Boeing CEO loses Chairman job; Co wants him to focus on Max crisis

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Boeing CEO loses Chairman job; Co wants him to focus on Max crisis

Unread post by bimjim » Sun Oct 13, 2019

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Boeing CEO loses Chairman job as company wants him to focus on 737 Max crisis
12 Oct 2019

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 Muilenburg focus on getting the grounded jet back in the air, Boeing said in a statement Friday. While the board expressed its continued support for 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. 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."

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% to $374.92 in the Friday session. Boeing slumped after the flying ban began in March, but the stock has climbed 17% 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.

‘Full Confidence’

The board will soon add a director who will serve on a new safety panel, Calhoun said in the statement. The Aerospace Safety Committee is part of a board-ordered safety push.

“The board has full confidence in Dennis as CEO," he said.

Muilenburg, 55, said he was “fully supportive" of the change. “Our entire team is laser-focused on returning the 737 Max safely to service and delivering on the full breadth of our company’s commitments," he said in the statement. He took the reins as CEO in July 2015 and added the chairmanship in March 2016.

Governance Activists

Corporate-governance activists had already been clamoring to separate the chairman and CEO positions.

Boeing opposed a proposal to divide the roles at the annual meeting earlier this year, saying directors should be able to select their leadership structure rather than be bound by an “inflexible policy." Investors rejected the measure but it won 27% support, up from 20% the year before, including abstentions and non-votes.

Shareholder activist John Chevedden filed a proposal Oct. 9 to raise the matter again at Boeing’s 2020 annual meeting. Directors would have the discretion to phase in an independent chairman, “although it would be better to have an immediate transition," the measure said.

The Max’s return continues to slip amid scrutiny from sometimes fractious regulators. Until recent weeks, Boeing had insisted the plane would be cleared early in the fourth quarter. But the Max’s three U.S. 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 jeopardize Muilenburg’s position as CEO, said Aboulafia.

“If they’re on course for re-certification in the fourth quarter as they maintain, then he could hang on," he said. “If it slips much beyond that, then his job is definitely at risk."

Boeing Lifer

An aerospace engineer by training and Boeing lifer, the CEO has served as the company’s public face throughout the Max crisis. That’s made him a target of critics who contend that Boeing was too slow to fully explain the role its flight-control software played in the crashes.

Muilenburg will have two critical chances to shape perceptions about his handling of the crisis this month: When third-quarter results are released on Oct. 23 and when he testifies before Congress a week later.

Directors already should have insights into the financial results, which analysts anticipate to be dented by unexpectedly low deliveries of the 787 Dreamliner and other aircraft.

Boeing’s tally of 63 deliveries, down from 190 shipments a year earlier, was 12 jetliners less than predicted by Cowen & Co. analyst Cai von Rumohr.

The shortfall probably pared $900 million from third-quarter revenue and 25 cents to 30 cents a share from estimated earnings, von Rumohr said in an Oct. 8 report. That probably resulted in a cash outflow of $1.7 billion to $2 billion for the quarter, he said.

‘Undue Pressures’

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 U.S. Federal Aviation Administration 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 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, 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."

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Re: Boeing CEO loses Chairman job; Co wants him to focus on Max crisis

Unread post by bimjim » Sun Oct 13, 2019

https://www.forbes.com/sites/jeremyboga ... ax-crisis/

Boeing Board Relieves Muilenburg Of Chairman Job Amid 737 MAX Crisis
Jeremy Bogaisky
Oct 11, 2019

Boeing’s board of directors has taken the title of chairman of the board away from CEO Dennis Muilenburg, the company announced Friday after the close of trading, diminishing his power as the company struggles to bring its flagship plane back to service following two deadly crashes.

The board has appointed David L. Calhoun, its longtime independent lead director, to serve as non-executive chairman.

“The board has full confidence in Dennis as CEO and believes this division of labor will enable maximum focus on running the business with the board playing an active oversight role,” Calhoun said in a statement.

A Boeing spokesman was unable to comment on whether Muilenburg’s pay would be reduced. His compensation totaled $23.39 million in the last fiscal year, including the value of stock grants.

