Boeing on Monday announced it had fired its chief executive, Dennis A. Muilenburg, whose handling of the company's 737 Max crisis had angered lawmakers, airlines, regulators and victims' families.
The company has been mired in the worst crisis in its 103-year history since the crashes of two 737 Max jets killed 346 people. The plane has been grounded since March, and Boeing has faced cascading delays as it tries to return the Max to the air.
The company said David Calhoun, the chairman, would replace Muilenburg on Jan. 13. Until then, Boeing's chief financial officer, Greg Smith, will serve as interim chief executive effective immediately, the company said.
The Boeing board had stood by Muilenburg for months, but after a recent string of bad news for the company, his ouster came swiftly.
On Sunday morning, the Boeing board scheduled a call of its independent directors, which would exclude Muilenburg, for Sunday evening. It had been a disastrous week, including Boeing's announcement that it would temporarily shut down the 737 Max factory and the botched launch of a Boeing space capsule designed for NASA.
On the call, the board made the unanimous decision to remove Muilenburg. After the decision was made, Calhoun, who was in New York, and Larry Kellner, a board member who was elevated to chairman of the company effective immediately, called Muilenburg to inform him of the decision, according to a person familiar with the situation. The call was brief, and Muilenburg accepted the board's choice.
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The firing of Muilenburg underscores the extent of the challenges facing Boeing. Before the 737 Max can fly again, regulators must approve Boeing's fix for an automated flight control system that was found to have played a role in both crashes. The company still needs to provide the Federal Aviation Administration with all the documents needed to fully describe the software fix. Boeing stock has fallen by 20% during this crisis, costing the company more than $8 billion and affecting a supply chain that extends to 8,000 companies. Shares closed up 3% on Monday after the firing was announced.
OPTIMISM DASHED
Muilenburg has repeatedly made overly optimistic projections about how quickly the plane would return to service. That has created chaos for airlines, which have had to cancel thousands of flights and sacrifice billions of dollars in sales.
The development of the 737 Max, an updated version of Boeing's popular 737 jet, was begun under pressure in 2011 as the company sought to fend off competition from its European rival, Airbus. The two crashes have prompted investigations by prosecutors, regulators and two congressional committees into whether Boeing overlooked safety risks and played down the need for pilot training in its effort to design, produce and certify the plane as quickly as possible.
"What is most dispiriting is appointing Calhoun as CEO after he said that Dennis was doing everything right," Sen. Richard Blumenthal, D-Conn., said Monday, calling for a new Boeing hearing with Calhoun as soon as possible. "That certainly leaves the impression that it will be business as usual. What's needed now is a complete house cleaning, not only in personnel but in culture."
Muilenburg's relationship with the FAA was particularly tattered after he was seen in recent months to be pressuring the agency to return the planes to service.
The FAA said Monday that it did not comment on personnel decisions but that it was continuing work on approving the plane and had "set no time frame for when the work will be completed."
A spokesman for the agency said it expected that Boeing would "support that process by focusing on the quality and timeliness of data submittals for FAA review, as well as being transparent in its relationship with the FAA as safety regulator." Calhoun and Stephen Dickson, the FAA chief, spoke Monday morning.
As recently as Friday, the Boeing board was standing by Muilenburg. At a board meeting in Chicago last week where the production shutdown was deliberated, there was no talk of removing him, according to two people familiar with the matter.
After the decision was made to suspend production, Muilenburg spent much of last week at Boeing's headquarters in Chicago, taking calls and attending meetings related to the Max crisis.
During the week, the FAA became aware of more potentially damaging messages from Boeing employees that the company had not turned over to the agency, further straining an already tense relationship. Earlier this year, Boeing waited months to disclose to the FAA that it had found messages from 2016 in which a Boeing pilot complained that the automated flight-control system, which was new to the 737 Max, was acting unpredictably in a flight simulator.
MORE BAD NEWS
By Friday morning, Muilenburg was in Florida to observe the predawn launch of the Boeing Starliner, a space capsule the company built for NASA. At a viewing location inside Cape Canaveral, Muilenburg gathered with NASA officials and other Boeing executives, including Leanne Caret, head of Boeing's defense and space business; Tim Keating, head of its Washington office; and Jim Chilton, a top space executive.
Soon after the spacecraft launched, it went off track because a clock was not set correctly, failing to reach the correct orbit and rendezvous with the International Space Station. The botched Starliner mission was a crushing blow to company morale, with employees desperate for good news after a difficult year.
Yet Muilenburg, who updated the board about the mission after it had gone awry, remained positive and emphasized what went right, according to three people with knowledge of the matter. Muilenburg's response was seen as another sign of his being overly optimistic about the challenges facing the company.
Over the weekend, the simmering frustration with Muilenburg's performance came to a head, leading to his ouster and the elevation of Calhoun, who is viewed internally as a more natural public communicator than Muilenburg.
Boeing said in a statement that its 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."
Business on 12/24/2019