Boeing management clearout betrays the seriousness of the company’s crisis
The scale of the management changes announced by Boeing are a recognition from the company of the grave situation in which it finds itself.
It is pretty rare for the chairman and chief executive of an organisation to step down at roughly the same time as Larry Kellner and Dave Calhoun are doing.
For the departure of another senior executive, running one of that company’s most important businesses, to be announced at the same time is almost without precedent.
Stan Deal, who steps down immediately as head of Boeing‘s commercial airlines operation, is clearly carrying the can for the crisis to have engulfed the 737 MAX 9 jet which has been subject to mass groundings since the incident, in January, in which one of the jets, operated by Alaska Airlines, suffered the blowing-out of a door plug in mid-air.
Money latest: Get ready for 3% interest rates, respected economists predict
Since then, Boeing has had to launch a root-and-branch investigation of its fuselage production to ensure that nothing like that happens again.
It has also had to tell some of its customers, most notably Ryanair in Europe and Southwestern Airlines in the United States, that deliveries of the aircraft will be subject to delays. That has led customers to rethink their flying schedules during the key summer months and Ryanair, for one, is demanding compensation.
What is especially damning about the departure of Mr Calhoun, in particular, is that he is now the second consecutive Boeing chief executive to be forced to step down due to questions over its poor quality of production and supply chains.
The man he replaced, Dennis Muilenberg, was sacked at the end of 2019 following two crashes involving an earlier version of the 737 MAX – a Lion Air flight in Indonesia in October 2018 and an Ethiopian Airlines flight in March that year – that claimed the lives of hundreds of people. On that occasion, Boeing was heavily criticised for not acting more quickly, with Mr Muilenberg’s continued occupation of the CEO’s office distracting from the company’s attempts to rebuild its relationships with its customers and regulators.
Please use Chrome browser for a more accessible video player
What’s going on at Boeing?
Mr Calhoun’s decision to depart at the end of the year suggests Boeing has learned from that experience but also reflects the fact that he failed in his most crucial role – to improve production quality – and clearly that has rattled the confidence of investors.
Their mood will not have been improved by a report in the Wall Street Journal last week that the chief executives of some of Boeing’s biggest airline customers in the US had requested a meeting with Boeing’s board to express concern over the Alaska Airlines accident and the subsequent production problems with the 737 MAX 9.
The outgoing CEO did his best today to suggest that this was part and parcel of the normal process of succession – telling CNBC’s Phil LeBeau that he would be 68 at the time of his departure, having been in the role for five years, making it an obvious time to step down.
Please use Chrome browser for a more accessible video player
January: Ryanair has ‘confidence’ in Boeing
But this is not a normal CEO succession, not when Mr Kellner and Mr Deal – who has spent nearly 40 years at the company – are also stepping down. It is emblematic of a company in crisis.
That Boeing – America’s biggest and most important manufacturing business – has been able to immediately announce a new chairman of the quality of Steve Mollenkopf, the former Qualcomm chief executive, will at least provide some reassurance.
His first task will be identifying a new chief executive. Stephanie Pope, who had only just been made chief operating officer before her second ‘battlefield promotion’ this year to replace Mr Deal, will obviously been seen as a contender.
However, it feels likely that Boeing investors will press him to appoint someone from outside the company, someone not tainted with the production disasters of the last few years.
In one way, though, Mr Calhoun does deserve some sympathy.
Read more:
Ryanair boss declares passengers are safe despite Boeing issues
Boeing axes 737 MAX chief after mid-air scare
US regulator increases oversight of Boeing
Boeing used to be run by engineers who took immense pride in what the company did. It was a key contractor in Apollo 11, the NASA mission that first put man on the moon, as well as the Space Shuttle – the world’s first reusable spacecraft.
More recently, the focus has been on financial engineering, with share buybacks given a greater priority than research and development. The 737 MAX family was emblematic of that – it was merely a re-engineering of the old 737 family of jets rather than a complete rethinking of what customers might want.
