Editor’s Note: This is the final week of 2023 scheduled publications for LNA. Our usual posts this week will appear on Thursday and Friday. Then we’re taking the Christmas-New Year’s week off and will resume posting on Jan. 2, 2024, provided there is no breaking news of importance during the holidays.
Dec. 19, 2023, © Leeham News: Naming Stephanie Pope to the new position of EVP and COO of The Boeing Co. raises more questions than it answers.
By Scott Hamilton
Stephanie Pope. Credit: Pope’s Linkedin.
Pope was CEO of Boeing Global Services, the only company unit currently making a consistent profit. She was named to the new corporate-level post on Dec. 11. She immediately became the favorite to succeed president and CEO David Calhoun. Calhoun, 66, was given an extension of up to five years from Boeing’s mandatory retirement age of 65. Some press reports suggested Calhoun may retire in the next year or two.
Stan Deal, the CEO of Boeing Commercial Airplanes, and Brian West, the corporate CFO, were said to have been in contention for Calhoun’s job. But Deal, who is also an EVP of The Boeing Co., is 59. At this age, any elevation to corporate CEO was a long shot at best. Calhoun brought West into the CFO position in August 2021. He’s 54, which could have given him 10 years as CEO if Calhoun steps down next year. Pope, at age 51, has four years to age 55 and then 10 years to be CEO.
In four years, Calhoun will be 70—the outside age the Board of Directors gave him with the extension.
Why Is all this timeline business relevant? Here’s why.
Calhoun’s leadership and legacy
Calhoun was thrust into the presidency and CEO slot in December 2019 when the Board fired then-CEO Dennis Muilenburg. Muilenburg in the view of many mishandled the 737 MAX grounding crisis, relations with the Federal Aviation Administration, and customers affected by the grounding. Calhoun, who had been on the Board since 2009, had been named chairman in October 2019 when the Board stripped Muilenburg of his chairman’s title.
Calhoun took office in January 2020. In addition to the MAX crisis, certification of the 777X was delayed, caught in the negative halo effect of the MAX. Then, in March, the COVID-19 virus exploded into a global pandemic. Airlines across the world all but shut down. Boeing’s remaining widebody business all but dried up. Boeing’s very existence was threatened.
Calhoun killed the development of the New Midmarket Airplane and the joint venture with Embraer. Say what you will about the strategic wisdom of these moves, but given Boeing’s cratering financial condition at the time, the moves made tactical sense.
Today, Calhoun advocates a “green” airplane vs a conventional NMA. Boeing has a contract with NASA to convert a Boeing MD-90 into a truss brace wing (TBW) demonstrator. The TBW potentially can provide a 9%-12% aerodynamic economic improvement vs today’s conventional design. (LNA’s initial analysis concludes there is a 9% improvement.) Coupled with the CFM RISE Open Fan engine now in development, a TBW/Open Fan combination could reduce fuel consumption and emissions by 20% or more. Calhoun believes the next new airplane needs to reduce fuel consumption by 20% to 30%.
The Open Fan service target is 2035. Calhoun says Boeing will introduce its next new airplane by the middle of the next decade. The timing fits.
Turning 70
Twenty thirty-five also fits Calhoun’s age 70 timing. A new airplane program in recent decades takes about seven years from launch to entry into service. A 2035 EIS for the Next Boeing Airplane (NBA) means the program launch is about 2028. This is also the year the MD-90 TBW demonstrator is supposed to first fly.
Calhoun turns 70 in April 2028. It’s certainly possible Calhoun could announce Authority to Offer (ATO) the TBW in 2027. This “green,” advanced airplane could be Calhoun’s last hurrah—and his legacy. He saved Boeing. He launched a new generation of advanced, eco-friendly airplanes.
In 2028, Pope will be 55. Does she assume Calhoun’s position when he turns 70 or before? Outsiders certainly don’t know and even insiders may not know. What promises have been made are entirely between Calhoun, Pope, and the Board. Regardless, Pope has to prove she’s up to the job of EVP and COO. And there is no information to indicate what Pope’s personal views are on a TBW and its feasibility.
This is where more questions arise than answers.
Pope’s background
Pope is an MBA and has a finance career. This background already causes groans among those I’ve talked to. These people point to the history of Boeing’s emphasis on finance and MBA leadership since the 1997 merger with McDonnell Douglas. Will Pope emphasize shareholder value, a mantra since the merger, or balance stock buybacks and dividends with new product development?
Before becoming president and CEO of Boeing Global Services, she was CFO for slightly more than two years at Boeing Commercial Airplanes. She previously was CFO of BGS. In fact, according to some in the know, Stan Deal was Pope’s mentor and benefactor. She was BGS CFO under Deal and BAC CFO under Deal.
Pope also spent a stint as CFO of Boeing’s Defense unit.
There is nothing I could find in the public that sets Pope apart or reveals her thinking about BCA’s future or even that of The Boeing Co. The only encounter I had with her was at last summer’s Paris Air Show. I asked about the long-studied possibility of BGS entering the 777-300ER freighter conversion market—something Deal announced to me in 2018 when he was CEO of BGS. Pope said there was no business case; three other companies are already in the market. Rather, Boeing will license IP to these firms.
Those I’ve talked to wonder whether Pope has the chops to become CEO of The Boeing Co. Although she was CEO of BGS, one pointed out that coming out of the pandemic, BGS had nowhere to go but up. She didn’t run BCA or BDS. Her views on product development are unknown. She’s an unknown among customers.
The bottom line: customers are wary.
Other contenders
Although there was immediate speculation Pope is in the pole position to succeed Calhoun, there are two members of the Board who have been mentioned to succeed Calhoun: Steven M. Mollenkopf and David Gitlin. Gitlin is chairman of Carrier Global Corp., which was spun off by United Technologies (now Raytheon). He held positions within UT’s aerospace divisions.
Mollenkopf spent years in the C-Suite at Qualcomm and retired in his early 50s. He’s been a Boeing director since 2020. His young age thrust him into the speculative successor arena.
It’s unknown, of course, whether the Gitlin-Mollenkopf speculation is rooted in anything of merit. Regardless, Pope must begin quickly telling the customers, supply chain, and shareholders just what her visions are. Right now, she’s an enigma.
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