Since its founding by William Boeing more than a century ago, the Boeing Company has had 12 CEOs. The 13th might be the most important yet.
As Boeing begins its search for a new CEO, the company is facing its worst-ever crisis. It has struggled through more than five years of safety incidents and bad news that created unprecedented doubt about the quality of its aircraft.
It faces multiple federal investigations into its commercial plane practices, as well as an outcry from the airline customers that buy its planes.
In addition to two fatal crashes that cost 346 lives, the company has run up more than $31 billion in losses since 2019, with no end to the red ink in sight. It has grabbed unwanted attention with incidents like a blown-out door plug that left a gaping hole in an Alaska Airlines flight in January.
Those incidents were followed by Monday’s decision by the current CEO, Dave Calhoun, to step down by the end of the year, leaving the company to search for a new chief executive.
When picking a new CEO, the company likely has two pools of choices.
It can go with someone who has an engineering background, as was the background of many of the past CEOs who led the company in its heyday. Four of the company’s first five CEOs were engineers by training, running the company for 46 of the first 70 years of Boeing’s existence.
Or it can once again pick a leader like outgoing CEO Calhoun, who has a financial background and an undergraduate degree in accounting. Critics have said an increased focus on financial results over engineering excellence over the last 25 years has led to the company’s current problems.
Some say it’s crucial that Boeing get back to its engineering roots in its next CEO.
“To fix Boeing’s issues the company needs a strong engineering lead as its head coupled to a governance model which prioritizes safety and quality,” said Sir Tim Clark, president of Emirates Airlines, which ordered 373 planes from Boeing since 2009, but only two of those since 2019. “Whether, yet again, this changing of the guard will resolve Boeing’s issues only time will tell, but time, unfortunately, is not on their side.”
In an interview with CNBC on Monday morning, Calhoun was asked about what he wants to see in his successor.
“I want somebody who knows how to handle a big, long, long-cycle business like ours,” Calhoun said. “It’s not just the production of the airplane. It’s the development of the next airplane. It will be a $50 billion investment. I would like somebody who clearly has the experience inside our industry.”
Calhoun did not give any potential names, or say whether Boeing is looking more at internal or outside candidates. But a number of potential choices are surfacing, according to Richard Aboulafia, managing director at AeroDynamic Advisory.
Pat Shanahan is the “top of the list,” according to Aboulafia. A former Boeing executive for 31 years, he became known as “Mr. Fix It” at the company for dealing with various problems during his tenure.
He was deputy secretary of the US Department of Defense under President Donald Trump and was nominated to be secretary, serving nearly six months in an acting capacity in 2019. His name was withdrawn before his confirmation due to media reports involving domestic incidents involving violent actions by his son and ex-wife.
He has held a number of different posts in the years since, and in September became CEO of Boeing’s major supplier, Spirit AeroSystems, which makes the fuselages for the Boeing 737 Max among other items.
Spirit AeroSystems faces its own safety and quality issues, which have caused problems for Boeing, forcing temporary halts of production on some jets. But most of those problems occurred before Shanahan took the CEO job there.
Boeing is in talks to reacquire Spirit, the companies confirmed, which would be something of a homecoming. Spirit was part of Boeing before the larger company spun it off in 2005.
If Boeing acquires Spirit, it’s possible Shanahan would be tapped as Boeing’s next CEO as part of the merger.
Most of the companies where candidates mentioned in this story now work declined to comment when questioned by CNN or did not respond to a request for comment. Spirit was the only one to comment, but it did not address the possibility of Shanahan becoming Boeing CEO.
“Mr. Shanahan remains solely focused on driving a zero-defects culture across all aspects of Spirit AeroSystems,” said Joe Buccino, a Spirit spokesperson.
Larry Culp has already turned around one major American industrial icon, becoming CEO of General Electric in 2018 and spinning off many of the company’s parts. One of the parts that remains is GE Aerospace, which makes engines used on Boeing jets and other planes.
Under its longtime CEO Jack Welch, GE grew to corporate success with a strong focus on cutting costs to improve financial performance. Three of the last four Boeing CEOs, including Calhoun, spent part of their careers at GE. Some Boeing critics say those CEOs’ emphasis on the GE playbook of cost cutting, profitability and shareholders rewards rather than quality was the source of much of Boeing’s current problems.
But Culp has moved GE away from the Jack Welch era, a time when Calhoun and some of the other earlier Boeing CEOs cut their teeth, said Aboulafia.
Culp joined GE as an outsider in 2018 after spending 24 years at Danaher Corp., moving up the ranks to CEO from 2000 to 2014. Many industrial analysts believe Danaher, during Culp’s tenure, outperformed GE and many other manufacturing and industrial companies during that time. Culp has an undergraduate degree in economics and an MBA from Harvard, a business background more than an engineering background.