Airbus, which took a more conservative approach to its balance sheet, was by contrast more able to rethink its aircraft designs and invest in R&D. The European company’s reward is that it has now comprehensively overtaken Boeing in terms of production and aircraft sales.
In an ideal world, this boardroom reset would be aiming to recapture Boeing’s past glories.
For now, though, the task for the new management will be to rebuild the confidence of regulators, customers, investors and employees. It is that serious a situation.
Vladimir Putin has described Donald Trump’s sanctions against two major oil firms as an “unfriendly act”.
However, the Russian president has insisted the tightened restrictions won’t affect the nation’s economy, a claim widely contradicted by most analysts.
In a major policy shift, Mr Trump imposed sanctions against Rosneft and Lukoil – Russia’s biggest oil companies – on Wednesday.
Please use Chrome browser for a more accessible video player
Will US sanctions on Russian oil hurt the Kremlin?
The White House said this was because of “Russia’s lack of serious commitment to a peace process to end the war in Ukraine”.
Putin has now warned the move could disrupt the global oil markets, and lead to higher prices for consumers worldwide.
A meeting between the two leaders had been proposed in Budapest, but Mr Trump said he had decided to cancel the talks because “it didn’t feel right to me”.
Speaking from the Oval Office, he had told reporters: “I have good conversations. And then, they don’t go anywhere. They just don’t go anywhere.”
Giving a speech in Moscow yesterday, Putin said “dialogue is always better than war” – but warned that Russia will never bow to pressure from abroad.
Earlier, his long-term ally Dmitry Medvedev had described Mr Trump as a “talkative peacemaker” who had now “fully embarked on the warpath against Russia”.
Please use Chrome browser for a more accessible video player
Why did Trump sanction Russian oil?
Oil prices have witnessed a sizeable jump since the sanctions were announced, with Brent crude rising by 5% – the biggest daily percentage gains since the middle of June.
In other developments, Lithuania has claimed that two Russian military aircraft briefly entered its airspace yesterday.
A Su-30 fighter and Il-78 refuelling tanker were in the NATO member’s territory for 18 seconds, and Spanish jets were scrambled in response to the incident.
Russia’s defence ministry denied this – and said its planes did not violate the borders of any other country during a “training flight” in the Kaliningrad region.
Read more:
Sanctions could have chilling effect on market
How could new sanctions impact the UK?
Please use Chrome browser for a more accessible video player
Zelenskyy tells Sky News ‘ceasefire is still possible’
Volodymyr Zelenskyy attended a European Council summit in Brussels to discuss the war in Ukraine – and said the meeting had delivered “good results”.
He said Ukraine had secured political support for frozen Russian assets and “their maximum use” to defend against Russian aggression, adding the EU would “work out all the necessary details”.
Mr Zelenskyy thanked the bloc for approving its 19th sanctions package against Russia earlier today, and work was already beginning on a 20th.
European leaders are going to arrive in London later today for a “critical” meeting of the “Coalition of the Willing” – with the goal of discussing “how they can pile pressure on Putin as he continues to kill innocent civilians with indiscriminate attacks across Ukraine”.
Please use Chrome browser for a more accessible video player
How will the Russian oil sanctions affect petrol costs?
Prime Minister Sir Keir Starmer said: “The only person involved in this conflict who does not want to stop the war is President Putin, and his depraved strikes on young children in a nursery this week make that crystal clear.
“Time and again we offer Putin the chance to end his needless invasion, to stop the killing and recall his troops, but he repeatedly rejects those proposals and any chance of peace.
“From the battlefield to the global markets, as Putin continues to commit atrocities in Ukraine we must ratchet up the pressure on Russia and build on President Trump’s decisive action.”
-
Sports2 years agoStory injured on diving stop, exits Red Sox game
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports3 years agoButton battles heat exhaustion in NASCAR debut
-
Sports3 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment1 year agoHere are the best electric bikes you can buy at every price level in October 2024