"In a complex industry such as aerospace, leaders who have spent a lot of time in the cockpit are usually the preferred choice. But a company as scandal-struck as Boeing may turn out to be the exception.
On Monday, the plane maker said Chief Executive Officer Dave Calhoun will step down at the end of the year, having been in post since 2020. His departure is part of a larger shake-up: The chairman of the board, Larry Kellner, won't stand for re-election at the next shareholder meeting, and is being succeeded by Steve Mollenkopf -- the former boss of semiconductor firm Qualcomm -- who will lead the search for the next CEO.
This is on top of the retirement of Stan Deal, who has led the troubled Boeing Commercial Airplanes, or BCA, division since Kevin McAllister was ousted in the wake of the two fatal 737 MAX crashes in 2018 and 2019. Stephanie Pope, Boeing's chief operating officer, took over the role on Monday.
Shares of Boeing edged up in response. They are trading at approximately 56% of their prepandemic value, compared with fresh records for sector peer Airbus.
The airlines and leasing companies that buy planes have been at odds with Boeing ever since the worldwide grounding of the MAX in 2019 and 2020. Yet their criticisms have become more open this year, following an Alaska Airlines flight on which a door plug blew out. Executives at major U.S. carriers have expressed their frustration with the accidents and production snafus that have delayed deliveries of both the narrow-body MAX and the wide-body 787 Dreamliner, and earlier this month requested a meeting with Boeing's board.
Calhoun doesn't appear to have chalked up much success in his mission to change Boeing's culture, which had become excessively focused on bean counting at the expense of engineering -- a shift that goes all the way back to the acquisition of its rival McDonnell Douglas in 1997. Over time, the company became incapable of executing what were otherwise good product designs and engineering ideas.
To be sure, changing the course of an industrial behemoth would have been a daunting task for anyone. Unlike his predecessor Dennis Muilenburg, Calhoun struck the right notes when reacting to problems, and his recent plans to crack down on quality lapses appeared reasonable. He has even earned praise from Michael O'Leary, the plain-speaking CEO of European budget airline Ryanair, who has pointed the finger specifically at the BCA division.
"We welcome these much-needed management changes in Seattle," O'Leary said, referring to the departure of Deal from the Seattle-area unit. "We also look forward to continuing to work with Boeing CEO Dave Calhoun," he added.
Still, Calhoun's status as a longtime insider was hard to overcome. He had served as a director since 2009 before being chosen as CEO, and even briefly became chairman in 2019 -- a position from which he still publicly supported Muilenburg right up until his resignation.
His background also includes 26 years at General Electric, where some of the misguided management practices that led to Boeing's decline may have developed.
Finding a successor won't be easy. Usually, the aerospace industry prefers insiders, which could point to Mollenkopf or Pope, a three-decade Boeing veteran. Another name floated by Wall Street analysts is Pat Shanahan, former deputy defense secretary under Donald Trump, who took over as CEO of Spirit AeroSystems last year. Boeing has been in talks with Spirit about a takeover to regain control over its supply chain. If this project goes ahead, Shanahan could be the natural choice.
But the plane maker's troubles have attracted so much attention that turning to a steady hand might not be enough to improve its tarnished reputation.
To sell investors on the idea of a "new Boeing," it could be time for outsiders to take over. A fresh perspective can help, even in aerospace." [1]
1. After Calhoun, Boeing Needs a Clean Break With the Past. Sindreu, Jon. Wall Street Journal, Eastern edition; New York, N.Y.. 26 Mar 2024: B.11.
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