Boeing ditches CEO Muilenburg in bid to contain 737 MAX crisis

[webfact]

Boeing ditches CEO Muilenburg in bid to contain 737 MAX crisis

By Ankit Ajmera and Tim Hepher

 

FILE PHOTO: Boeing Chief Executive Dennis Muilenburg testifies before the House Transportation and Infrastructure Committee during a hearing on the grounded 737 MAX in the wake of deadly crashes, on Capitol Hill in Washington, U.S., October 30, 2019. REUTERS/Sarah Silbiger

 

(Reuters) - Boeing Co <BA.N> has fired its Chief Executive Dennis Muilenburg, seeking to restore confidence after two fatal crashes forced the world's biggest planemaker to halt production of its best-selling 737 MAX jetliner.

 

Boeing is struggling to mend relations with the regulators it needs to win over to get the grounded 737 back in the air. The company also needs to regain trust with passengers and airline customers as it faces what is widely seen as the worst crisis in its history.

 

Chairman David Calhoun will take over as CEO and president, effective from Jan. 13, Boeing said.

 

"The Board of Directors decided that a change in leadership was necessary to restore confidence in the Company moving forward as it works to repair relationships with regulators, customers, and all other stakeholders," it said in a statement.

 

Muilenburg could not immediately be reached for comment.

 

Boeing shares, which have dropped more than 20% over the past nine months, rose nearly 4% in early trading.

 

The ousting of the company veteran followed a week of dramatic setbacks for Boeing, which vies with Europe's Airbus <AIR.PA> for industry supremacy. They ranged from a decision to halt production of the 737, to a public slap-down from the Federal Aviation Administration (FAA), a ratings downgrade and a space launch glitch on Friday.

 

Boeing's dismissal of the CEO received backing from Peter DeFazio, chair of the U.S. House of Representatives' transportation committee.

 

"It’s clear Dennis Muilenburg’s ouster was long overdue," he said. "Under his watch, a long-admired company made a number of devastating decisions that suggest profit took priority over safety."

 

The 737 MAX has been grounded since March after two crashes in Indonesia and Ethiopia killed 346 people within five months.

 

Boeing said this month it would halt production of the jets in January, a decision that also threatens to hit the U.S. economy. Economists estimate it will lower overall American economic growth by half a percentage point.

 

CALHOUN: 'THE RIGHT TOOL KIT?'

 

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

 

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

 

Boeing - which has taken flak from the FAA for appearing to pressure the regulator by predicting when the planes would return to the air - pledged full transparency, including "effective and proactive communication" with regulators.

 

"We don't think it is controversial to suggest that Boeing's MAX response has been a failure - and as a result we think it is wholly appropriate for the Board to replace Muilenburg," said Robert Stallard, analyst at Vertical Research Partners.

 

Muilenburg is owed more than $6.6 million in the event of a "lay off," according to Boeing's shareholder proxy statement. But it was not clear if his departure would qualify as a dismissal "for cause," where most severance payouts would be considered void.

 

Muilenburg, an engineer who started at Boeing as an intern in 1985, fought a rising tide of public and regulatory scrutiny to try to steady the company during the crisis.

 

'WE'VE MADE MISTAKES'

Muilenburg acknowledged errors in failing to give pilots more information on a stall-prevention system before the crashes and for taking months to disclose that it had made optional an alarm that alerts pilots to a mismatch of flight data on the 737 MAX.

 

"We've made mistakes and we got some things wrong. We're improving and we're learning," he told U.S. lawmakers at a hearing in October.

 

Speculation that he would be fired had been circulating in the industry for months, intensifying in October when the board stripped him of his chairman title - although he had also twice won expressions of confidence from Calhoun.

 

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

 

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."

 

Board member and former airline boss Lawrence Kellner will become non-executive chairman of the board effective immediately, Boeing said. Chief Financial Officer Greg Smith will serve as interim CEO during the brief transition period.

 

(Reporting by Ankit Ajmera in Bengaluru and Tim Hepher in Paris; Additional reporting by Eric Johnson in Seattle, David Shepardson in Washington, Allison Lampert in Montreal, Dan Burns in New York; Writing by Pravin Char; Editing by Saumyadeb Chakrabarty and Grant McCool)

 

-- © Copyright Reuters 2019-12-24

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[Damrongsak]

Off with their heads.  Change for change's sake.  Keep the stock price high. Whatever. 

[steve187]

i think Boeing's problems will take a long time to fix, will people have the confidence in the max, Ryan air will not let you know which flights will use the max. although i see some fresh orders of the max were made at the Dubai airshow

[puck2]

OMG, what a low quality article. Only squabbling about the results of Muilenburg's dismissing.

 

 

Quote

„It’s clear Dennis Muilenburg’s ouster was long overdue," he said. "Under his watch, a long-admired company made a number of devastating decisions that suggest profit took priority over safety."

