NEW YORK — Boeing on Monday pushed out its embattled chief executive, Dennis Muilenburg, as it attempts to pivot from a protracted crisis surrounding the grounding of its top-selling 737 MAX after 2 deadly crashes.
More than nine months after the MAX was grounded and a week after halting production of the aircraft, Boeing named board Chairman David Calhoun as chief executive and president, saying the company needed to "restore confidence" and "repair relationships with regulators, customers and all other stakeholders."
A week ago, Boeing took the monumental step of temporarily shutting down MAX production because of the crisis, which has pushed the aircraft's return to the skies into 2020 and raised the anxiety level among Boeing's workforce and suppliers.
Though coming during the sleepy days ahead of the Christmas holiday, the move was not entirely unexpected after Boeing stripped Muilenburg of his chairman title in October, installing board member Calhoun in that post.
Still, while Boeing watchers had seen Muilenburg's days as numbered, some expected him to stay on until the MAX was returned to service.
But the timing of that landmark event remains unclear and will depend on the Federal Aviation Administration, which has made it clear it is not in a hurry.
An FAA spokesman said the agency does not comment on personnel decisions.
"The FAA continues to follow a thorough process for returning the Boeing 737 MAX to passenger service," the FAA spokesman said. "Our first priority is safety, and we have set no timeframe for when the work will be completed."
Muilenburg repeatedly offered predictions on the 737 MAX return to service that proved overly-optimistic. His prospects further dimmed last week when its Starliner unmanned spacecraft came up short in a NASA mission to reach the International Space Station.
Muilenburg's departure was "long overdue," said former National Transportation Safety Board chief Jim Hall.
"Boeing clearly needs to reset the table and put someone in who puts safety first," Hall told AFP.
ANOTHER INSIDER?
Shares rallied on the announcement of the leadership shakeup, which came after calls in Congress for Muilenburg to go. The stock price jumped 2.9 percent to finish at $337.55.
But Scott Hamilton of Leeham News, an aviation website, noted that Calhoun had roundly praised Muilenburg's performance as CEO in a November television interview.
The executive has been "part of the Board policy-making that led to the cost-cutting some say had deleterious impact on the development of the MAX," Hamilton wrote.
"Calhoun has been on the board 10 years," he said. "Is Calhoun, an insider, the right person to pull Boeing out of its dive?"
Senator Richard Blumenthal, a Democrat from Connecticut, called for a "complete management house cleaning" at Boeing and new leadership "who will take safety seriously."
Calhoun previously served as vice chairman of General Electric, where he had a long career after starting with the company soon after graduating from Virginia Tech. He also currently serves as senior managing director of investment banking firm Blackstone Group.
Following the announcement, Calhoun reached out to lawmakers, airline CEOs, suppliers, regulators and other key stakeholders, a Boeing spokesman said.
Muilenburg will leave the company immediately but Calhoun will not take the CEO post until January 13, 2020, while he exits existing commitments, Boeing said in a news release.
During that period, Chief Financial Officer Greg Smith will serve as interim CEO. Meanwhile, board member Lawrence W. Kellner will become non-executive chairman of the board effective immediately.
AWKWARD RESPONSE TO CRISIS
Muilenburg's response to the crisis was increasingly criticized as the MAX grounding has dragged on far longer than initially expected as more disturbing details have dribbled out about the certification of the aircraft and issues with the flight software implicated in both crashes.
He also was seen as tone deaf and awkward towards families of the 346 people killed in the crashes.
Michael Stumo, whose daughter Samya was killed in the Ethiopian Airlines crash in March, called Muilenburg's departure "a good first step toward restoring Boeing to a company that focuses on safety and innovation."
"The next step is for several Board members who are underperforming or underqualified to resign," Stumo said.
The company resisted grounding the planes even after the second crash when Muilenburg pressed his case in phone calls with President Donald Trump.
Probes of the 2 crashes have focused in particular on the Maneuvering Characteristics Augmentation System, an automated flight control system.
FAA chief Steve Dickson ripped Muilenburg in October for not disclosing communications from a Boeing pilot that raised questions about the MCAS system.
The FAA also called out the company for its overly-optimistic statements about restoring the MAX saying it created the perception Boeing was trying "to force FAA into taking quicker action."
Agence France-Presse
CHICAGO, United States - Boeing co-chief executive Dennis Muilenburg will face shareholders on Monday for the first time since 2 fatal crashes that led to the 737 MAX's grounding worldwide and triggered investigations, lawsuits and a sharp loss in share value.
Battling the biggest crisis of his tenure, Muilenburg will try to bolster investor confidence in the manufacturer's future as well as that of its fastest-selling airplane as questions linger over the model's safety.
Family and friends of 24-year-old American Samya Stumo, one of the victims of the crash of an Ethiopian Airlines 737 MAX on March 10, will hold a silent protest outside the meeting site.
That crash, which killed all 157 on board when it plunged to the ground shortly after takeoff, came five months after a similar Lion Air nose-dive that killed all 189 passengers and crew.
Muilenburg will hold his first press conference since the grounding after the general annual shareholder meeting in Chicago, scheduled for (10 p.m. in Manila).
Boeing is under pressure to deliver a software fix and a new pilot training package that will convince global regulators, and the flying public, that the aircraft is safe to fly again.
