Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Boeing CEO promises company is turning around…again April 24, 2024
- Solid start for stand-alone GE Aerospace despite cuts to LEAP output April 23, 2024
- SPEEA, Boeing at impasse over safety program, union says April 23, 2024
- Better transparency needed on Boeing’s 1Q earnings call April 22, 2024
- Bjorn’s Corner: New engine development. Part 4. Propulsive efficiency April 19, 2024
Analysis: Calhoun’s insider status raises question: is he the one to pull Boeing out of its dive?
Analysis
By Scott Hamilton
Dec. 23, 2019, © Leeham News: The Boeing Board of Directors has fired Dennis Muilenburg.
Dennis Muilenburg. Source: Boeing photo.
Board chairman David Calhoun was named president and CEO, effective next month. The delay is required while Calhoun resigns from other business commitments.
Boeing CFO Greg Smith was named interim CEO. Board member Lawrence Kellner was named non-executive chairman.
Calhoun has been on the board 10 years. The roots of Boeing’s current crisis includes decisions made by the Board. Is Calhoun, an insider, the right person to pull Boeing out of its dive?
Muilenburg’s demotion
Muilenburg was demoted in October from his position as chairman, remaining president and CEO.
Despite a rousing endorsement last month by David Calhoun, a long-time Boeing board member who was named chairman after the demotion, that from the board’s perspective, Muilenburg had done everything right, few supported this position.
The 737 MAX crisis only got worse under Muilenburg’s leadership.
Despite many forecasts about an early return to service, the grounding of the MAX extended time and again, like an airline’s creeping delay of a flight at the airport.
Muilenburg mishandled family relations from the two MAX crashes.
His public relations responses were awful (though I blame the corporate lawyers for setting this tone).
His Congressional hearing performance was terrible.
Relations with the Federal Aviation Administration spiraled down like an MCAS-induced flaw.
Relations with airlines and lessors are tanking (also in part due to Boeing’s legal position on compensation).
Calhoun’s appointment
Calhoun was the Board’s lead director for years.
David Calhoun. Source: CNBC photo.
He’s been on the Board since 2009. He’s been part of the Board policy-making that led to the cost-cutting some say had deleterious impact on the development of the MAX.
He’s been part of the Board decisions that shareholder value is the No. 1 priority at Boeing.
His career includes GE, and the GE influence permeated the Board of Directors for years with his and other directors who had GE background. This influence contributed to the direction the Board set about shareholder value, cost-cutting and operating margins.
Remaking Boeing
As noted in my Oct. 7 column, the Boeing board is entrenched.
It also fails to include a pilot of high stature—someone like a Chesley Sullenburger or the late Al Haynes. Given what’s happened, a former investigator from the National Transportation Safety Board or a former member of the EASA regulatory agency might be a good addition.
The GE cost-cutting culture in the executive ranks and the Board that’s been prevalent for 20 years needs to go.
Crucial is a Board that has fresh perspective and is not married to “shareholder value” as the No. 1, 2 and 3 priorities.
Shareholder value is important, of course. But not at the expense of safety and investing in new airplanes rather than derivatives of a 50-year old design (the 737) or a band aid (the 777X).
Whether Calhoun, who has been part of the problem, is the person to make these changes remains to be seen.
Excellent.
Right on, as usual.
Thank you Scott.
@Pierre,
+1 on that!
Do we believe that all life (very successful) accountant is capable of turning BO around ?
Ehm….
I think he Calhoun is good temporary CEO who knows the inernal financial situation and high in exec team to be temporary CEO. Boeing needs a seasoned turnaround CEO change culture. Louis Chenevert former UTX ceo comes to mind.
Was the rocket falure the final straw? That said, good riddance. They coulda bought Cseries and made it the new MAX. Now Airbus will use it to thrash Boeing in the single aisle market. When the 220-500 is announced I suspect Southwest will switch
According to Wikipedia :
“Calhoun was born on 18 April 1957 in Philadelphia, Pennsylvania.[1]) In 1979, he graduated from Virginia Tech with a degree in accounting.”
So he’s a bean counter among many others who will retire soon with a golden parachute. The Boeing’s annus horribilis is not yet over, there are still a few more days to hit rock bottom.
At this point I would not disqualify him strictly based on his accounting background. If he is intelligent and listens to advice, he may be able to do what is necessary, even without an engineering degree.
I don’t know him at all, though.
