Boeing’s New CEO Blames MAX Crisis On Predecessor

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In a revealing interview with The New York Times, Boeing’s new CEO, David Calhoun, blamed the 737 MAX crisis on his predecessor and conceded that the situation inside the company is worse than he thought. Calhoun said he’s trying to repair relationships with angry airlines and the FAA and hopes the troubled airliner will return to service sometime this summer. “It’s more than I imagined it would be, honestly. And it speaks to the weaknesses of our leadership,” Calhoun told Times reporters Natalie Kitroeff and David Gelles.

A protégé of the late General Electric CEO Jack Welch, who advanced shareholder value as a key business principle, Calhoun was blunt in his criticism of Dennis Muilenburg, who ran the company from 2015 until he was ousted last December. “I’ll never be able to judge what motivated Dennis, whether it was a stock price that was going to continue to go up and up, or whether it was just beating the other guy to the next rate increase,” Calhoun told the Times. “If anybody ran over the rainbow for the pot of gold on stock, it would have been him,” Calhoun added.

Calhoun, who assumed his new duties in January, joined the Boeing board in 2009 and was present for the 737 MAX’s gestation. As the crisis unfolded last spring, he defended Muilenburg as having done “everything right.” Calhoun said the board believed that Muilenburg, an engineer who had been at Boeing his entire career, had a good feel for the risks involved in increasing production. It later soured on Muilenburg’s performance and showed him the door last December.

When asked about his own and the board’s role in overseeing Muilenburg’s decision making, Calhoun said, “If we were complacent in any way, maybe, maybe not, I don’t know. We supported a CEO who was willing and whose history would suggest that he might be really good at taking a few more risks.”

Whatever those risks were, nearly a year into the crisis, Boeing’s 737 MAX line remains shuttered with no certain date when it will resume. The company’s stock price, even before the current coronavirus-inspired downturn, has been battered, from a high of $440 a year ago, to $260 at Thursday’s closing bell.

Calhoun has been on an apology tour to airlines and, especially, the FAA. He told the Times that the FAA “felt like they were being pushed into a timeline” and that under Muilenburg, the regulator was “never there alongside of us, but apparently our team didn’t quite come up to grips with that.” Calhoun also met with President Donald Trump. “He wants us to get back on our horse. He wants us to get the Max flying again, safely,” Calhoun said.

Calhoun did not, however, concede that Boeing has systemic cultural problems, although he said internal messages denigrating the FAA were “totally unacceptable” and not representative of Boeing more broadly.

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14 COMMENTS

    • Well, if Calhoun is a protege of Jack Welch as indicated in the interview, then I doubt any cleansing is going to take place. Jack Welch was always concerned about stock price and absolutely nothing else. So the only change we should really expect from this new regime is that there will simply be a new set of bean counters in charge.

  1. Wow, what a case of corporate buck-passing! Blame literally everything on his predecessor in the hopes that Boeing’s airline customers and the FAA are dumb enough to believe it. Here’s my question, Mr. Calhoun: You served on the board of directors for a decade, during which time the MAX debacle, along with several other major gaffes occurred. Just what the hell were YOU doing all that time? Did you ever do anything other than show up for the occasional board meeting, collect your fat retainer and head back to the golf course? All board members bear a fiduciary responsibility to the company, its employees and customers to see that it is operating in a responsible manner. In this case, responsible translates into designing and building a safe, high quality product. Muilenburg didn’t create this mess all on his own. You and the other board members are as culpable as he in this whole mess. The least you can do is admit to your lack of leadership and commit to changing the culture back to what it once was. Otherwise, you will be as guilty as Dennis.

  2. The fish always stinks from the head and no matter how well Mr. Calhoun does in trying to deflect guilt, its time to remind folks just how much money this larger than life corporate CEO/ President giant rakes in for doing this job.

    His job is to LEAD. His job is to get the company back on track. His job is to identify and tackle issues which pain the company and its employees and negatively affect sharholders and the companies reputation.

    Blaiming predecessors is whining. Mr. Calhoun realistically should have no time for whining, he should have no time for press interviews and no time for trying to explain things of bad nature in plain sight, away.

    He should be having his hair on fire, being busy listening to his employees, he should be looking inwards, acknowledging that not all competence within the Boeing concern sits in board rooms or wears $10.000 suits and $26.000 Rolexes.

    Mr. Calhoun, why do they pay you the big bucks?

    Answer: Because I get s*it DONE!

    Alright. Execute, Mr. Executive!

  3. Yes Jason, he should be executing in a very big way. A top down blood bath. Heads should be rolling like balls in a bowling alley on a Saturday night. Will it happen, I doubt it. To much money and influence at the top to keep things as undisturbed as possible. Boeing will die a slow death as the powers in charge milk it all the way down.

  4. If I Were CEO-for-a-Day at Boeing…..

    Sell off all the businesses that are losing money and focus on just one thing, building the best airliners. They have so many irons in the fire that neither the board of directors or a team of CEOs can juggle everything. Aviall has not been a good parts supplier for 30 years but, once ‘The Lazy B’ bought them it only got worse.