The US Federal Aviation Administration could clear Boeing the 737 MAX jet to fly in late May or the first part of June, 2 people familiar with the matter said on Friday, though Boeing has yet to submit the updated software and training for review.
Some pilots have warned that draft training proposals do not go far enough to address their concerns.
Meanwhile, deliveries of the 737 MAX, which airlines around the world had been relying on to service a growing air travel industry for years to come, are on hold.
Last week Boeing abandoned its 2019 financial outlook, halted share buybacks and said lowered production due to the 737 MAX grounding had cost it at least $1 billion so far.
Shareholders have filed a lawsuit accusing the company of defrauding them by concealing safety deficiencies in the plane. The model is also the target of investigations by US transportation authorities and the Department of Justice.
Muilenburg is Boeing's chairman and president in addition to CEO, and faces calls that could strip him of one of those titles at Monday's meeting. Boeing has recommended against the move.
Boeing must also contend with lawsuits filed on behalf of dozens of victims of the 2 crashes, including the family of Stumo, who are asking whether the Ethiopian disaster could have been prevented after what happened to Lion Air.
"Those in charge of creating and selling this plane did not treat Samya as they would their own daughters," her mother Nadia Milleron told reporters in early April.
Shares in the company, worth $214 billion, have lost nearly 10 percent of their value since the March 10 crash.
source: news.abs-cbn.com
NEW YORK -- After a second air disaster involving the 737 MAX 8, aviation giant Boeing swung into crisis mode, losing $25 billion of market capitalization and suffering a severe hit to its reputation.
That was made worse by the company's response, according to industry experts, who described their efforts variously as "terrible," and "rough."
The tragedy of the Ethiopian Airlines flight on Sunday, in which all 157 people on board perished, renewed fears about the safety of the plane, and led to it being grounded worldwide -- although the US decision was not made for three days.
"It's been a rough week for them," said Matt Yemma, a crisis communication specialist at Peaks Strategies, based in Connecticut.
Boeing -- which in the first days after the accident said the MAX was reliable and safe -- could have announced it was voluntarily grounding the planes on Sunday to restore confidence and ensure the flying public they were on top of the problem, he said.
"Instead they just kind of let things dragged on and they end up losing a lot of market cap and a lot of business."
It was not until Wednesday after many governments and airlines worldwide had already banned the plane, that Boeing followed suit "out of an abundance of caution."
This was the second tragic accident in less than five months involving this model, which has been in service since May 2017, after the crash of a Lion Air flight in October which killed 189 people.
A malfunction of the new MCAS stall prevention system on the MAX was implicated in the Lion Air accident in Indonesia.
And the Federal Aviation Administration said evidence at the crash site in Ethiopia and new satellite data showed similarities and warranted "further investigation of the possibility of a shared cause for the two incidents."
And despite the growing use of the MAX worldwide, in China and Europe in particular, Boeing only issued brief statements, and meanwhile appeared to be attempting to prevent the US authorities from grounding the plane.
Two days after the accident, the company's CEO Dennis Muilenburg spoke on the phone with President Donald Trump, who had complained on Twitter that modern airplanes were becoming too complex for pilots to handle.
'American arrogance'
And it didn't help that the FAA announced it had ordered Boeing to make a software fix to the MCAS flaw, which some American pilots also encountered, raising questions about whether the manufacturer was diligent about getting the word out.
"It's the American arrogance," a source close to the aircraft manufacturer told AFP, which is "dangerous because it shows that the work was not done properly" due to overconfidence.
Others said the company should have moved more quickly to get out in front of the problem.
"Typically in a situation like this, you want to give as much information as you possibly can," especially given how quickly news whips around the globe, Yemma said.
"You want to make your clients, passengers and the public feel at ease about wanting to fly your planes. And the market and investors need to know there is nothing wrong and if there is something wrong that it's going to be fixed."
Michael Priem of communications firm Modern Impact in Minneapolis, agreed Boeing should have moved faster to reassure the general public.
The public expects "very quick responses and I think Boeing didn't engage in the conversation soon enough," he told AFP.
Two industry sources told AFP on Friday that the company will be rolling out a software upgrade for the MCAS in the next 10 days, which helped boost its share price, but the lag since the October crash in Indonesia is troubling.
And Captain Chesley "Sully" Sullenberger -- noted for his safe landing of a damaged plane on the Hudson River in New York without loss of life -- questioned Boeing's response as well.
"It has been obvious since the Lion Air crash that a redesign of the 737 MAX 8 has been urgently needed ... and the announced proposed fixes do not go far enough," he said on social media.
The issue has drawn the scrutiny of Congress, with key oversight committees planning hearings to look into the aircraft and flaws.
"I continue to have serious concerns about key decisions made in the FAA's certification of the 737 MAX, and what was, and was not, disclosed to pilots," said Representative Peter DeFazio, head of the Transportation and Infrastructure Committee.
"I will be conducting a rigorous investigation to make sure that FAA is carrying out its critical safety mission."
Boeing may have to roll out a public relations campaign to try to restore confidence in its aircraft.
The company will have to provide a sincere "mea culpa" because "the damage is done," a source close to the aircraft manufacturer told AFP.
source: news.abs-cbn.com
