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- Boeing announced Monday that CEO Dave Calhoun would resign at the end of the year.
- It makes him the second successive chief to go after a 737 Max crisis.
- Attorneys for crash victims say he failed to refocus the planemaker on safety above profit.
On Monday morning, Dave Calhoun became the second successive Boeing CEO to lose his job in the wake of a 737 Max crisis.
The company announced he would step down at the end of the year while Stan Deal, the head of Boeing’s commercial airplanes division, was immediately replaced.
Calhoun, Boeing’s former chairman, became CEO after Dennis Muilenburg was ousted by the board in 2020. A year later, Boeing raised its mandatory retirement age from 65 to 70 — a sign it had faith that Calhoun, then aged 64, could continue piloting the firm.
Muilenburg was terminated as the planemaker fought for its reputation after 346 people died in two 737 Max 8 crashes in 2018 and 2019.
The company was accused of putting profit above safety as it hurried production of the Max in order to compete with the Airbus A320neo — which broke order records at the 2011 Paris Air Show.
After the longest-ever grounding for a US airliner, the 737 Max was ungrounded 10 months into Calhoun’s reign.
Under his leadership, the firm worked to reassure both customers and the public that the Max was safe. MCAS, the software that played a major role in the crashes, now relies on two sensors rather than one, and is easier for pilots to override.
In 2021, Boeing paid $2.5 billion in a deferred prosecution agreement to settle charges that it defrauded the Federal Aviation Administration by misleading it about MCAS.
Most people’s concerns about the 737 Max looked to have been assuaged, until the Alaska Airlines blowout on January 5.
The fact that the incident occurred on a jet delivered just 66 days earlier immediately sent alarm bells ringing that it could be the manufacturer’s fault, rather than a maintenance issue at the airline.
In its preliminary report, the National Transportation Safety Board said the 737 Max 9 left Boeing’s factory missing key bolts designed to secure the door plug that came off in midair.
The Department of Justice is now reviewing whether the incident constituted a violation of the deferred prosecution agreement, and the FBI has sent letters to passengers on the blowout flight saying they may be victims of a crime.
“The watershed moment should have been when nearly 400 people died in the Boeing Max 8 disasters years ago,” Bob Clifford, the lead counsel in pending federal litigation for families of the 2019 Ethiopian Airlines crash victims, said in an email.
“If the company had taken the Max crashes seriously, it is likely that the Alaska Air debacle could have been averted, and the company would be on the way to healing itself, and ensuring the safety of the flying public,” he added.
According to data from Muck Rack, the media monitoring company, around 40% of news coverage of Calhoun was negative last quarter, compared to 50% this quarter.
Maintenance problems at United Airlines, Boeing’s biggest customer, also created bad headlines for the planemaker, like a tire falling off a 777. Even though that doesn’t appear to be Boeing’s fault, interest in the planemaker’s problems soared following the blowout.
However, it was the airline chiefs who appeared to have the biggest sway, after Boeing’s deliveries of new jets have been delayed.
The Wall Street Journal first reported last Saturday that airline CEOs requested a meeting with Boeing’s board to discuss their frustrations. The meeting hasn’t yet taken place, but was called by the bosses of United, Southwest, Alaska, and American as a symbolic vote of no confidence in Calhoun, The Air Current reported.
Boeing declined to comment when reached by Business Insider.
In an email to BI, Timothy Hubbard, assistant professor of management at the University of Notre Dame, said: “His departure is a long time coming. The embattled leader has struggled to rebuild confidence in Boeing’s products following years of design and manufacturing issues.”
He added that Boeing’s culture around safety and quality needs to change, but “it’s unfortunate” that it will take nine months for a new CEO to take over and take control of that process.
“This delay may reflect poor succession planning or a desire by Calhoun to keep power a little longer,” Hubbard said.
In an interview with CNBC following the announcement, Calhoun said the decision to leave was “100%” his own.
He added that Boeing has a “bad habit” of being too focused on delivering planes on time, which suggests “the movement of the airplane is more important than the first-time quality of the product.”
That’s notable given the planemaker has often come under criticism for an emphasis on profit over safety.
For example, Clifford said: “The families of the victims knew that the culture of profit over safety would not change when Calhoun took over in January 2020 because he was raised on that principle.”
The Journal reported last September that Boeing staff were frustrated by Calhoun’s use of private jets to commute to the office. It added that he was rarely seen at the headquarters, even while managers encouraged employees to return to the office after the pandemic.
Critics also cite the distance between Boeing’s headquarters in Virginia and the 737 factory near Seattle as evidence that safety isn’t prioritized. In February, the board shut down a shareholder’s attempt to force a vote on relocating Boeing’s headquarters back to its historic base.
Calhoun’s interview with CNBC took place in Renton, Washington, the home of the 737 factory — a sign of the firm’s renewed focus on manufacturing.
For now, it looks like the outgoing CEO has come to agree with his critics. In his memo to employees, Calhoun said the company needs to have “safety and quality at the forefront of everything that we do.”
“The next CEO must know that his or her role will be to prioritize safety, not just profit,” Justin Green, a partner at Kreindler and Kreindler who represents 34 families of Max 8 crash victims, said in an email.
Green praised the personnel changes but called on the company to be “fully transparent” regarding every change it makes involving manufacturing processes.
“For too long, Boeing has been avoiding public accountability and these leadership changes open a window for the company to do so,” he added.
