San Francisco Frontiers - Boeing CEO to exit as safety concerns mount

Besides Calhoun, who will stay in his post through the end of 2024, Boeing announced two other major changes to company management.

Stan Deal, Boeing's head of commercial airlines since 2019, will exit immediately, while the company's chairman, Larry Kellner, a former airline CEO, will depart after the company's annual meeting this spring.

Replacing Deal will be longtime Boeing executive Stephanie Pope, while former Qualcomm CEO Steve Mollenkopf will serve as the new chairman.

The sweeping personnel changes come in the wake of Boeing's near-catastrophic incident in January when a fuselage panel on a Boeing 737 MAX 9 Alaska Airlines jet blew off mid-flight.

Calhoun called the Alaska Airlines incident a "watershed moment" for the company in a letter to employees.

"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," Calhoun said.

Shares jumped on the announcement, which follows criticism of Boeing's manufacturing and quality control practices from the Federal Aviation Administration, which has told Boeing to come up with a plan to address the problem.

- Restive clients -

Boeing also faced heavy questioning from airlines, who had requested a meeting with the Boeing board in a move seen as a sign of restiveness among the carriers.

The Alaska Airlines incident put Boeing back in the hot seat, a familiar spot after a 20-month grounding of the 737 MAX following fatal crashes in 2018 and 2019.

Boeing tapped Calhoun, a long-time board member, as CEO after ousting former chief Dennis Muilenburg in December 2019 following widespread criticism of Muilenburg's handling of MAX crisis following the crashes.

Calhoun's tenure was challenged by the effects of the MAX grounding, and the severe industry downturn due to Covid-19 that was quickly followed by a frenzy of new orders from airlines facing surging post-pandemic travel demand -- with the flood of orders straining the industry's supply chains.

In April 2021, Boeing extended Calhoun's contract as CEO potentially through 2028, raising the company's retirement age to 70.

In recent weeks, the company has faced questions following more potentially dangerous episodes, including an engine fire on a Boeing 747 shortly after takeoff from Florida in January.

Earlier this month, a Boeing 777 jetliner bound for Japan had to make an emergency landing shortly after takeoff from San Francisco when a wheel fell off and plunged into an airport parking lot, damaging several cars.

Last week New Zealand authorities launched an investigation after a Boeing 787 Dreamliner violently lost altitude mid-flight from Sydney to Auckland, injuring some passengers.

- Mixed reaction -

The leadership changes were praised by Ryanair Chief Executive Michael O'Leary as "much needed" as the Irish carrier pointed to delayed new aircraft deliveries as a drag on the company's prospects.

But Michel Merluzeau, an aeronautics specialist with consulting firm AIR, expressed misgivings, saying, while there is a need for "fresh enterprise leadership" at the top, "the urgency lies primarily on the factory floor," he said in an email.

"Without substantial operational improvements and personnel changes implemented at Boeing factories, tangible results will remain elusive in our opinion," Merluzeau said.

"These issues transcend Dave Calhoun or Stan Deal. They've been simmering beneath the surface in Seattle for well over four decades."

In an interview with CNBC, Calhoun described the personnel changes as "all about a clear path to give our best people internally an opportunity to shine in front of the board to demonstrate everything that they can do."

Besides getting a better grip on safety and quality control, Calhoun said the new CEO will need to "know how to handle a big long-cycle business like ours," including overseeing the company's next airplane, a $50 billion investment.

Formerly head of Boeing Global Services, Pope was promoted to Chief Operating Officer in January. She takes over commercial planes immediately.

With degrees in electrical engineering, Mollenkopf, a Boeing board member since 2020, will lead the process to oversee the next CEO.

In his letter, Calhoun praised Kellner for recruiting "superb" board members, which includes members with engineering degrees or aviation safety backgrounds, in some cases replacing outgoing board members who were politicians or Washington insiders.

Shares of Boeing rose 0.9 percent in mid-morning trading.

B.Turner--SFF