Analysis: Boeing’s new CEO plays it safe — but more will be needed to get the company flying right

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David Calhoun
Boeing’s new CEO, David Calhoun, gives a talk at Virginia Tech, his alma mater, in 2018. (Virginia Tech Photo)

Veteran aerospace executive David Calhoun took the reins as Boeing’s CEO today, telling employees in a company-wide email that his top priorities are to get the 737 MAX flying again and restore confidence in the troubled aerospace giant.

It was just the kind of email you’d expect Calhoun to send — and that’s the problem.

In the midst of what’s likely to be a yearlong grounding of Boeing’s most widely sold airplane, questions about other airplane programs ranging from the 777X to the yet-to-be-announced 797, and a setback to Boeing’s CST-100 Starliner space taxi project for NASA, bolder action will be needed.

It doesn’t help matters that the transition from former CEO Dennis Muilenburg to Calhoun was marked by reports of multimillion-dollar payouts, including more than $60 million in pension benefits and stock for Muilenburg.

Calhoun himself has reportedly been promised a $7 million bonus if the 737 MAX safely returns to service — which you’d think would be the bare minimum required of an incoming CEO. (Today three U.S. senators sent Boeing a letter urging the company to cancel that bonus for safety’s sake.)

Previously: What brought down Boeing’s CEO — and what the next CEO will need to do to bring Boeing back

In his email, Calhoun said returning the 737 MAX to service safely “must be our primary focus.”

“This includes following the lead of our regulators and working with them to ensure they’re satisfied completely with the airplane and our work, so that we can continue to meet our customer commitments,” he wrote. “We’ll get it done, and we’ll get it done right.”

Calhoun, 62, also acknowledged that Boeing’s reputation needs repair.

“Many of our stakeholders are rightly disappointed in us, and it’s our job to repair these vital relationships,” he said. “We’ll do so through a recommitment to transparency and by meeting and exceeding their expectations. We will listen, seek feedback, and respond — appropriately, urgently and respectfully.”

Much of the message had a stay-the-course tone. “Boeing must keep innovating to succeed,” Calhoun wrote. “We’ll continue to invest in our global workforce and new processes and technologies that will help us become safer and more efficient as we define the future of aerospace.”

Perhaps one of the best things about the email is what it didn’t say: There was no reference to boosting shareholder value, which has been a priority for Boeing going back more than 20 years. Many critics have said the emphasis on cost-cutting led to an erosion of Boeing’s engineering infrastructure and a tendency to cut corners as well as costs.

The revelations that have come out since Muilenburg’s departure was announced two days before Christmas add to that perception.

In a trove of internal emails, made public last week in response to requests from Congress, Boeing employees bragged how they “Jedi mind tricked” regulators at the Federal Aviation Administration about the capabilities of an automatic control system that’s been implicated in two fatal 737 MAX crashes. They complained that the plane was “designed by clowns, who in turn are supervised by monkeys.”

““Would you put your family on a MAX simulator trained aircraft? I wouldn’t,” one employee wrote.

Other reports said Boeing was looking at potential wiring problems involving tail control for the 737 MAX — an issue that came to light only after fresh rounds of safety reviews related to the automatic control system. Other newly reported safety concerns relate to the MAX’s engines.

The uncertainties have led to a planned suspension of 737 MAX production at Boeing’s plant in Renton, Wash., and thousands of layoffs for Boeing’s suppliers.

Then there’s the Starliner issue: During an uncrewed test flight, Boeing’s Starliner spaceship picked up a wrong time stamp, which led the automatic control system to miss a crucial thruster firing. Because of the glitch, Starliner missed out on a required rendezvous with the International Space Station.

Now Boeing and NASA are weighing whether another uncrewed flight will be required before astronauts climb on board. The decision could lead to a no-win situation: If Boeing is obligated to do another flight, that could lead to tens of millions of dollars in additional costs and months of additional delays for crewed flights. But if Boeing is allowed to skip the extra flight, that could add to the corner-cutting complaints.

In the short term, Calhoun and Boeing appear to be getting some breathing space from investors as they start on the road back to normalcy. The company’s share price bested the previous close by about 1 percent in midday trading today.

But it won’t be long before Calhoun has to show significant progress on the company’s core concerns: The current expectation is that Boeing could win FAA recertification for the MAX by as early as next month, assuming no new obstacles arise. Then it’ll be up to Boeing and its customers in the airline industry to get 737 MAX pilots retrained, get the production pipeline moving again, and get the planes that have already been built delivered and in service.

Another turning point will come in April, when Boeing is due to hold its annual meeting and elect board members. “Now is the time to start a house cleaning at the board level that is so clearly needed,” Scott Hamilton, managing editor of Leeham News and Analysis, wrote today in his to-do list for Calhoun.

Hamilton noted that the current board doesn’t have a single person well-versed in aerospace engineering and aviation safety. He suggested that old-timers on the board should be replaced by the likes of famed airline pilot Chesley “Sully” Sullenburger, crash investigator John Cox and representatives of the unions for Boeing’s Machinists and engineers.

Is Calhoun up to the task? To his credit, the former GE executive (as well as interim CEO Greg Smith) gave the OK to releasing Boeing’s embarrassing emails and requiring MAX simulator training — two recent steps running counter to the cutting-corners, keeping-it-quiet perception that’s hurt the company in the recent past.

Calhoun could well give the 104-year-old, Seattle-born company a fresh start, despite his reputation as an insider. Or perhaps even because of it.

“Like Nixon going to China, Calhoun has the opportunity to do the unexpected and radically change direction of Boeing,” Hamilton wrote.

But like Nixon in China, Calhoun will have to be bold, even as he plays it safe.



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