Boeing’s Chief Executive Officer will step down as the aerospace giant battles serious safety allegations.
Dave Calhoun announced his retirement as Chief Executive Officer of Boeing on Monday amid a deepening crisis for the aerospace giant. Boeing is currently undergoing its worst year in recent times, with the company’s stock price dropping almost 24% year-to-date.
Boeing’s troubles started in January when the door of an Alaska Airlines flight got detached from the plane after take off. What followed were a series of incidents, including a LATAM flight plunging uncontrollably for a few seconds and a tire falling off after take off on a United flight.
The company has been in the spotlight for its safety issues for a while now, with several investigations from the US Federal Aviation Agency (FAA). The recent swath of incidents in a row, however, further worsened Boeing’s reputation.
Several airlines have canceled existing orders of 737 Max, Boeing’s latest 737 models. Many companies including United Airlines and Southwest are encountering several budget issues because of public awareness of safety mismanagement on the 737 Max.
Airline CEOs started scheduling meetings with Boeing addressing these issues specifically. Meanwhile, several 737 Max have been grounded by the FAA. Boeing now has 90 days to report new safety steps to the FAA.
Shakeup at the top
Calhoun’s decision to step down was widely expected by industry observers. Calhoun became Boeing’s chief executive in 2020 amid another safety crisis. Dennis Muilenburg, the former CEO, resigned after two 737 Max crashes resulting in the death of 346 people.
"The eyes of the world are on us," Calhoun said in the letter announcing his resignation, "and I know we will come through this moment a better company, building on all the learnings we accumulated as we worked together to rebuild Boeing over the last number of years."
He also added that resigning was completely his own decision. Calhoun will effectively step down at the end of the year, no replacement has been announced yet.
In the letter, Calhoun said the Alaska Airlines flight incident was a “watershed” moment for the company. Boeing’s stock price increased 1.26% for the day after the announcement.
Conversely, chairman Larry Kellner announced he will not seek re-election at the company’s upcoming shareholder meeting. He will be replaced by Steve Mollenkopf, the former CEO of Qualcomm, who will also lead the research of Boeing’s new CEO.
Finally, the President and CEO of Boeing Commercial Airplanes division Stan Deal will also step down effective immediately. Deal will be replaced by Chief Operating Officer Stephanie Pope.
It’s unclear how much this shakeup will solve Boeing’s problems. A similar resignation row took place in 2020, resulting in the company back to square zero after a few months. Meanwhile, Boeing’s only meaningful rival Airbus keeps collecting new orders.