The move comes six months after Boeing’s board had opposed a proposal at its April shareholder meeting to separate the roles of chairman and CEO. The measure was voted down by a margin of 66% to 34%.
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Muilenburg stated, “I am fully supportive of the board’s action. Our entire team is laser-focused on returning the 737 MAX safely to service and delivering on the full breadth of our company's commitments.”

Muilenburg has taken the brunt of public criticism for Boeing’s failures with the 737 MAX, an updated version of its bestselling plane. The MAX has been grounded worldwide since early March in the wake of the second of two crashes that killed a total of 346 people. Muilenburg has made few public appearances since and drew criticism for being slow to acknowledge that design flaws with a new automated flight control feature called MCAS were a key contributor to the accidents.

PROMOTED

Efforts to fix the flight control system and draw up new pilot training procedures to return the plane to service have been repeatedly delayed amid intense scrutiny by the U.S. Federal Aviation Administration and regulators in other countries.

Boeing shares were little changed in after-hours trading, off 0.14% to $374.40.

Muilenburg, 55, has spent his entire career at Boeing, working his way up from engineering intern to run its defense business, before being promoted to president and COO as he was groomed to replace CEO James McNerney, who stepped aside in 2015. Muilenburg was appointed chairman of the board the following year.

Earlier Friday, an independent review panel commissioned by the FAA issued a report concluding that the agency failed to properly evaluate MCAS and oversee Boeing employees who had been delegated to perform safety analyses for it. The panel also said it appeared that the Boeing employees had faced “undue pressure” from their supervisors at the company.

Since midsummer, Boeing has pinned its hopes on receiving regulators’ approval to return the plane to service early in the fourth quarter, a prospect that has dimmed with the plane yet to undergo a test flight so that regulators can affirm the safety of Boeing’s modifications to the flight control system. United, American and Southwest airlines have pulled the 737 MAX from their schedules until mid-January.

Boeing has halted MAX deliveries to customers amid the grounding, though it has continued to produce the plane and older models at a slower rate of 42 a month, down from 52. It could be forced to slow the production line or even temporarily halt MAX output entirely if the reentry timeline slips further.

In its statement Friday, the board also said that it plans to name a new director soon with deep safety experience who will serve on its newly established Aerospace Safety Committee.

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Re: Boeing CEO loses Chairman job; Co wants him to focus on Max crisis

Unread post by bimjim » Sun Oct 13, 2019

https://www.baltimoresun.com/sns-bc-us- ... story.html

Boeing names new board chairman in setback to CEO
Oct 12, 2019

Boeing CEO Dennis Muilenburg has lost his title as chairman of the troubled aircraft manufacturer, nearly a year after the first of two crashes of its 737 Max that together killed 346 people.

Boeing announced late Friday that company directors decided to separate the two jobs and elected one of their own, David L. Calhoun, to serve as non-executive chairman.

Earlier on Friday, a panel of international aviation regulators issued a report critical of Boeing and the Federal Aviation Administration over how the Max was approved to fly. The group said Boeing failed to adequately inform the FAA about changes to a key flight-control system implicated in the accidents.

Muilenburg said in a statement that he supported splitting the CEO and chairman jobs.

"The board has full confidence in Dennis as CEO and believes this division of labor will enable maximum focus on running the business with the board playing an active oversight role," Calhoun said in a statement issued by the company.

The board in April opposed a shareholder resolution to split the jobs amid criticism over Boeing's response to the accidents. The measure was rejected by a 2-to-1 margin.

The Max was Boeing's best-selling plane until being grounded worldwide in March after the crashes in Indonesia and Ethiopia. The company has set aside billions to compensate airlines affected by the grounding.

The Justice Department and Congress are investigating the company, which also faces dozens of lawsuits by families of passengers who died in the crashes.

Muilenburg is scheduled to testify Oct. 30 before a House committee looking into the plane's certification.

Boeing was initially optimistic that the Max could return to flight this spring, but work to fix flight software took longer than expected. In June, FAA test pilots discovered another problem in the plane's computers, extending the grounding.

Muilenburg said recently that Boeing expected the plane to be back in service by early in the fourth quarter, but the company still hasn't formally submitted its fixes to regulators. U.S. airlines don't expect the plane back until at least January, and it could be longer in other countries.

Chicago-based Boeing is one of two companies that dominate the building of large airliners; Europe's Airbus is the other. Boeing is also a major defense contractor. It has more than 150,000 employees.

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