Boeing: CEO Dennis Muilenburg ‘resigns’

You know things aren’t going well for a company when on the same day as you ‘resign’ your CEO, and shuffle people into the newly vacated position you also appoint a new senior vice president of Communications to start on New Year’s Day.

Two media releases about appointments in one day.

23 December 2019 is the day Boeing announced that:

Dennis A. Muilenburg has resigned from his positions as Chief Executive Officer and Board director effective immediately.

Media Release: Boeing

It also announced that David L. Calhoun, previously a board member is named President and CEO in Muilengurg’s place. Another ‘Board member Lawrence W. Kellner will become non-executive Chairman of the Board effective immediately.’

When in doubt, change the messenger

And to top off the announcements for the day, Boeing announced that it has appointed ex-chief communications officer of Fiat Chrysler Automobiles and former Navy fighter pilot ‘Niel Golightly as the company’s senior vice president of Communications, effective Jan. 1, 2020. He succeeds Anne Toulouse, who previously announced her plans to retire in early 2020.’

Given they knew Anne Toulouse was retiring, it sounds like this has been in the works for a while. On the other hand, the ‘resigning’ of Muilenburg sounds a little more precipitous.

Boeing 737 MAX debacle

The airline manufacturer has been in hot water since two of the planes crashed killing a total of 346 people.

Indonesian Airline, Lion Air flight 610 crashed into the Java Sea, 12 minutes into its flight on 29 October 2018. The second was Ethiopian Airlines flight 302, which crashed six minutes into its flight from Addis Ababa, Ethiopia on its way to Nairobi Kenya on 10 March 2019. The plane in this crash was a three-month-old Boeing 737 MAX.

It took this second crash for the Boeing 737 MAX to be grounded worldwide while Boing and regulators launched numerous enquiries into the causes of the crashes.

Reportedly, there exist messages found by the American Federal Aviation Administration between test pilots which seem to show that Boeing knew about the problems with the Manoeuvring Characteristics Augmentation System (MCAS) anti-stall system three years before the crashes which poses the question why CEO Muilenburg didn’t ground the plane after the first crash.

The entire worldwide fleet of 737 MAX planes has been grounded since the 2nd crash, and announced dates for it to get back into the air, have been revised and revised. The current tentative date is March 2020, but don’t hold your breath.

Production Suspended

Earlier this month Boeing suspended the manufacture of the planes, given that it has about 400 of the defective aircraft parked around the USA already. At US$121m apiece, that is a lot of money sitting on the tarmac.

The 737 MAX was previously Boeing’s best selling plane, with deliveries of 580 of the cigar tubes in 2018 alone.

The suspension of manufacture of the plane will have a great knock-on effect for Boeing. It will impact a substantial number of Boeing’s 150,000 employees, not to mention the withdrawal of business from a range of subcontractors and external suppliers.

2PAXfly Takeout

Muilenburg had to go, even if just to indicate change.

The concern now is, that removing an engineer from the top job, and replacing him with a CEO whose background is in finance, is the wrong signal to give.

Many commentators believe that it was the emphasis on getting the 737 MAX to market so it could compete with Airbus’s A330 NEO, which precipitated the fast track decision making and resulting lack of attention to safety issues, that is the foundation of the cause of the two crashes.

Putting a finance guy in charge of the company – on the one hand, the right thing to do when the company must be haemorrhaging money. But on the other hand, sends completely the wrong message about Boeing re-invigorating the primacy of safety and engineering, rather than the acquisition of filthy lucre.

With its collaboration with NASA not going so well – its capsule didn’t quite make it to the space station – the massive loss in production and future orders of the 737 MAX, the cost of keeping planes parked, the compensation needed to be paid to the families of victims of the two crashes, not to mention the lawsuits that customers will bring, I re-iterate my dire predictions for Boeings future.