  5. The real title of the story :, The More Things Change, The Less They Do. As long as the board remains the same and doesn’t have a good representative mix of aviation folks, lawyers, and financial people nothing has changed. This was predictable.

  6. Kinda like this: “ Calhoun did not, however, concede that Boeing has systemic cultural problems, although he said internal messages denigrating the FAA were “totally unacceptable” and not representative of Boeing more broadly.”

  7. In my opinion, Calhoun is executing his job perfectly. For some reason, many folks think a CEO is someone who has all sorts of autonomy to change a company internally. That may have been true in some distant past. However, not today, especially when we are talking about the company the size of Boeing.

    Muilenburger’s job was t drive up the stock prices. He did not do that by himself. The company board was well aware of his engineering prowess and allowed him to take risks to help facilitate that stock price mandate. “Calhoun, a protege of Jack Welch, said the board believed that Muilenburg, an engineer who had been at Boeing his entire career, had a good feel for the risks involved in increasing production. ‘We supported a CEO who was willing and whose history would suggest that he might be really good at taking a few more risks.’” Indeed he did take risks in the past ( a demonstrated history Calhoun admitted to) and is a safe bet for continued risk taking. With full participation and understanding of Calhoun and his board cohorts.

    The decision to use a single source for the AOA probe was not left up to some sort of middle management department head or independent action of a rogue engineering team. Nor was the change from what was certified as initial MCAS activation speed and travel to what was on board delivered aircraft done by some obscure independent bean-counter.

    There are plenty of internal emails warning of such changes. Boeing board’s cavalier attitude went to the extreme of intentionally not tell the customers MCAS even existed. MAX was marketed and sold as just another 737. If Boeing did not get caught, production would increase, with higher resulting stock prices. If Boeing out-produces Airbus, even higher stock prices.

    Muilenburger performed as requested, drove the stock price up. With the number of shareholders combined with that high price, the dollar figures were astronomical. So what if you lose an airplane or two? There are torte limits. Boeing’s lawyers know what those limits are. Traditionally, it takes 1-3 years for the NTSB to finally issue a final cause. If fault lies with the manufacturer, until all the appeal processes have been exhausted, claims are not paid. By that time, when and if settled, it will be Lion Air who and an obscure middle east carrier from Ethiopia which means nothing to the average airline passenger. By the time a claim is paid, the lawyers have already made sure the real problem lies with those “foreign carriers” tying in the already woven story of inferior pilots and crew. In the meantime, Boeing has had control of all that dough.

    Now Calhoun takes over after the two crashes. Subsequent investigations are showing a bunch of people questioned these changes but those changes, nonetheless, were incorporated into the delivered airplanes. Boeing’s boards excuse for all of this chicanery including from Calhoun himself is a statement simply placing too much trust in a Boeing company man. But Calhoun takes over with stock prices at 40% less than they were at Muilenburgers height. I can only imagine how many very wealthy investment firms are quietly buying Boeing stock at 40% off Muilenburg’s former high price.

    Calhoun is doing exactly what he is told. First make friends with Trump, let the stock prices bottom, then do the “lets all be friends to the FAA”, and make “Dennis” a nice guy, yet the fall guy who just took too many risks. As long as “Dennis” keeps his mouth shut, he has a oodles of Boeing stock purchased well below $440 per share, plenty of cash, to live out his life and support his family quite nicely.

    Calhoun will get MAX back in the air because there is no replacement airplane, nor any replacement manufacturer. Boeing and Airbus both knows this. Boeing knew this before MAX’s problems surfaced. If you do get caught in a less than desirable situation, what are the global airlines gonno do? Not buy the airplane? Boeing already has 70% of the market partially because there are no real competitors. And even if you could design a better airplane, think of the years it would take to launch a company, certify a new clean sheet design, including getting engine manufacturers to supply you engines for this new, untested upstart aircraft corporation, build manufacturing facilities plus supply chain to accommodate 4300+ sold orders, and then deliver them at 40+ per month. Those two crashes are nothing more than temporary collateral damage to stock prices.

    Calhoun has no intention of changing the business culture of Boeing. His job is to make sure internal email policies are tightened up with whistle-blowing dangerous to continued Boeing employment. Surely, there will be an ad campaign about improved safety concerns by Boeing with many donations to crash victim’s families as loving charity. Meanwhile business as usual with all eyes toward relaunch of MAX. Once in the air, FAA off the certification hook, stocks will soar and the new investors more rich than ever. After Calhoun accomplishes this, there will be a new CEO coronation.

  8. Nothing is going to change at Boeing until the top management moves back to Seattle. It is more than symbolic that the distance between the ‘bean counters’ and the ‘sharp end’ became surmountable. They lost touch with what was really going on, where it really mattered. You can bet your ass Bill Boeing was on the hangar floor every single day. It is so sad to see this giant trying to grovel its way back to respectability.
    Doug Morey

  9. Look at GE it has been run into the ground by Jack Welch’s spawn. Unless something changes at the top, the big B will continue its downward slide. A corporate culture does not change by putting a new expensive suit in the corner office.