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Boeing strips CEO of chairman job over 737 Max
BOEING Co stripped chief executive officer Dennis Muilenburg of his role as chairman, leaving him little margin for error in his final push to resolve the crisis engulfing the company's 737 Max jetliner.
Separating the CEO and chairman roles will let Mr Muilenburg focus on getting the grounded jet back in the air, Boeing said in a statement on Friday. While the board expressed its continued support for Mr Muilenburg, it pledged "active oversight" of his performance, a sign of the pressure he's under to surmount regulatory hurdles and soothe the safety concerns of customers, pilots and passengers.
Lead director David Calhoun, a senior executive at Blackstone Group Inc, will take over as non-executive chairman. Mr Calhoun, 62, a former boss of General Electric Co's aviation division, stands out on the board for his deep aerospace experience and has been mentioned in years past as a contender for Boeing's CEO job.
"It provides stability and continuity but also introduces a new approach to leadership," said Richard Aboulafia, an aerospace analyst at Teal Group. "It's not a huge move in itself, but it creates the potential for a much bigger move."
Mr Muilenburg, 55, is under increasing scrutiny as the global flying ban on the Max nears the seven-month mark, with little clarity on when Boeing's best-selling jet will return to service. The planemaker's reputation and finances have been battered since two Max crashes killed 346 people and prompted a worldwide grounding.
The shares were little changed after the close of regular trading in New York, having advanced 1.1 per cent to US$374.92 in the Friday session. Boeing slumped after the flying ban began in March, but the stock has climbed 17 per cent since mid-August as investors bet that the Max would soon return to service. That's the biggest gain on the Dow Jones Industrial Average over that period.
The board will soon add a director who will serve on a new safety panel, Mr Calhoun said in the statement. The Aerospace Safety Committee is part of a board-ordered safety push.
Corporate-governance activists had already been clamouring to separate the chairman and CEO positions.
The Max's return continues to slip amid scrutiny from sometimes fractious regulators. Until recent weeks, Boeing had insisted that the plane would be cleared early in the fourth quarter. But the Max's three US operators - Southwest Airlines Co, United Airlines Holdings Inc and American Airlines Group Inc - have taken the single-aisle jet out of their flight schedules until January.
A longer delay would jeopardise Mr Muilenburg's position as CEO, said Mr Aboulafia.
Boeing announced the decision to split the CEO and chairman jobs on the same day that a review panel of global aviation experts delivered a scathing assessment of missteps by the company and the US Federal Aviation Administration (FAA) in the development and certification of the Max.
The Chicago-based manufacturer exerted "undue pressures" on some of its own employees who had FAA authority to approve design changes, according to a 69-page summary of the panel's findings.
Regulators assessing the aircraft sometimes didn't follow their own rules, used out-of-date procedures and lacked the resources and expertise to fully vet the design changes implicated in two fatal crashes, the Joint Authorities Technical Review found.
The findings are ratcheting up the pressure on Mr Muilenburg as he seeks to guide Boeing out of one of the biggest crises in the modern jet era.
When asked in an interview last week if he was the right person to lead Boeing out of the deepening turmoil, Mr Muilenburg responded: "This is not about me, right? It's about our company and what we do for our customers."
He then said: "I will serve in this role with everything that I have as long as the board wants me serving in this role." BLOOMBERG