Birdy – do you think an engineer or a salesperson would be a better fit?
Anyone but a bean counter with a GE background and 10+ years at the Boeing board.
Hear! Hear! Spot on!
Plus, it’s time to get rid of “celebrities” who never should’ve been on McBoeing’s Board in the first place, for example, Caroline Kennedy, Nikki Haley, etc., etc., etc.
Time for ALL of the non-aerospace, non-aviation/non-airline people to go!
Oh, and especially any and all vestiges of McDonnell Douglas.
If the many outright failed outcomes as now manifestly clear at McBoeing that, btw, also doomed McDonnell Douglas itself isn’t reason enough to completely rid Boeing of the ghosts of McDonnell Douglas, what is?
Remember when GE was circling the drain, they turned to an insider, Jeffrey R. Immelt who ended up just presiding over final collapse of the stock price and the reputation of the company. It’s an open question whether an outsider, Culp, can get the ship separated from the iceberg it’s on right now without sinking. Especially now that the Aviation division is taking a hit from not producing the engines for the 737 Max.
The question is who decides on a new Boeing board. Is personal interest balanced with long term company interest.
In my opinion they have to cut the (stock price driven) executive payment structure at it’s roots. Who has the b.lls to bring that up?
Probably none of them.
Shareholders decide, via a vote, who sits on the board. Ofcourse the process is manipulated somewhat. Boeing is small fry compared to big banking and institutional shareholders.
keesje & william – if all Boeing stockholders think/vote like so many of the Boeing cheer-leaders/speculators on the SeekingAlpha investors’ website — amid their other ‘too-big-to-[be allowed to]-fail’ and MAGA rhetoric — then share price is all. They ‘know’ that $350, $400, $425 (tomorrow the world) is just around the corner… Certainly one has to wonder what mechanism (orchestration?) has been employed to prevent a further fall in price than has occured these past several months.
If I am on the helm,
I will fire all the key persons who gave green light to certify B737 MAX whether they are among Boeing, and or FAA Admin. groups including their test pilots.
There was no doubt that they rush the certification of the plane to guarantee some pieces from the remaining cake of the one aisle plane type.
Exactly this ! Fire all that was on the board and prison time to go with it. Not a 50 million dollar severance package.
The board should be made up of labor only.They are the only ones that actually want a good product, Labor knows more about the products than any book smart money grabbing thief. People get mad at labor when their pay is over 200k a year not 40 million.
Muilenburg’s departure is WAY overdue, but Calhoun is not the answer. He will be a continuation of the GE/McDonnell Douglas cancer that has metastasized through Boeing since 1997. He was part of the decision making process that approved a $20 billion stock buyback almost exactly a year ago (after the first MAX crash), following his approval of more than $40 billion in buybacks the 5 years prior to that. Boeing could have launched at least two new airplane programs with that cash. And as long as all Boeing managers are cycled through the Harry Stonecipher charm school in St. Louis, that culture will continue to trickle down throughout the company.
If they didnt do stock buy backs that money would be returned to shareholders some other way. Its a fanatsy that it would be used for product development, the share price would tank without buybacks and Boeing would be a takeover target for others who would take the company apart and the Boeing name sold off as a label for hobby drones sold in big box stores and imported from China.
So 21st Century capitalism is incapable of producing state of the art, or even safe, airplanes. A company with that focus, instead of financial engineering will be set upon and eviscerated by a bunch of Wall Street sharks. That remarkably clarifying
Boeing has a large development budget every year , the 777X is about to have its first flight…. a further new model is in the planning stage.
Companies can borrow to finance a new planes development , with interest rates at a few % thats the way to go for a project that might return 10-15%.
None of what you have said is true.
21st century capitalism is capable of doing that, at least in Europe…
Let’s put it like this: It can only get better.
First, Muillenberg knew that he was geeting the boot. Second, the rot continues with yet another bean counter guiding Boeing, and the board collectively has to be replaced. To paraphrase, “a new broom, (not a few strands), my phrasing sweeps clean.”
Eau Contraire!
