Berliner Boersenzeitung - Mission impossible? Next Boeing CEO faces pile of problems

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Mission impossible? Next Boeing CEO faces pile of problems
Mission impossible? Next Boeing CEO faces pile of problems / Photo: WIN MCNAMEE - GETTY IMAGES NORTH AMERICA/AFP/File

Mission impossible? Next Boeing CEO faces pile of problems

Since announcing plans in late March to replace CEO Dave Calhoun at the end of 2024, Boeing's problems have seemingly gone from bad to worse, complicating an already daunting executive search.

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In the ensuing weeks, Boeing has endured troubling congressional hearings with whistleblowers and safety experts, repeat delays to a space launch, and a steep decline in commercial plane deliveries that has deepened financial losses.

On Tuesday night, the Department of Justice said Boeing had breached a 2021 criminal settlement over the 737 MAX crashes, opening the company up to possible prosecution.

Faced with these challenges, Boeing's next chief will need to be a kind of corporate magician capable of turning around troubled operations, resetting bruised relations with airline clients and redefining the company's public identity following scandal and missteps.

"Given the nature of what's required, the new CEO may prove to be a bit of a unicorn," said a recent note from Bank of America analyst Ron Epstein.

Aviation experts say the next Boeing CEO will ideally have an aerospace background, experience managing big manufacturing projects, strategic smarts and a hands-on approach to safety.

Boeing declined to comment for this story on its executive search. But the company may disclose more at its annual meeting on Friday.

- Big change ahead? -

Calhoun's impending departure is part of a March 25 leadership shakeup that included an immediate replacement of its head of commercial aviation and a new chairman of the board.

A former General Electric and private equity executive who has been on Boeing's board since 2009, Calhoun ascended unexpectedly to CEO after Dennis Muilenburg was fired in late 2019 following the two deadly MAX crashes.

Despite manufacturing and supply chain problems at Boeing, Calhoun appeared poised to remain CEO through 2028.

But everything changed on January 5 when an Alaska Airlines jet made an emergency landing after a fuselage panel blew out mid-flight, prompting intensified scrutiny from regulators, airline customers and lawmakers.

Given the depth of the problems, some Boeing watchers argue the company needs to make profound changes beyond the executive-suite shakeup already announced, which keeps Calhoun in his post through December.

He will also be in line to influence the selection of his replacement if he is reelected to the board at Friday's annual meeting.

Boeing has acknowledged that the Alaska Airlines incident shows more work is needed, while insisting it has made progress on safety.

Richard Aboulafia of consultancy AeroDynamic Advisory has tied Boeing's travails to decisions made by Calhoun and CEO predecessors that have diminished Boeing's engineering prowess in a hunt for profit and shareholder payouts.

The next CEO could be "anybody who's really committed to the industry and not just there to manage money," Aboulafia told AFP. "Anything that gets the rot out of the system."

Bank of America's Epstein called for a "drastic cultural overhaul" at Boeing, including changes throughout the executive ranks and moving headquarters from near the US capital to one of Boeing's manufacturing centers to communicate "an all-hands on deck" spirit.

- Full plate -

Regarding the next CEO, Calhoun has spoken highly of longtime Boeing executive Stephanie Pope, who was promoted on March 25 to lead commercial aviation.

Some aviation experts have said the next CEO should come from outside Boeing.

Names mentioned include GE Aerospace CEO Larry Culp and Spirit AeroSystems CEO Patrick Shanahan, a former Boeing executive and Pentagon official. Both have publicly denied interest.

A key figure in the process will be Steve Mollenkopf, the former head of Qualcomm who joined the Boeing board in 2020 and was promoted to chairman in March.

After Friday's meeting, a full plate of issues will face Calhoun, including a late-May deadline to present a plan required by the FAA, which has capped MAX production until the company shows progress on safety and quality control.

In July, the Justice Department will make a final determination on whether to criminally prosecute Boeing.

Then in September, the company faces a potential strike of 30,000 workers if it is unable to reach a contract with the International Association of Machinists and Aerospace Workers.

(O.Joost--BBZ)