Boeing CEO Dennis Muilenburg was ousted on Monday after a tumultuous period in which the company faced a series of setbacks, including two fatal crashes, delays and numerous issues with its 737 Max airplane. Boeing continues to struggle to get its most important product back in the air.
Chairman David Calhoun will take over as CEO, effective January 13, 2020.
Boeing (BA) said in a press release that its board of directors decided to part ways with Muilenberg in part because its customers and regulators no longer trusted the company’s decision-making.
“A change in leadership was necessary to restore confidence in the company moving forward as it works to repair relationships with regulators, customers, and all other stakeholders,” the company said.
Boeing’s 737 Max, which was the company’s bestselling commercial jet, was grounded worldwide in March 2019 after two fatal crashes killed 346 people. It still hasn’t returned to flight, despite Boeing’s efforts to clear a software fix with regulators.
The company said earlier this month that it would suspend production of the 737 Max starting in January. Boeing has continued to produce the 737 Max during its grounding, but uncertainty about when the federal regulators will clear the planes for flight has made production untenable. Boeing shifted its timeline for the 737 Max’s return to the skies several times throughout the year, as it became evident that it could not easily satisfy regulators’ concerns about the plane’s safety.
Boeing also lost lawmakers’ confidence, particularly after a former employee testified before Congress earlier this month that Boeing ignored safety concerns when building the 737 Max. One whistleblower suggested Boeing had a culture problem in which it cut corners to save on costs and made production mistakes.
Other problems have plagued Boeing during Muilenberg’s tenure. Another version of the 737 Max, an older version of 737 NG aircraft, was found to have structural cracks that forced airlines to inspect their fleets.
A spacecraft the company is building to ferry NASA astronauts to the International Space Station malfunctioned last week during its first-ever trip to space. The uncrewed test flight, which came after years of delays and setbacks, was intended to be the final major test before it was finally ready to fly humans.
The company has also been roundly criticized by federal oversight officials over billion-dollar cost overruns and missed deadlines with another NASA contract: to build the Space Launch System, a massive rocket that the space agency wants to use to return humans to the moon.
The growing list of issues with the 737 Max and the company’s handling of the situation are likely the main reasons Boeing decided to oust its longtime CEO, said Richard Aboulafia, aerospace analyst with the Teal Group.
“It was a series of missteps with the FAA, missteps to communicate with Congress, lack of communication with customers and with suppliers,” Aboulafia said. “If there was a final straw, it was the way the [production] shutdown happened with not a lot of explanation or plans as to what would happen.”
Boeing still has a strong balance sheet, and its stock is up marginally this year despite all of its setbacks. But questions about the company’s leadership grew louder as the company’s missteps added up.
“Under the company’s new leadership, Boeing will operate with a renewed commitment to full transparency, including effective and proactive communication with the FAA, other global regulators and its customers,” the company said in a statement.
Boeing’s stock rose 3% in early trading Monday.
How Muilenburg was ousted
Muilenburg was informed Sunday night that Boeing’s board of directors would ask him to resign, according to a person familiar with the board’s decision.
The call came after board members met in-person last weekend and expressed concerns that Muilenburg got “sideways” with the FAA as well as with some customers who have been hurt and confused by all the shifting timelines for the 737 Max, the source said. The board, however, didn’t directly address Dennis’s future at the board meeting last weekend.
Newly appointed CEO Calhoun spent last week calling and talking to the FAA and customers himself. And the board met again over the weekend — this time over the phone — and decided to ask Muilenburg to step down.
Some board members expressed concerns that a leadership change could destabilize the company. But, ultimately, the board concluded the company and the FAA are in a good place now with a schedule and timeline to get the 737 the certification it needs.
Muilenburg, 55, became CEO of the world’s largest aerospace company in July 2015. He previously held the chairman role as well but relinquished that seat in October. He had worked at Boeing in a number of different roles since 1985.
Incoming CEO Calhoun has served on Boeing’s board since 2009. He has also served as a senior managing director at Blackstone Group and he previously was the chairman and CEO of Nielsen Holdings.
What’s next for Boeing
Aviation regulators continue to follow a thorough process for returning the 737 Max to service, the FAA said in a statement Monday. The FAA added it expects Boeing will continue to support that process with its new CEO.
The list of lawsuits that airlines and other Boeing customers have filed against the company continues to grow. The longer the 737 Max remains grounded, the more Boeing will have to pay to its airline customers in compensation. The 737 Max crisis is far from over, and the company’s new leadership will have to navigate those tricky next steps.
Lawrence Kellner, a Boeing board member who will become chairman, praised Calhoun’s “deep industry experience” in a statement Monday. Kellner said Boeing’s future leader has “a proven track record of strong leadership, and he recognizes the challenges we must confront.”
A successful test flight of Boeing’s Starliner capsule was seen as a chance for the company to garner some positive attention amid its ongoing scandals. But the mission turned into yet another black eye. It went awry shortly after Starliner was launched into space on Friday and it failed to put itself on the correct path in orbit, forcing Boeing to end the mission a week early. That could further delay Boeing’s attempt to start delivering humans to the space station, and the company may have to test Starliner again before sending people into space.
– CNN’s Cristina Alesci contributed to this report