Quite, absolutely – subject perhaps to a slight re-sequence:
‘Crucial is a Board that has fresh perspective and is not married to “shareholder value” as the No. 1, 2 and 3 priorities. [A] former investigator from the National Transportation Safety Board or a former member of the EASA regulatory agency might be a good addition. The GE cost-cutting culture in the executive ranks and the Board that’s been prevalent for 20 years needs to go…’
I don’t see how Calhoun can in any way be suitable as CEO once (and, I guess, if) the MAX is fully returned to service and I’m not convinced there is an intention for him to be there ‘permanently’ (if there is, I think it suggests Boeing’s top clique still don’t get it). But near term at least he is a much more capable public speaker. Perhaps it also suggests the top people at Boeing believe things are now as bad as they can get and so Muilenberg’s purpose to soak up the deserved criticism is done and he can be discarded.
I think the more interesting aspect is Kellner as Chair. What, if any, change of direction and attitude does this indicate.
I agree that Calhoun looks like a short to medium seat warmer. He is hardly there to drive change but more to deal with the here and now, a bit of gravitas for public display
Woody – it’s been suggested it indicates upcoming re-certification (with implications that Mr Muilenburg should receive no credit relating to Max RTS…?).
Why would anyone be interested in who receives credit? Calhoun will have difficulty coming out of this with any degree of dignity given his fingerprints are all over the culture of excessive cost cutting over the past 10 years
Larry Kellner as non-exec Chairman will have his work cut out for him. He currently serves on several other high profile boards (Marriott, Chubb, Sabre). Is he going to keep all those commitments? I know boards are supposed to do oversight, set goals, etc. But chairing this board, while the company is in such turmoil seems like it should receive laser focus.
(NB Boeing couldn’t get their much-delayed space launch into the correct orbit. Because a clock was set incorrectly! How very emblematic of their issues.)
It’s a pitty the Embraer take over has been on hold (by EU). When completed they should transplant the Embraer top to Boeing.
Sort of like how Boeing took over McDonnell Douglas, but in management (style) McDonnel Douglas took over Boeing.
Boeing management and production was a shambles before the MDD merger.
The reason Embraer is doing a JV with Boeing for its commercial planes , is the E2 production future is looking shaky with 160 orders, which was less than half that of the Cseries when they went to Airbus.
In fact its Boeing management going south to Brasil
“”The reason Embraer is doing a JV with Boeing for its commercial planes , is the E2 production future is looking shaky with 160 orders””
Embraer said that A220 production is expensive, E2 is much cheaper. If Canada is still paying the losses now, it will be interesting when this stops soon. With the MAX mess now, Embraer should have much better chances. It would be sad if Boeing runs down Embraer too.
I feel sorry to say,
Whatever going up there from cosmetic changes, please say good bye to Boeing 737MAX type.
David Calhoun might get smart and ask Alan Mulally to help save Boeing and/or hiring Fabrice Brégier to work with Alan to evaluate the 737MAX, move Boeing back to Seattle and launch the 797 designed to be built and serviced by robots for the same price a hand built A321XLR is selling for. The top guy can only lead by putting “the right” people in positions of power and money, allocating money & deadlines and hope he/she made the right decisions as the story unfolds.
One can aruge that Lookheed Martin dug itself our of the F-35 hole by developping 3 different aircrafts that were over weight, over budget and not up to spec to something that is close to spec and making money, so Marillyn Hewson might get a phone call from Chicago one day to come with the key program managers and top engineers. The president and DoD might have agreed to give L-M some slack while they are off save Boeing?
Might be time for board of directors change to get aviation experience back on the board….how about Alan M replace Caroline Kennedy and experience test pilot/engineer type replace Nikki Haley
As a general principle I think it is an excellent idea to have some people on the board who are total outsiders and not intimately involved in the technology or detail workings of the company.
Their job is to let the board know how their decisions might be viewed from outside the company.
They are also very valuable when they bring contacts and advice from a different circle of acquaintances than those who are so deeply involved in the business of the company and related suppliers etc.
Bringing on Alan M might be an excellent idea, but that serves a different purpose.
My concern with Caroline Kennedy and Nikki Haley is that they may be appointed purely for political purposes and for their contacts in the two main political parties. That is a different objective again.
“move Boeing back to Seattle”
1) Boeing Commercial Aircraft is headquartered in Seattle
2) Why should the thousands of engineers and manufacturers at Boeing’s non-BCA divisions (including Defense) have their senior executives located in isolated Seattle?
Why should they be in Chicago?
Roushf150 – possibly because Chicago offered the most/best sweeteners after the board decided to sight corporate HQ away from all divisions (special interest groups…). Wasn’t there a beauty contest involving a couple of other locations, I believe?
