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Dave Calhoun, Boeing CEO, to Step Down in Management Reshuffle

BusinessDave Calhoun, Boeing CEO, to Step Down in Management Reshuffle

Boeing abruptly said on Monday that it was overhauling its leadership amid its most significant safety crisis in years, announcing sweeping changes that included the departure of its chief executive, Dave Calhoun, at the end of the year.

The aircraft maker has been under mounting pressure from regulators, airlines and passengers as the company struggled to respond to the fallout from an incident in early January in which a panel blew off a Boeing 737 Max 9 plane midair during an Alaska Airlines flight.

The incident has roiled the company, considered by many to be a prized American institution, and renewed concerns about its commitment to safety and quality five years after two crashes of 737 Max 8 planes killed a total of nearly 350 people.

In addition to Mr. Calhoun’s departure, Boeing announced that Stan Deal, the head of the division that makes planes for airlines and other commercial customers, would retire immediately. He will be replaced by Stephanie Pope, Boeing’s chief operating officer, the company said in a statement.

Boeing also said that its chairman, Larry Kellner, would not stand for re-election. This weekend, the board elected Steve Mollenkopf, an electrical engineer by training and the former chief executive of Qualcomm, as its new chairman. In that role, he will lead the process of choosing Boeing’s next chief executive.

The Federal Aviation Administration, which regulates the company, grounded 737 Max 9 planes across the United States after the Alaska Airlines incident. When the agency cleared the planes to fly again in late January, it also imposed limits on Boeing’s planned production increase of Max planes, foiling the company’s latest attempt to better compete with its European rival Airbus.

A recent F.A.A. audit of Boeing’s Max production found dozens of lapses. The agency gave Boeing 90 days, or until about late May, to address its issues. The Justice Department has also reached out to passengers of the Alaska Airlines flight, informing them that they may be a “possible victim of a crime,” according to a copy of one such notification.

Airline leaders publicly expressed frustration with the manufacturer after the incident. The chief executives of several major carriers in the United States were set to meet with Mr. Kellner and other board members this week, according to a person familiar with the company’s plans. Mr. Calhoun was supportive of those meetings but was not going to attend them. Mr. Mollenkopf will now participate.

Ahead of those meetings, Boeing’s board met on a conference call this weekend to approve the leadership changes announced on Monday, according to the person.

In a note to employees on Monday announcing the changes, Mr. Calhoun said that the Jan. 5 incident involving Alaska Airlines Flight 1282 “was a watershed moment for Boeing.”

“The eyes of the world are on us, 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 said.

Discussions about changes to the company’s leadership have been going on for some time. Late last year, the company appointed Ms. Pope its chief operating officer, a move that was seen as setting her up to take over for Mr. Calhoun in a few years.

Ms. Pope has had a relatively rapid ascent in recent years. In early 2022, she was promoted from her role as chief financial officer of the commercial planes division to head of Boeing Global Services, which provides aftermarket support to customers.

Mr. Calhoun said in an interview with CNBC that he would be a part of the search for his successor. He also characterized all of the leadership changes, including his own, as “very deliberate.”

“Why now? I’ve entered my fifth year,” he said. “At the end of this year, I’ll be close to 68 years old. I’ve always said to the board — and the board has been very prepared — I would give them plenty of notice so that they could understand and plan succession.”

The announcement Monday came ahead of the company’s annual meeting, expected in May, during which board members are elected.

Boeing’s board appointed Mr. Calhoun chief executive after firing his predecessor, Dennis A. Muilenburg, who had led the company during the 2018 and 2019 crashes. Mr. Calhoun, who assumed the company’s leadership in January 2020, had been a member of its board since 2009. He spent much of his career at General Electric, where he was once vice chairman and headed the company’s infrastructure division. When he assumed the leadership of Boeing, he told employees that the company would “do better.”

His departure is all the more surprising because Boeing’s board in 2021 raised the mandatory retirement age for the chief executive to 70, from 65, to allow Mr. Calhoun to stay in the job until April 2028.

The leadership shake-up raises urgent questions about Boeing’s succession planning. Ms. Pope now has a big job trying to fix the commercial planes division. Analysts have said the company may look to bring on a top executive from outside, but the number of people with the experience needed to lead an engineering and manufacturing company with more than 170,000 employees is extremely limited.

Several Wall Street analysts welcomed the changes and the plan to keep Mr. Calhoun on until the end of the year. His departure, along with that of Mr. Deal, was “ultimately necessary,” Nicolas Owens, an analyst at Morningstar, said in a note to clients on Monday.

“For key Boeing stakeholders, including customers, investors, directors, and likely the machinists’ union, their tenure became too closely associated with the successive manufacturing flaws uncovered in the 737 Max and 787 lineups since 2019 for their mantle of leadership to survive into the next chapter,” he said.

Since the door plug incident in January, Mr. Calhoun has repeatedly affirmed the company’s commitment to quality and safety. But pressure continued to rise on him and Boeing. The National Transportation Safety Board’s preliminary report about the incident said that four bolts that were supposed to hold the door plug in place appeared to be missing before it came off the plane. It said the bolts were removed at a Boeing factory in Renton, Wash., where the 737 Max is built, so that damaged rivets could be repaired.

The company’s announcement in February that the head of its 737 Max program was leaving the company did little to address the growing criticism. Even some travelers have become wary of the company’s most popular series of planes, the 737 Max. After the Alaska Airlines mishap, Kayak, the flight booking service, said it saw a noticeable rise in users filtering out flights that were scheduled to be on 737 Max planes.

One union leader, who represents more than 19,000 engineers, scientists, pilots and other employees at Boeing and its supplier Spirit AeroSystems, said the plane maker’s management needed to make more far-reaching changes to regain its credibility.

“The problems in Boeing’s executive suite are systemic,” the union leader, Ray Goforth, the executive director of the Society of Professional Engineering Employees in Aerospace, said in a statement. “Nothing is going to change for the better without company leadership acknowledging their failures and thoroughly committing to fixing them.”

Southwest Airlines, a big Boeing customer that flies only the company’s planes, said in a statement that it was “committed to working with Boeing’s new leadership team to ensure that each airplane meets the highest quality and safety standards.” Delta Air Lines and United Airlines issued similar statements.

Boeing’s stock was up about 1 percent on Monday afternoon after the company announced its management changes.

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