“I know he’s done incredibly well at Danaher and GE. This is a new GE. Culp is being very open to being transformative,” he said. “They needed to escape from that Jack Welch culture. What looks like a negative is actually a positive.”
GE did not comment when asked about whether Culp would be interested in the Boeing job.
Kathy Warden has had a lot of success as CEO of Northrop Grumman since she began in the company’s top job at the start of 2019.
The military contractor’s revenues have grown 30% during that period. Its stock price has nearly doubled under her tenure. And while Northrop doesn’t make commercial jets, Boeing is also a major defense contractor in addition to a commercial aircraft maker. Warden has an MBA and worked at GE for a decade and two other industrial companies before joining Northrop.
“That’s a wonderful idea,” Aboulafia said. “I don’t now how you’d convince her to make that leap, but she’d be perfect.”
One reason that the Boeing board might be interested in her, besides her success, is what’s known as the “glass cliff” phenomenon, in which companies, especially those in male dominated fields like tech or manufacturing, are more open to looking at women CEOs when they’re in trouble.
Think of General Motors picking Mary Barra to be the first woman to run a major global automaker just before a major crisis — the ignition switch problem that killed more than 100 drivers and passengers and cost the company billions — became public. Sometimes the new woman CEO is not as successful as Barra in steering the company through the crisis, and thus a woman who has shattered the “glass ceiling” finds herself pushed off the “glass cliff.”
Greg Smith left his post as CFO of Boeing soon after the company’s board granted a five-year waiver of the normal retirement age limit of 65 to Calhoun in 2021. Smith, who was 54 at the time, clearly saw his path to the CEO job had been blocked.
Since he left, he joined a number of corporate boards, most notably American Airlines, where he serves as chairman.
RIght now, one of Boeing’s biggest problems is relations with its airline customers, many of whom are frustrated with repeated missed deadlines to deliver new jets, groundings by regulators and for the quality of the jets it is delivering.
One way for the Boeing board to signal it is listening to those customer concerns would be to name someone who now is on the airlines’ side of that crucial relationship but who also has experience with Boeing. That describes Smith. But picking him would also mean another CEO with a finance background rather than an engineering background.
Aboulafia suggested there could be a number of executives who have left Boeing who might be good fits if they could come back, although their age could be an issue.
At the top of that list is Alan Mulally. He was a long-time veteran of the Boeing Commercial Airplane unit, rising to be its CEO. He left Boeing in 2006 to become CEO of Ford. At the time, Ford was struggling more than the other Detroit automakers, GM and DaimlerChrysler, as Chrysler was then known.
Mulally helped turn around the company, which allowed Ford to be the only Detroit automaker to avoid a federal bailout and bankruptcy, as GM and Chrysler experienced three years later. He retired from Ford in 2014 with a nest egg worth nearly $300 million thanks to the turnaround the stock experienced during his eight years on the job. Mulally has degrees in aeronautical engineering and in management.
It’s not clear if Mulally, now 78, would want to come out of retirement for a challenge as big as turning around Boeing. He did not respond to an email from CNN about the job on Monday.
It’s also not clear if the Boeing board would consider someone that old. But in a year in which the US presidential election appears likely to pit an 81-year old candidate versus a 77-year old candidate, it seems tough to argue a well respected 78-year-old is too old to run Boeing.
Internal candidates
Normally, internal candidates might be seen as the likely picks to replace Calhoun. Most of the 12 CEOs in Boeing’s history were internal candidates, with Calhoun being an exception.
However, the problems at Boeing during the last five years could lead the board to give preference to outside candidates.
“Boeing is in need of drastic cultural overall, which is cultivated from the top, but sprouts from the bottom,” said Bank of America aerospace analyst Ron Epstein in a note to clients Monday. “We see the changes [announced Monday] as the first right steps of removing the ‘old guard’ and making way for a new team which can work from a less sullied slate.”
But among the internal candidates who might be considered are Stephanie Pope, who has been rising rapidly at Boeing and was promoted to chief operating officer just this past January. She was then promoted to CEO of Boeing Commercial Airplanes on Monday.
Another internal candidate could be CFO Brian West, another GE veteran, having served as CFO of GE Aviation and CFO GE Engine Services before coming to Boeing. Both Pope and West come from a finance background, not an engineering background.
It’s also possible that Boeing could tap Elizabeth Lund, who is senior vice president of quality at Boeing Commercial Airplanes, a new position that was created just a month ago. She does have an engineering background and experience dealing with Boeing suppliers, a major issue for the company’s efforts to get back on track.
“I don’t know her, but she’s well regarded,” Aboulafia said.
A Boeing spokesperson declined to provide any comments on behalf of any of the internal candidates.