It appears to be a minimum change strategy with the offload of Muilenburg the sacrificial lamb. Given the fact that the Boeing share price has held up at what could be argued a stratospheric level throughout the continued debacles:
Cseries shenanigans
MAX errors
777x delays
Etc etc
It seems that the current BOD has decided it still has relevance and who is in a position of power to disagree. I think a lot of us, me included, have expected a larger negative impact on Boeing’s valuation. Perhaps it is still to come,
Valuations for every stock are kind of high. look at Tesla with it’s $75B valuation, almost 40% of Boeing and more than all the other carmakers combined.
Sowerbob – do you wonder if a conspiracy – sorry, I mean coincidence – of confidence between and among Boeing and isntitutional investors has been sufficient to sustain the reduced stock price since March or have speculators matched numbers of sellers to prevent any further fall?
How would I know, I don’t buy conspiracy theories. Boeing is a cash return stock so I expected a reduction in dividends/ buybacks to gather with the underlying news to have more of an impact
sowerbob – like I said, a coincidence of confidence, and I agree – perhaps there’s summat still to come…
Perfect summary Scott. Spot on!
There is nothing wrong, per se, with cost cutting. The problem comes when the cost cuts actually cut more from the companies assets than they save. Not the assets that Wall Street sees on the Balance Sheet, but those assets that can’t be easily measured in financial terms, like expertise within the company, and research that might result in the next big success story.
Compensation plans never seem to attempt to account for this. What gets measured gets done. What isn’t measured therefore gets ignored.
This is my view:
You don’t fire the CEO when you have won, you fire the CEO when you have lost.
What happens next I don’t know. But don’t expect the MAX to fly.
Deductive reasonings. Not let me down so far.
Scott, I agree with every word of this post.
The entire board has to go.
The only group that can arrange this are the large institutional shareholders, but then their interests are more aligned towards milking Boeing for more dividends. A catch 22 position for all involved.
This reminds me of the famous scene in the Movie version of Mr Roberts with the Board of Directionless playing the role of James Cagney
” Forget what I told you ..I’M TELLING you ! ”
And Dennis is the Palm tree . ..
Why now? My guess is that Muilenburg has made assurances to the board that have not been met. Another possibility is that Boeing has seriously annoyed the regulators and its time for a new approach and a fresh face.
The least likely option is that its all behind them now and a new day has dawned.
Anyone feeling sympathy should remember that this idiot rang the president to try and overrule the FAA.
It’s hard to manage an aircraft mfg company the same way you do a fleet of McDonald’s hamburger joints. Sure, you must have a sales leaders, accountants, finance types, logistics folks, marketing strategists, Wall Street experts, and I suppose a few lobbyists on a board, but they cannot be CEO or Chairman. If they are truly experts in their fields, then by default they are not experts in pilotting, flight controls, avionics, aero structures, aerodynamics, reliability, etc. A BoD is supposed to be a well-rounded group to steer the company with its leaders (CEO/CoB) being experts on the nuts & bolts of the business itself, close to the shop floor action (not Chicago). For BA, that person should be a pilot/engineer, and probably not a person having an MBA. You don’t want a jack-of-all-trades person – that’s what a “board” is for. Sorry to upset all you MBAs out there but those three little initials in your email signature tell me that you’re not focused on engineering and technical matters. You’re going where the money is – serving yourself. BA needs a CEO that loves airplanes and sees salary as a secondary motivator… someone who would be thrilled to lead such a technological organization. Remake the board with passionate people, not gold-diggers. If only the company could be taken private…
Look at BP, they quite often fire the CEO as soon as the worst is over.
I think they need some Kelly Johnson type of guy to fix Boeing and to build proper airplanes instead of trying to jedi mind tricking regulators.
JMA – what do we know about Johnson’s ability to run/manage a company, as opposed to a military project perhaps sourced largely from U.S.G. hidden budgets and maybe not pubicly accountable? Was he not nearer in BA terms to Joe Sutter…?
History tell us. DC10 went down after multiple crashes, the same for MD11 and lastly for Concorde,
I think Boeing accept the fact that B737MAX will follow and preparation was done to stop the production. I am sure that will put an end for B737MAX era.
History doesnt tell anything like that.
The A320 series has had 44 crashes ( hull loss), and is still going strong
MD11 has had 11 hull loss crashes , but only 1 was a passenger version ( Swiss) while all the rest were cargo planes
Personally, I admire the design of both DC10 & MD11 and I think, planes with 3 engines should be more safer than the 2 engines planes specially for mid and large size types.
