Boeing sank deeper into crisis

CEO David Calhoun was brought in to solve Boeing's problems, but he left, leaving an even more difficult job for his successor.

On March 25, Boeing announced that CEO David Calhoun would leave this position after 4 years in office. Calhoun is considered a veteran leader in crisis management. He was appointed in 2020 to steer the airline after two fatal accidents in 2018 and 2019 with the 737 Max - the airline's best-selling aircraft.

However, he was unable to create further achievements in his career, such as when leading Caterpillar, General Electric and Nieslen. Calhoun left Boeing as the company sank further into crisis, with production problems and safety concerns.

The next leader at the iconic American aircraft manufacturer will have to deal with problems similar to Calhoun. Boeing said Calhoun will leave his position at the end of this year. However, when Boeing finds a new CEO, he will probably leave immediately.

In addition to Calhoun, Boeing's President and Director of Commercial Airplanes also resigned earlier this week. Aviation industry leaders and officials all said they welcomed this change.

However, if the search for a replacement leader drags on, efforts to turn the situation around will be slowed down. CEOs preparing to leave rarely dare to implement bold strategies. Uncertainty about the leader also makes it difficult for other employees and leaders to work.

"The faster they find it, the better. Because the new CEO will have to handle a huge amount of work," said Bill George - CEO of Medtronic. He co-authored research papers on Boeing's challenges.

Boeing CEO Dave Calhoun in Washington in January 2023. Photo: Reuters

Calhoun tried to solve Boeing's supply chain problems by tightening quality control with fuselage supplier Spirit AeroSystems.

Investigators said that during the production process, Alaska Airlines' aircraft doors were removed or opened at Boeing's factory in Washington. However, Boeing employees then just reinstalled it without using the necessary screws to fix it. A few months later, this door opened when the plane was at an altitude of 4,800 m, starting a new series of crises for Boeing.

Calhoun is in talks with Spirit about buying the company. This deal will reverse the company's manufacturing policy, which is to outsource production and focus only on complete assembly. Boeing sold Spirit in 2005. However, WSJ quoted a close source as saying that reaching an agreement was very complicated, because Spirit also supplied Airbus - Boeing's main rival.

During Calhoun's tenure, Boeing still struggled to compete with Airbus. Boeing shares have lost 43% in value since Calhoun took this position in early 2020. In contrast, Airbus shares have increased more than 26%.

Although both companies have received large orders from airlines to serve increased flight demand after the pandemic, Boeing's production and quality problems are making customers angry.

Airbus is the opposite. The airline's narrow-body aircraft market share is still increasing, after a series of incidents by its competitors.

Solving Boeing's problems is a huge undertaking, United Airlines CEO Scott Kirby said earlier this month. "This is not a job that can be resolved in 12 months, but in 2 decades," he said. Earlier this week, United said it would continue to support Boeing and wanted to cooperate during the leadership transition.

The part was detached in the incident of the Boeing 737 MAX 9 aircraft in the US on January 5. Photo: X/ FL360aero

Boeing is still in trouble with authorities. The US Federal Aviation Administration (FAA) is not satisfied with Boeing's changes after the Alaska Airlines incident. A former FAA official said Calhoun agreed to the FAA's requests, but the agency did not see enough effectiveness.

Tensions between the two sides increased earlier this month. After inspecting Boeing 737 production, the FAA discovered many problems related to quality management. After that, the FAA continued to recommend that airlines re-check the seats in the cockpit of the 787 Dreamliner, after the sudden descent of LATAM Airlines.

The US Department of Justice opened a criminal investigation after the Alaska Airlines incident. The US Federal Bureau of Investigation (FBI) also recently contacted the passengers on that flight.

Leaders of unions involving Boeing workers are demanding seats on the Board of Directors, for the first time in Boeing's nearly 108-year history. They also want the next line of planes to be made in their unionized factories, instead of Boeing factories opening in other states.

For many years, before the door opening incident occurred, airline leaders had expressed dissatisfaction with delayed deliveries. Earlier this month, Southwest Airlines - whose entire fleet is Boeing - said it had to reduce the number of flights in the second half of the year. United Airlines is buying more Airbus aircraft.

In his final months in office, Calhoun's task will probably be to clear the way for the new CEO to take over. But the transition period will be awkward for Calhoun. "Will he be confident enough to solve some strategic challenges? Who knows," concluded Harry Kraemer - former CEO of health care company Baxter International.

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