 

 

Quote

The 737 MAX has been grounded since March after two crashes in Indonesia and Ethiopia killed 346 people within five months.

 

Did you read something about the real, disastrous and abysmal reasons of BOEING's failure?

 

It was not only Boeing's Chief Executive Muilenburg strategy which has lead to the 737 Max grounding. It started already in 1997 with the new bosses on the top of Boeing, Harry Stonecipher and his successor Philip Cond. They implemented a new, not uncommon American, system: money first, quality not so important. Money first meant: produce higher results of income (on the paper, not in reality) to enjoy the shareholders. Passengers well being, safty not so important ! Every year higher results (for the shareholders – on paper) at the cost of safety. The shareholders enjoyed it, the relatives of  Lion Air's and Ethiopia's Boing plane not. Their passengers payed the price for „Boeings sharholders avarice“. That includes the unbelievable avarice of Boeings top management.

 

Horrible, shameful especially because this management hasn't been restricted in its unreliable and irresponsible, piggishly actions.

 

Now, it's too late. But many, many years too late. Boeing was a noble and respected company until the the system change for „money first“!

Edited December 24, 2019 by puck2

[Aforek]

I remember a discussion here, about Airbus which stops the A 380; one of the TV members, of course an American guy , told that Airbus was finished, they copied Boeing and that Boeing was the best plane maker and the rest was s h i t

it was several months ago, before the two accidents of the 737 …  I wonder now where is this TV member, I don't remember his name, but what does he think now ? Boeing still the best company in the world ? 

[Opl]

7 minutes ago, Aforek said:

I remember a discussion here, about Airbus which stops the A 380; one of the TV members, of course an American guy , told that Airbus was finished, they copied Boeing and that Boeing was the best plane maker and the rest was s h i t

it was several months ago, before the two accidents of the 737 …  I wonder now where is this TV member, I don't remember his name, but what does he think now ? Boeing still the best company in the world ? 

He thinks:  "America first" whatever… "the dollar is our currency but your problem"...…. " America is the Greatest Nation in the History of the World"... 

Edited December 24, 2019 by Opl

[Somewhere In Time]

7 hours ago, webfact said:

Chairman David Calhoun will take over as CEO and president, effective from Jan. 13, Boeing said.

So in essence, no change at all...  ????

 

SIT

[KhunBENQ]

13 minutes ago, Somewhere In Time said:

So in essence, no change at all...

What can go wrong with a Blackrock man at an engineering company

[sandrabbit]

Former Volkswagen engineering executive Oliver Schmidt was imprisoned for seven years in the US for his part in hiding the exhaust emissions software from regulators so will Muilenburg get any jail time because as far as I know Schmidt didn't kill anyone?.

[Ramen087]

2 hours ago, sandrabbit said:

Former Volkswagen engineering executive Oliver Schmidt was imprisoned for seven years in the US for his part in hiding the exhaust emissions software from regulators so will Muilenburg get any jail time because as far as I know Schmidt didn't kill anyone?.

O. S. had already entered a plea of guilty.  Germany normally does not extradite citizens; Schmidt was within Germany’s borders.  Then he did this: He voluntarily took a vacation to Miami, Florida.  In the USA!  Inexplicable under the circumstances.  He was arrested only because he was voluntarily in the USA and subsequently sentenced.  Muilenburg hasn’t even been charged yet, never mind entering a plea of guilty.
 

[stevenl]

4 minutes ago, Ramen087 said:

O. S. had already entered a plea of guilty.  Germany normally does not extradite citizens; Schmidt was within Germany’s borders.  Then he did this: He voluntarily took a vacation to Miami, Florida.  In the USA!  Inexplicable under the circumstances.  He was arrested only because he was voluntarily in the USA and subsequently sentenced.  Muilenburg hasn’t even been charged yet, never mind entering a plea of guilty.
 

Easy then, Muilenberg killed many and is in the US.

[candide]

5 hours ago, puck2 said:

OMG, what a low quality article. Only squabbling about the results of Muilenburg's dismissing.

 

 

 

 

 

Did you read something about the real, disastrous and abysmal reasons of BOEING's failure?

 

It was not only Boeing's Chief Executive Muilenburg strategy which has lead to the 737 Max grounding. It started already in 1997 with the new bosses on the top of Boeing, Harry Stonecipher and his successor Philip Cond. They implemented a new, not uncommon American, system: money first, quality not so important. Money first meant: produce higher results of income (on the paper, not in reality) to enjoy the shareholders. Passengers well being, safty not so important ! Every year higher results (for the shareholders – on paper) at the cost of safety. The shareholders enjoyed it, the relatives of  Lion Air's and Ethiopia's Boing plane not. Their passengers payed the price for „Boeings sharholders avarice“. That includes the unbelievable avarice of Boeings top management.