Yes, I agree with you that while DC10 & MD11 had few passengers fetal crashes and the reasons behind the crashes were not related with design, but related with others (poor maintenance, Pilot error ..etc.) however, please note that both DC10 & MD11 types are still flying till now with US army and others and that represent a big proof that both of them are quite safe to fly. However both of them are currently out of service for flying people from one place to another one.
It is something related with trust.
I think the same will happen here with B737MAX, people will not trust flying this type anymore , and Boeing has to prepare for phasing it out or to modified it to cargo type..
I am sue that, no additional orders will be there , on the contrary, lot of cancellation will be seen soon from the current backlog.
Personally I have no problem with “shareholder value is the No. 1 priority at Boeing”. The problem is the time frame. For a company like Boeing it should be decades and not 3 months only. This is driven by how the top management is paid for and also for some wannabe masters of the universe at e.g. Wall Street (70 % of Boeing is owned by institutional ownership).
I agree, it is a fundamental fiduciary duty for Board Members to maximise shareholder wealth. The issue here is not that, it is understanding whether to maximise wealth in the short-term by sweating assets and minimal investment such as Boeing have been practising. Or alternatively taking a medium or long-term view which requires investment to retain skills and capability to stay relevant. On the latter point Boeing appear to be falling down. They have struggled with a development strategy for years as it runs counter to generating immediate cash, this has led to multiple sub-optimal decisions which over time has crippled the fundamentals of the business.
Maximise shareholder wealth is a misconception
The primary duty of the Board members is to the corporation itself, the shareholders personal interests come second.
https://www.forbes.com/sites/hbsworkingknowledge/2015/09/16/the-real-duty-of-the-board-of-directors/#3aa74a07768f
sowerbob – ‘Boeing … have struggled with a development strategy for years as it runs counter to generating immediate cash, this has led to multiple sub-optimal decisions which over time has crippled the fundamentals of the business.’ Quite, absolutely.
It was not just the MAX, the 787 is a massive commercial failure in that its development was botched and it did not crate any significant shareholder value. It is clear to me that Airbus now has a HUGE lead over Boeing in R&D efficiency. The 320 NEO, the A350 and A330 all running nice and smooth. Boeing has one plane that is popular and well liked but not profitable and one that sold well but was a flying coffin, the KC 46 farce ..they have low bid on the Helo deal and won the new Tx only because SAAB partnered with them. They need new blood badly.
“they have low bid on the Helo deal”
You mean the MH-139 for Air Force? it is an Italian product.
Interestingly it was started as a Agusta + Bell project. Bell jumped out, Italians continued and already sold more than 1000…and have also derivatives out of it.
This feels a bit like the handling of the MAX crisis. Trying to get away with the least impact, slicing away as the crisis evolves. The board still hasn’t learned anything and still fails to understand that a bandaid is not enough. There needs to be some serious surgery done to save the whole of Boeing, or it might infect the rest of the body.
Agree
While the immigrants from GE certainly found the emphasis on enhancing shareholder value consistent with their genetic corporation culture, it was really introduced into Boeing by the MD merger and emphasized by the leadership of Harry Stonechipher.
Boeing was a shambles until after the MD merger and Stonecipher introduced real management
1998: If Boeing could learn to make aircraft efficiently, it could be a truly great company.
https://archive.fortune.com/magazines/fortune/fortune_archive/1998/01/12/236418/index.htm
“Last fall things got so bad that Boeing had to halt production on two major assembly lines for a full month, take a $1.6 billion charge against third-quarter earnings, and then warn a stunned Wall Street that manufacturing woes would knock another $1 billion off its anticipated profits in 1998”
“Boeing executives have known for years–for decades even–that their factories were inefficient, their supply chains tangled, their computer systems outmoded. Ever since the late 1970s they have tried, in a piecemeal fashion, to fix these problems. But they never took the issues seriously.”
Everyone forgets one of McDonnells leading ventures was McAuto or McDonnell Automation, which was an early user of numerical control and large scale computer systems, they had their own CAD system from 1959
IMHO Boeing BOD and management need a full root canal. Half the people on the board have been responsible for this current debacle as well as a proper B77X plane. The other half (like Nikki Haley) probably have no idea what’s needed in the market.
I would rather see Scott Hamilton in the BOD over someone like Nikki Haley-at least Mr. Hamilton is “in tune” with aviation market fundamentals and dynamics!
