By Scott Hamilton
Analysis
David Calhoun
March 25, 2024, © Leeham News: The changes at The Boeing Co. and at Boeing Commercial Airplanes today speak to the depth of the 
crisis at the company following Jan. 5’s accident on Alaska Airlines Flight 1282. But it also speaks to the thin bench for executive ranks at the corporate and division levels.
President and CEO David Calhoun will step down at the end of the year. No successor was named. Board chairman Larry Kellner will not stand for reelection at the annual shareholders meeting. Board Member Steve Mollenkopf was named non-executive chairman. Stan Deal, the CEO of Boeing Commercial Airplanes, is out, effective today. Stephanie Pope, who was named EVP and COO of The Boeing Co. in December, takes over from Deal as CEO of Commercial Airplanes.
Pope’s move drew immediate rebuke from a Wall Street executive. Pope “has absolutely no qualifications to hold the job of head of BCA,” the executive wrote LNA in an email. Pope’s another MBA finance executive without production or product development experience. Her job before being named COO was CEO of Boeing Global Services. She followed Deal, who left BGS to become CEO of Boeing Commercial Airplanes.
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Boards are invested in the CEOs until they’re not
Boeing’s thin bench was outlined in the related article above. The leading personalities are detailed in this article.
Outside pressure
Boeing is under extraordinary pressure. The Federal Aviation Administration (FAA) clamped down on Boeing yet again after Alaska 1282. A door plug blew off the airplane at 16,000 ft; nobody died, but there were injuries during the explosive decompression and damage to the 10-week-old 737-9 MAX.
The FAA administrator, Mike Whitaker, criticized Boeing for putting production over safety and quality. Some customers were calling for leadership heads. A group of customers demanded a meeting with members of the Board without Calhoun’s presence.
When Calhoun’s predecessor, Dennis Muilenburg, was fired, word was that behind the scenes, the FAA told the Board that progress in returning the grounded MAX to service would not happen with Muilenburg at the helm. This was never confirmed, but many believe this to be true.
The obvious question arises, has the FAA quietly told the Board that dramatic executive management changes are necessary? The ultimate nuclear option the FAA holds over Boeing is to suspend its production certification, PC 700, on the 737 line or even all the commercial airplane production lines. Whitaker said in a news conference he was prepared to do so if necessary.
LNA heard conflicting stories about whether the Board was satisfied with Calhoun’s performance during his tenure. Some stories said the Board was becoming frustrated with Calhoun’s progress in turning Boeing around. Others said the Board remained solidly in Calhoun’s corner, especially chairman Kellner. And this was before Alaska 1282. Since then, Boeing has faced an existential threat to its survival.
Boeing, Boeing, Gone
In a quick investor note from Bob Stallard of Vertical Research, entitled Boeing, Boeing, Gone, he wrote, “While someone losing their job is rarely something to celebrate, we think that this is probably a wise move by the Boeing Board of Directors.
“Many of Boeing’s customers, suppliers, and other stakeholders have arguably lost faith in the company, while its relations with the FAA and NTSB are clearly strained. A change in senior management is a good first step in addressing the company’s myriad of problems, but the major piece that is missing from the puzzle is who will be the next CEO? As we commented last week, we think it will require someone with pedigree and patience, as fixing Boeing is probably a multi-year non-linear journey.”
“The management change comes at a time when most investors have lost faith in current BA management,” wrote Ken Herbert of RBC Capital Markets. “Our view that the company is likely looking for a replacement outside of Boeing is a positive. BA’s culture of quality and manufacturing has been called into question over recent issues, and a new, outside perspective on operations, could be encouraging….”
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