Boeing considers hiring outsider CEO to address escalating crisis, sources say

Boeing considers hiring outsider CEO to address escalating crisis, sources say

© Reuters. FILE PHOTO: A Boeing 737 Max during a display at the Farnborough International Airshow, in Farnborough, Britain July 20, 2022. REUTERS/Peter Cziborra/File Photo

By Allison Lampert and Tim Hepher

(Reuters) – Boeing’s board has begun searching for a heavy hitter to take over the struggling aircraft maker after CEO Dave Calhoun’s rocky tenure, with many industry executives and analysts predicting he will seek a remedy outside.

Facing growing pressure from airlines, regulators and investors, Boeing (NYSE:) announced a broader-than-expected shakeup on Monday with Calhoun, 66, resigning by the end of the year, as a result. of the company’s head of commercial aircraft manufacturing and its president.

The US plane maker is grappling with a growing crisis following the in-flight panel explosion of a 737 MAX plane in January.

The new CEO will face many tasks, including improving the company’s safety culture, resolving quality issues and regaining the trust of regulators, customers and the public.

Boeing will also need to meet targets to ramp up production and increase cash flow as it tries to reduce debt and catch up with European rival Airbus.

Just three months ago, Boeing appeared to name Stephanie Pope as its future leader after naming her chief operating officer following a successful stint leading its services division.

But on Monday, Pope was named head of Boeing’s commercial aircraft division, replacing the retiring Stan Deal, with responsibilities including the MAX factory.

His new position makes reaching the top job less likely, at least for now, analysts say.

“The company was grooming Stephanie Pope to likely succeed Calhoun, but that appears to have changed in favor of an external search for a new CEO,” said Bert Subin, an analyst at Stifel.

“This could lead to a high-profile hire.”

GE, CEO OF SPIRIT

Many investors say GE CEO Larry Culp has the star quality Boeing desperately needs to restore confidence, after splitting the historic conglomerate into three public companies.

But Culp recently told reporters that he is fully focused on leading GE Aerospace as a standalone engine maker and looks forward to continuing to serve Boeing as a key partner and supplier.

GE is expected to finalize the split next week.

Pat Shanahan, a former Boeing executive and former acting U.S. defense secretary in the Trump administration who now runs struggling MAX airframe supplier Spirit Aerosystems, is also cited as a possible frontrunner.

Shanahan could be promoted once the aircraft maker completes negotiations to buy Spirit, which was a Boeing subsidiary until 2005.

“He’s the perfect outsider; he knows Boeing inside and out, and now knows the people who produce fuselages and who seem to be part of Boeing again,” said industry veteran Adam Pilarski, who s It was asked in January how long Calhoun could last. .

Shanahan may not want to commit to five years at Boeing, said a former company executive who worked with Boeing’s former production chief. “It’s a game of endurance,” the executive said, speaking on condition of anonymity.

Spirit said Shanahan’s “only priority remains building a safety culture at Spirit AeroSystems (NYSE:).”

OTHER OPTIONS

Another Boeing veteran tipped for a possible return, according to industry sources, is former CFO Greg Smith, who was ousted by Calhoun in 2021 and is now president of American Airlines (NASDAQ:).

Smith spent part of his career overseeing supply chains. American Airlines did not respond to a request for comment.

Boeing board member David Gitlin has been widely mentioned as a potential candidate for CEO, but analysts said it was unclear whether he would be willing to give up his post as chief of the company. ventilation group Carrier Global (NYSE:). Boeing and Carrier declined to comment.

Several analysts said Boeing would prefer a clean break to stem a tide of safety criticism from regulators and Congress.

“(Boeing’s) culture of quality and manufacturing has been called into question following recent problems, and a new outside perspective on operations could be encouraging for investors,” said Ken Herbert, an analyst at RBC Capital Markets. Capital.

But unions, some of which are entering a new phase of contract negotiations, want a return to basics after widespread criticism that Boeing prioritizes shareholder value over quality and safety.

Ray Goforth, executive director of a key union at Boeing and Spirit, said the aircraft maker’s next CEO should be an engineer.

“This company has thrived under engineering leadership for decades, but it has gone from crisis to crisis,” said the president of the SPEEA union, which counts engineers among its members.

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