While “shareholder value” is important, having products which customers will buy would’ve solved that as well.
Personally, I’m tired of the way US companies are run with BOD members “in cahoots” with management, etc. and lack of “long-term vision”.
This is what we see.
I say fire all of them!
More bad news coming out:
“(Reuters) – Boeing Co documents now under review by a U.S. government committee appear to point to a “very disturbing” picture of commentary from the planemaker’s employees over the 737 MAX aircraft, a House of Representatives transportation infrastructure committee aide said on Tuesday.”
https://finance.yahoo.com/news/boeing-documents-under-review-point-175624265.html
Regardless, given the scrutiny of the plane now, IMHO it will be a very safe plane to fly on.
“”Boeing documents point to a “very disturbing” picture of commentary from the planemaker’s employees over the 737 MAX””
This reliefs the responsibility of employees and put pressure on management.
Depending on how many comments and the severity, the MAX will never fly again. This will be a home run for regulators.
Easy to sort responsible managers out and giving them justice.
I used comments in my profession too, management told me that I am resistant. Then I was moved to another department, I showed management regulations they didn’t know. Later I got paid to stay at home. I was fired 4 times, but court put me back in. I became an elected member of the union, it made management angry. Management put microphones in my office and taped phone calls. I’m always happy when Karma strikes, happy that EASA is in the position to uncover now.
Not a easy carreer Leon. We need stubborn, fearless guys that stick to rules and the intentions of the rules. To balance against cost & schedule driven opportunists from industries. Industries that are more forgiving.
Depends on the person and his bosses (owners via the Board).
Remember that Southwest Airlines did well with people out of troubled airlines – Jack Vidal and the current boss, among others.
The CEO does have to set the tone clearly and firmly – McNerney tried but apparently didn’t fire enough people at the time.
I recommend the ‘culture’ document of a perennially successful bank that was wise enough to avoid the mortgage debacle: https://bbt.mediaroom.com/our-culture.
Dukeofurl, Interesting link, thanks. Perspectives from 20 years ago. Lately I find it interesting looking back using google search. It started large scale logging ~20 years back and you can select time frames in your search to see how others (and yourself ) looked at topics without knowing what came later. Your own little history research 🙂
keesje & enplaned (below) – enplaned says: ‘You can’t make stupid industrial re-organization decisions like the one that almost sunk the 787 program.’
Since Boeing obviously could and did make such decisions – and picking up keesje’s history reference – can anyone provide, please, examples of folk saying that (comment in blogs, whatever…) out loud at the time (which would be especially interesting with any contemporary Boeing response)?
Is Boeing doomed to repeat some sort of major issue every 10 years?
1998…..stops production for a month
2008 …787 issues begin
2018…Max first crash
What could go wrong in 2028?
Duke… – I fear 787 ‘issues’ began earlier (if not all visibly…): just go back to mid-2007 and the, er, disingenuous executive statements being made at Le Bourget about first flight and the May 2008 EIS schedule. Senior (and, no doubt, many non-senior) executives and managers would have known that the program was running late. ‘Tis a shame the attendant aerospace technical media at the rather-silly ‘7-8-(0)7’ roll-out were not looking more closely at the airplane’s true physical state. Methinks there eyebrows should have risen…
Shareholder value is of course the most important thing. That’s not the issue, the issue is creation of long term shareholder value.
You can goose the stockprice in the short run by the financial engineering shenanigans so beloved of the current board. They’re all about reaping – but you also need to sow so that in the future you can reap. And that means making big risky program investments of the kind that this board cannot bring itself to contemplate.
You can’t make stupid industrial re-organization decisions like the one that almost sunk the 787 program.
If Boeing had never launched the 777, they’d never have had a couple of decades worth of reaping the benefits. You need to be ready to step up and make those decisions. Or, if you’re a Boeing board member without the stomach for that, resign and allow the appointment of someone with the necessary intestinal fortitude.
The 737MAX issues are related to oversight / governance and not engineering expertise / practice.
With regards to MCAS, the architecture / system was finalised very early in the 737MAX development phase (2014) and as such the core issues relate to how the development of the system was managed throughout the development / certification process and not the actual system itself.
In this instance there were very distinct (publicised) issues relating to people with authority. This is highlighted by the fact that person’s with responsibility in the MCAS certification process had already hired lawyers prior to the extent of the issues became fully public.
