What killed Boeing’s CEO?

A series of missteps, two plane crashes, 346 dead passengers, and a failed space mission along with a bit of hubris led to downfall of Dennis Muilenburg. Questions remain as to how much Boeing will actually change under its new leadership team.

OUT THE DOOR: Boeing's ex-CEO Dennis Muilenburg walked away from the company with more than US$60 million in long-term incentives, stock awards, and pension benefits. (PHOTO: Shutterstock)

In the end, it was the clock in the capsule that killed ousted Boeing CEO Dennis Muilenburg. Not literally of course, but the failure of Boeing’s Starliner space capsule that was to herald a US return to manned space flight on a US vehicle appears to have been the straw that broke the camel’s back and led to Muilenburg’s ouster as CEO on 23 December. It appears Boeing engineers, once hailed in the aerospace industry as the best of the best, could not set an internal clock properly on the spacecraft.

The Starliner’s failure to perform as planned came on top of a nearly year-long grounding of its best-selling 737 MAX narrowbody jet, which was the result of two crashes that together killed 346 people. Muilenburg was slammed by relatives of the victims, US congressional investigators, the US Federal Aviation Administration, and many others for his handling of the fallout from those two crashes.

A Boeing “lifer” and engineer by training, Muilenburg never seemed to get a grip on how to handle the crisis and seemed to be, in his public appearances at press conferences and congressional hearings, simply repeating lines that sounded like they had been written by the company’s lawyers, and they probably were.

Don’t cry for Muilenburg though. Even though he was fired just two days before Christmas, he is eligible for a US$39 million payout, including US$6.6 million in cash as well as bonuses and stock awards, based on share price of US$322.50, according to regulatory filings and media reports. That’s far more than any relatives of the 346 dead passengers will be receiving in any settlement with Boeing, which has been trying to move the legal cases against it to Indonesia and other jurisdictions where payouts are normally far less than what might be awarded by courts in the US.

Muilenburg’s handling of the two crashes of Boeing’s 737 MAX plane led to his ouster. (PHOTO: Shutterstock)

Boeing, in its 23 December statement announcing the leadership change, said the board of directors “decided that a change in leadership was necessary to restore confidence in the company moving forward as it works to repair relationships with regulators, customers, and all other stakeholders”. Boeing’s board in October stripped Muilenburg of his chairman’s title and replaced him in that seat with David Calhoun, who will now take over as CEO and president. Calhoun will remain as a member of the board but will be replaced in the chairman’s role by Lawrence Kellner. Boeing Chief Financial Officer Greg Smith will serve as interim CEO during the brief transition period, while Calhoun exits his non-Boeing commitments, the company added.

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David Calhoun, Boeing’s new CEO. (PHOTO: Boeing)

The problem with appointing Calhoun as CEO – he was in the running for the position previously – is that Boeing has been criticised for putting profits before people (i.e., safety), and Calhoun is unlikely to change that corporate mindset, coming as he does from General Electric where “financial engineering” is the name of the game. Calhoun has been on the Boeing board since 2009 and has been a strong proponent of cost-cutting that many blame for Boeing’s troubles. His past at GE and his focus on finances means safety, despite all the press releases Boeing may send out to the contrary, will take a backseat to shareholder value.

Boeing has a long way to go to restore trust with regulators around the world, with Wall Street, with airlines that have lost millions of dollars due to the grounding of the MAX, pilots and air crews, and not least, the flying public. Pilots have slammed Boeing because the manufacturer failed to include details about a flight-control subsystem known as Manoeuvring Characteristics Augmentation System (MCAS) that played a role in the accident. While the company had described MCAS to MAX operators, it deliberately removed references from flight-crew manuals in its rush to get the MAX into the air and into competition against the Airbus A320.

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Matthew Driskill is the Editor of Asian Aviation and is based in Cambodia. He has been an Asia-based journalist and content producer since 1990 for outlets including Reuters and the International Herald Tribune/New York Times and is a former president of the Foreign Correspondents Club of Hong Kong. He frequently appears on international broadcast outlets like CNN, Al Jazeera and the BBC and has taught journalism at Hong Kong University and the American University of Paris. Driskill has received awards from the Associated Press for Investigative Reporting and Business Writing and in 1989 was named the John J. McCloy Fellow by the Graduate School of Journalism at Columbia University in New York where he earned his Master's Degree.


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