Dave Calhoun, announced his decision to leave the company he's led for four years by the end of this year, along with a significant reshuffle of the company's leadership.

In addition, Stanley Deal, head of Boeing's commercial plane division, is to depart immediately, and Larry Kellner, chairman of the board, will not seek re-election.

Having served on Boeing's board since 2020, former Qualcomm CEO Steve Mollenkopf is set to be appointed as the new chairman.

In a memo to employees on Monday, Calhoun stated: The eyes of the world are on us, and I know that we will come through this moment a better company.

Calhoun also emphasized that he would not be departing immediately but would ensure all matters and work were successfully transitioned before leaving: I will only feel the journey has been properly completed when we finish the job that we need to do. We are going to fix what isn't working, and we are going to get our company back on the track towards recovery and stability

Notably, Calhoun took the helm at Boeing because of the company's significant safety events—in 2018 and 2019, two severe 737 MAX crashes plunged the aircraft manufacturer into a maelstrom of public opinion and resulted in the resignation of former CEO Dennis Muilenburg. Calhoun, who had previously served at General Electric and Blackstone, was hired by the board to mend the company's trust with the outside world.

Shortly after becoming CEO in January 2020, Calhoun emphasized that Boeing's future would face severe damage if safety issues were not considered a priority. He even said in a previous call with reporters: Whether you might think I am the right guy to do it or not, I've probably got more conviction around these topics than almost anybody..

While Calhoun claimed he could serve at Boeing as long as they want me to, four years later, the fact that this executive who once made solemn promises regarding safety is now stepping down amidst safety incidents, is making his bold statements and various promises appear somewhat ironic.

However, although Calhoun is on his way out, the series of crises and problems Boeing now faces will not leave him, and this will become a thorny issue for the incoming CEO to confront.

Boeing is still beset by serious crises, including plane quality issues, production disarray, dissatisfaction from airlines and regulatory bodies, and unrest among suppliers and labor unions.

After the fuselage cabin door flew open mid-flight in January this year, the Federal Aviation Administration (FAA) has already imposed restrictions on Boeing's production and later audits revealed widespread problems on the 737 production line. Now, the United States Department of Justice is also conducting a criminal investigation into this accident and preparing to file a lawsuit against Boeing.

Under the impact of production constraints, analysts indicate Boeing can now only produce about 15 737 aircraft per month, far less than half the level of last year's end. As a result, many airline companies have been forced to adjust their flight schedules and issue warnings about their potential performance in 2024.

In light of this, CEOs of several airlines including United, Southwest, and American Airlines have recently met with Boeing's board to express their dissatisfaction with Boeing's plane quality issues and production efficiency. Meanwhile, the union representing 32,000 Boeing workers in Washington state is demanding a seat on the board during ongoing contract negotiations.

With these factors compounded, the slowdown in production also means that Boeing's losses are mounting: at an investor meeting last week, chief financial officer Brian West indicated Boeing expects to lose between $4 billion and $4.5 billion this quarter, more than previously forecast. This may bring further impact to Boeing's stock price, which has already fallen about 24% since the beginning of the year.

Therefore, Boeing urgently needs new leadership to tackle this series of challenges.

According to an insider familiar with the situation, the potential candidates for the new CEO include Stephanie Pope, who recently became Boeing's Chief Operating Officer; current General Electric CEO Larry Culp; Boeing board member and Carrier Global Corp. CEO David Gitlin; Patrick Shanahan, the CEO of aircraft component supplier Spirit AeroSystems soon to be acquired by Boeing; and American Airlines Chairman and former Boeing CFO Greg Smith.

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