I’d suggest Boeing could have been aware of these issues prior to the LionAir crash.
Even though I have not been a fan of the Boeing narrative, there is an appreciation of what can and can’t be said will be largely governed by the laws that form the foundations of our society.
From this perspective, the CEO was always going to have a hard task in delivering a message of sympathy to the families of the victims, whilst at the same time maintaining working relationships with the FAA, it’s customer airlines and protecting the interests of the employees that work for it. He obviously got the balance wrong (I am not too sure how he could have got it right).
Moving forward, personalities aside a change in leadership comes with a tremendous opportunity to rewrite the narrative and to a degree somewhat right the injustices of the past. With any luck the narrative will come with the managerial substance and leadership required to not just compensate the families of the victims and get MAX back flying again, but to bring substantial change to the industry where it is clear on multiple fronts the pace of development has simply not been sustainable.
This requires more than just a change in a CEO!
Travel – It is to be hoped that no one takes advantage of this ‘tremendous opportunity to rewrite the narrative:’ the story is as it is, however much any company representatives and cheer-leaders may wish it were not so. What we need, as always, is an accurate factual account of what happened – who knew what and when did they know it – if only for the history books. Then, as afar as possible, the lessons to be drawn need to be identified and measures considered to ensure a much more satisfactory ‘narrative’ in future events.
I was wondering about that:
A reasonably competent airframer would have looked at major and minor fallout from potentially upcoming design enhancements. Here: following Airbus into higher BPR engines. .. When those engines came up on the horizon and not after Airbus actually announced their NEO product.
My tentative guess is that Boeing had fixated on engineering gyrating around grandfathering, finding intricate explanations why cert requirements left and right need not apply but lost it in functional design solutions that did not entail “painting into a corner and the paint is a contact poison” 🙂
convoluted thinking and good design lack in overlap.
All – Dukeofurl says (above): ‘Boeing management and production was a shambles before the MDD merger…’ Discuss.
Boeing deliveries contracted to 207 ( down from over 400 in 1992/3) in 1995:
https://en.wikipedia.org/wiki/Competition_between_Airbus_and_Boeing#Orders_and_deliveries
Uwe – is your point that a reduced total is symptomatic of incompetent management, rather than (say) market forces?
I wonder more about what attitudes or philosophies some commenters might consider are/were evidence of Dukeofurl’s alleged ‘management and production shambles.’
Large changes in output are expensive.
Not good for profit.
Even in a “hire and fire is cheap” culture.
Additionally with the outlook of being fired at the cling of falling stock value I don’t see all that much loyalty from the workforce beyond cheap words.
Both Stonecifer and Mc Nermey killed the venerable high tech culture at Boeing …
Muillenberg just inherited of an already catastrophic situation (MAX, KC 46 , 787 , unprepared competitive product line …)
Good luck Mr Calhoun !!
@prune
Spot on analysis, muillenberg may have been given a hospital pass but he executed a strategy that saw the company’s #1 profit centre shut down, and seriously damaged it’s suppliers and customers. He then achieved platinum status with more than 40% of frequent flyers identifying “never” as the time they would set foot onboard his product.
Real credit however must go to the board. They signed off &/or mandated the decade long strategies that led to where we are now. Until they go there can be no recovery.
Two questions:
1. Can the people that created a train smash fix it? (hint: generally accepted answer is no).
2. WTF is Nikki Haley doing on the board? The only relevant competency she can claim is in the marketing/pr/comms arena and Boeings strategy in that area has been a monumental failure. Does anybody anywhere think Boeing is doing a good job re the MAX? MBA students will be writing Harvard Bus Review studies for years.
To think that Boeing is being whipped by AB – a start-up company created by public servants who’s employees don’t even speak a common language.
peterf… – while it is true that Airbus employs folk collectively representing myriad nationalities and speaking many different languages (and releases information in three or four), English – if not always English English – is the company’s working lingo.
Which point rather reminds me of the 1992 IATA agm in Montreal and the groans of derision that greeted Air France ceo Bernard Attali when he proclaimed – in francophile Quebec, remember – that he would speak in French: ‘the international language of civil “avvee-ass-eeon”.’ Attali was followed by Swissair boss Otto Loepfe, who in turn announced (to widespread applause) that he would address the meeting in English: ‘the international language of civil aviation…”.’
Take over target ?? Yes but after all this messy situation Boeing will soon sell the divisions that still make profit and the rest to be sold for 1$ !!