Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Bjorn’s Corner: Air Transport’s route to 2050. Part 13. March 14, 2025
- Rolls-Royce’s remarkable turnaround March 13, 2025
- NASA hit by DOGE layoffs, office closures; Boeing’s X-66A R&D continues for now March 11, 2025
- Boeing faces three labor contracts expiring this year March 10, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 12. March 7, 2025
Boeing to plead guilty to new criminal charges related to MAX crisis
By Scott Hamilton
July 8, 2024, © Leeham News: Boeing agreed to plead guilty to new criminal charges related to the 2021 Deferred Prosecution Agreement that the US Department of Justice says the company failed to live up to.
By pleading guilty, Boeing avoids a trial. Some families of the 346 victims of two 737 MAX crashes in 2018 and 2019 already indicated they will object to this new agreement, which must be approved by a federal judge.
Boeing will pay a second fine of $243.6m, new conditions related to safety improvements (including spending at least $455m on new safety protocols) and a special overseer will be appointed to monitor Boeing’s compliance this time.
The second fine is identical to the first one in 2021. However, many—including LNA—view these fines as inadequate.
By comparison, previous DOJ Deferred Prosecution Agreements include larger fines for violations that did not include safety violations or deaths.
Select Boeing performance under David Calhoun
David Calhoun, president and CEO of The Boeing Co.
March 26, 2024, (c) Leeham News: For more than a quarter of a century, Boeing’s Board of Directors focused on stock price and shareholder value as the top priority for the company’s performance.
Jim McNerney was CEO from 2005-2015. The stock price peaked at about $149 during his tenure, never reaching the $200 per share goal allegedly set by the Board.
Dennis Muilenburg followed McNerney. The stock price peaked at about $422 under his leadership. Even after the second 737 MAX accident on March 10, 2019, and its global grounding three days later, the stock price remained about $320. Muilenburg was fired in December 2019 and David Calhoun assumed office the next month. Three months later, the COVID-19 pandemic erupted. Boeing’s stock price plummeted, along with the rest of the stock market for the next two years.
By Nov. 2, 2022, market recovery–and Boeing’s–was such that the company held its first analyst-investors day since 2018. During the event, Calhoun announced that Boeing would not “introduce” a new airplane until the middle of the next decade (ie, around 2035). Analysts loved it–stock shot up in the following week.
But Calhoun failed to right Boeing’s ship. Production, delivery delays, big write-offs, losses at the commercial and defense units, and finally safety concerns at commercial dominated his tenure to date.
On March 25, Boeing announced Calhoun will retire by the end of 2024. Chairman Larry Kellner will not stand for reelection to the Board. The CEO of Boeing Commercial Airplanes, Stan Deal, retired effective immediately. Investors initially boosted Boeing’s stock price on the news, before falling back to the pre-announcement level.
How did Calhoun do during his tenure to date? Below are two charts: one reviews the stock price; the other reviews the write-offs and charges.
Update: Calhoun to retire, Deal out, Pope in, Kellner leaving, Mollenkopf new chair at Boeing
By Scott Hamilton
Analysis
David Calhoun
March 25, 2024, © Leeham News: The changes at The Boeing Co. and at Boeing Commercial Airplanes today speak to the depth of the crisis at the company following Jan. 5’s accident on Alaska Airlines Flight 1282. But it also speaks to the thin bench for executive ranks at the corporate and division levels.
President and CEO David Calhoun will step down at the end of the year. No successor was named. Board chairman Larry Kellner will not stand for reelection at the annual shareholders meeting. Board Member Steve Mollenkopf was named non-executive chairman. Stan Deal, the CEO of Boeing Commercial Airplanes, is out, effective today. Stephanie Pope, who was named EVP and COO of The Boeing Co. in December, takes over from Deal as CEO of Commercial Airplanes.
Pope’s move drew immediate rebuke from a Wall Street executive. Pope “has absolutely no qualifications to hold the job of head of BCA,” the executive wrote LNA in an email. Pope’s another MBA finance executive without production or product development experience. Her job before being named COO was CEO of Boeing Global Services. She followed Deal, who left BGS to become CEO of Boeing Commercial Airplanes.
Related Article
Boards are invested in the CEOs until they’re not
Boeing’s thin bench was outlined in the related article above. The leading personalities are detailed in this article.
