Boeing had already shaken up its leadership twice in recent months, naming its first ever chief operating officer in December and then, in February, ousting the head of its 737 Max programme after a door panel blew off an Alaska Airlines flight mid air.
On Monday the US plane maker went further, underscoring its struggle to contain a crisis that has left regulators, investors and customers questioning its safety record.
Dave Calhoun, appointed less than five years ago to try to resolve a crisis sparked by two 737 Max jets crashing within months of each other, will step down as chief executive at the end of the year. Board chair Larry Kellner will leave in May. Stan Deal, head of the commercial planes division since 2019, is retiring immediately, to be replaced by Stephanie Pope, who has been chief operating officer for less than three months.
Boeing’s board met on the weekend to finalise the details, said people familiar with the situation. But it is again facing the task of finding a new CEO able to address ongoing problems in manufacturing quality and increased scrutiny from regulators, customers and investors.
“We greet the news of the management shake-up at Boeing with resigned exhaustion,” said Morningstar analyst Nicolas Owens in a note. Calhoun and Deal “became too closely associated with the successive manufacturing flaws uncovered in the 737 Max and 787 line-ups since 2019 for their mantle of leadership to survive into the next chapter”.
Steven Mollenkopf, a former CEO of chipmaker Qualcomm whose electrical engineering qualifications Boeing emphasised, is taking over as chair, giving him a critical role in leading the search for Calhoun’s successor.
A director at Boeing since 2020, Mollenkopf is no stranger to corporate upheaval. While at Qualcomm, the company faced lawsuits from the US Federal Trade Commission, a hostile takeover bid and pressure from activist shareholders.
Mollenkopf is not waiting until May to step up: he and Kellner will attend previously arranged meetings with Boeing’s airline customers this week, the people confirmed.
Calhoun, who was paid $65mn in salary and incentives in his first three years as CEO, told CNBC on Monday that as a Boeing board member he too would have a view on who should succeed him, saying he would want somebody who “clearly has experience inside our industry”.
Michael O’Leary, chief executive of Ryanair, one of Boeing’s biggest customers, said he was “disappointed” Calhoun was leaving even as he laid out some of the challenges awaiting the next CEO. Calhoun, he told the Financial Times, took Boeing through an “existential crisis and was working his way out . . . until they got let down again by more mismanagement in Seattle”.
Boeing’s Renton factory, where it builds the Max, is just outside Seattle. The most important thing Boeing could do was to change the management there, O’Leary added, calling it “too full of sales guys”.
“Seattle is a logistics business. It is grind and detail and logistics, and that is what has been missing there over the last 12 months. But the Boeing CEO can’t go to Seattle and fix that, he also has a huge defence business to think about.”
Historically, the commercial aviation division generates the most revenue of Boeing’s three businesses, though the defence business eclipsed it during the depths of the Max and Covid-19 crises. But for the past two years the defence division has reported losses.
O’Leary said he had not yet worked with Pope, who became chief operating officer in January and who has been considered a key contender for the top job. She has a strong record of delivering profits at Boeing’s services business while both the commercial and defence divisions floundered.
“She has come from the finance side, which I think is a good starting point,” O’Leary said. “They are the people with an eye for detail and the attention span for the logistics.”
Another possibility is Dave Gitlin, a Boeing director who is CEO of Carrier, which manufactures heating and cooling systems, said Baird analyst Peter Arment in a note. Gitlin has a background in aerospace, previously holding roles at Collins Aerospace and United Technologies.
A third contender is Patrick Shanahan, head of Boeing’s troubled supplier Spirit AeroSystems. Boeing is in talks about a possible acquisition of Spirit, which it spun out in 2005. Shanahan spent three decades at Boeing and helped get assembly of the 787 Dreamliner back on track when it was beset by delays. He was tapped during then-president Donald Trump’s administration as acting head of the Department of Defense.
Boeing is likely to want a younger successor to allow him or her to stay in the job for a decade, Arment said. That could give an edge to Pope or Gitlin, who are in their early 50s. Shanahan is in his early 60s, which “hurts his chances, but we know the market would love to see his selection”.
Much will depend on how — and whether — Pope manages to get Boeing’s commercial business back on track, said one person, noting that “this would be a significant achievement”.
Repairing relations with frustrated airline customers will be just one of her challenges. She must work with production employees building the planes, regulators investigating Boeing’s manufacturing and quality control processes, and eventually the company’s suppliers, when the Federal Aviation Administration allows the company to boost production again.
Calhoun’s impending departure means Pope “has some nine months to instil meaningful behaviour changes in the commercial aircraft unit that eluded her predecessors for nearly five years”, Owens at Morningstar noted.
Concerns remain over the depth of management expertise at Boeing. Byron Callan, managing director of research group Capital Alpha Partners, said: “Given the travails of the company in recent years, it’s not clear to us how deep a bench there is in terms of people internally who could stabilise the company’s commercial aerospace operations.”
“At the least, we would expect a new Boeing CEO with some experience in aerospace [and] manufacturing,” he added.
The company is in need of a “drastic cultural overhaul”, Bank of America analyst Ron Epstein told clients, calling the latest changes “the first right steps of removing the ‘old guard’, and making way for a new team which can work from a less-sullied slate”.
Uncertainties remain about addressing any FAA-mandated changes, the possible acquisition of Spirit and rebuilding trust with customers, investors and travellers, Epstein said, but “this may be the first real chance, in a long time, Boeing has had to clean house and reset their own narrative”.