 

Horrible, shameful especially because this management hasn't been restricted in its unreliable and irresponsible, piggishly actions.

 

Now, it's too late. But many, many years too late. Boeing was a noble and respected company until the the system change for „money first“!

Exactly! He was fired by the same people who put pressure to cut cost on him, in order to extract higher rents from the company.

[Ramen087]

23 minutes ago, stevenl said:

Easy then, Muilenberg killed many and is in the US.

Due Process... it is more than just a concept.

[Opl]

"Muilenburg’s position, under pressure since March, became untenable this month following a breakdown of relations with the Federal Aviation Administration (FAA) and the growing anger of Boeing’s suppliers and airline customers over the collapse of its optimistic forecast that the MAX could be cleared to fly this year."

articles of the Seattle Times by Dominic Gates

https://www.seattletimes.com/author/dominic-gates/

 

Boeing ousts Muilenburg amid 737 MAX crisis; observers wonder if new CEO Calhoun will bring the right sort of change

 

Edited December 24, 2019 by Opl

[Basil B]

Muilenburg appointed CEO July 2015, production of the 737 Max started 2014...

 

He is just a sacrificial lamb.

 

The real bogiemen are the design team and the managers who signed off on this communal aluminium coffin, what ever happened to DFMEA??? 

[stevenl]

2 hours ago, Basil B said:

Muilenburg appointed CEO July 2015, production of the 737 Max started 2014...

 

He is just a sacrificial lamb.

 

The real bogiemen are the design team and the managers who signed off on this communal aluminium coffin, what ever happened to DFMEA??? 

To a certain extent I agree. But only to a certain extent, under his leadership the Boeing reaction to the 2 crashes was woefully inadequate.

[billd766]

7 hours ago, Somewhere In Time said:

So in essence, no change at all...  ????

 

SIT

In the British civil service parlance it is "Buggins" turn next.

[Basil B]

21 hours ago, stevenl said:

To a certain extent I agree. But only to a certain extent, under his leadership the Boeing reaction to the 2 crashes was woefully inadequate.

You have a point,  Just wonder with $billions at stake if say he were to have confided with senior directors that he was considering pulling the plug on the Max that he may have meet with an unfortunate accident...

[Thomas J]

21 hours ago, stevenl said:

Muilenburg appointed CEO July 2015, production of the 737 Max started 2014...

 

He is just a sacrificial lamb.

 

The real bogiemen are the design team and the managers who signed off on this communal aluminium coffin, what ever happened to DFMEA??? 

StevenL

Boeing could be faulted but its engineers "thought" the software system would solve the problems with the 737 max use of larger engines which when re positioned changed its  aerodynamics.  Apparently the software which was written by a third party was not well written.  If Boeing bears much fault, it is for not requiring the redundant systems on the 737 max that it was selling as optional safety add ons.  If you want to fault anyone, try the Federal Aeronautics Agency.  They are the one's who certified that the 737-max was safe and gave the green light to airlines to buy the plane. 

[colinneil]

I hope Boeing consulted cryingdick before sacking Muilenburg, if not he will not be a happy boy, Boeing cannot do anything without consulting him first.

[Basil B]

6 minutes ago, colinneil said:

I hope Boeing consulted cryingdick before sacking Muilenburg, if not he will not be a happy boy, Boeing cannot do anything without consulting him first.

Well Boeing's shares have not fallen any further today...

[stevenl]

17 minutes ago, Thomas J said:

StevenL

Boeing could be faulted but its engineers "thought" the software system would solve the problems with the 737 max use of larger engines which when re positioned changed its  aerodynamics.  Apparently the software which was written by a third party was not well written.  If Boeing bears much fault, it is for not requiring the redundant systems on the 737 max that it was selling as optional safety add ons.  If you want to fault anyone, try the Federal Aeronautics Agency.  They are the one's who certified that the 737-max was safe and gave the green light to airlines to buy the plane. 

Please quote correctly, that was not mine.

[candide]

2 hours ago, Thomas J said:

StevenL

Boeing could be faulted but its engineers "thought" the software system would solve the problems with the 737 max use of larger engines which when re positioned changed its  aerodynamics.  Apparently the software which was written by a third party was not well written.  If Boeing bears much fault, it is for not requiring the redundant systems on the 737 max that it was selling as optional safety add ons.  If you want to fault anyone, try the Federal Aeronautics Agency.  They are the one's who certified that the 737-max was safe and gave the green light to airlines to buy the plane. 

What strikes me in this story, is that it seemed to be no problem to put on the market or to buy an unstable plane, even improved by a software. If a car dealer would say "our car is unstable but we can add a software to correct it", who would buy that car?