Boeing Fires CEO over 737 MAX Crisis

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Chinedu Eze with agency report

After about nine months of uncertainty over the future of Boeing 737 MAX, the company has fired its Chief Executive Officer, Dennis Muilenburg.

Reuters reported that the management shakeup came as the world’s largest planemaker struggles to win regulatory approvals for its grounded best-selling jetliner, B737 MAX, while trying to regain trust with passengers and airline customers.

According to reports, Chairman, David Calhoun will take over as CEO and President, effective January 13, 2020, the company said, adding that a change in leadership was necessary to restore confidence in the company.

The company’s shares rose nearly four per cent in early trading.

The B737 MAX grounding was the biggest crisis of Muilenburg’s 34-year tenure at Boeing, where he started as an intern in 1985, rising through the company’s defence and services ranks to the top job in 2015.

The company said this month it would stop production of the jets in January.

Reuters reported that a senior industry source called the wording of Boeing’s statement “brutal”, while another said the decision was inevitable after spiraling pressures from the 737 production halt to a public slap-down from the US Federal Aviation Administration (FAA), topped off by an embarrassing space launch, snafu, on Friday.

Reports indicate that speculation that Muilenburg would be fired had been circulating in the industry for months, intensifying in October when the board stripped him of his chairmanship title.

A Boeing official said the board deliberated over the weekend and they made the decision to fire Muilenburg in a phone call on Sunday.

Aerospace analyst Richard, Aboulafia said the appointment of Calhoun, who previously served as head of Blackstone Group’s private equity portfolio operation, would provide needed short-term stability, but not the long-term “emphasis on engineering” the company needs.

“Calhoun is respected in the industry,” Aboulafia said yesterday. “But long-term, does he bring the right tool kit? Private equity leans companies out. That’s not Boeing’s problem right now.”

Board member, Lawrence Kellner, would become non-executive chairman of the board effective immediately, the company said.

Chief Financial Officer, Greg Smith, will serve as interim CEO during the brief transition period.

“Under the company’s new leadership, Boeing will operate with a renewed commitment to full transparency, including effective and proactive communication with the FAA, other global regulators and its customers,” Boeing said.

Reuters noted that in keeping Muilenburg in the job as long as Boeing has, the company was ignoring elements of the classic crisis communications playbook used by other companies, said Paul Argenti, a professor at Dartmouth’s Tuck School of Business.

“You want to bring somebody from the outside to bring fresh perspective to ‘save the day,’” Argenti said. “He should have been gone a long time ago. He is part of the problem.”