Leeham News and Analysis
There's more to real news than a news release.
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.
Breaking News: Calhoun to retire, Deal out, Pope in, Kellner leaving, Mollenkopf new chair at Boeing
Boeing press release; LNA take to follow.
Boeing Announces Board and Management Changes
- Dave Calhoun announces intent to step down as CEO at the end of 2024; Calhoun will continue to lead Boeing through year-end
- Independent Board Chair Larry Kellner announces his decision not to stand for re-election at annual meeting; Steve Mollenkopf appointed new chair
- Stan Deal to retire; Stephanie Pope named Commercial Airplanes CEO
ARLINGTON, Va., March 25, 2024 — Boeing [NYSE: BA] President and CEO Dave Calhoun today announced his decision to step down as CEO at the end of 2024, and he will continue to lead Boeing through the year to complete the critical work underway to stabilize and position the company for the future.
Board Chair Larry Kellner has informed the board that he does not intend to stand for re-election at the upcoming Annual Shareholder meeting. The board has elected Steve Mollenkopf to succeed Kellner as independent board chair. In this role, Mollenkopf will lead the board’s process of selecting Boeing’s next CEO.
In addition to these changes, Stan Deal, Boeing Commercial Airplanes President and CEO, will retire from the company and Stephanie Pope has been appointed to lead BCA, effective today.
Exclusive: IAM to seek Boeing Board seat
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By Scott Hamilton
Analysis
Jon Holden, president of the IAM 751 union that assembles Boeing’s airplanes in the greater Seattle area. Credit: IAM 751.
March 25, 2024, © Leeham News: Boeing’s largest union, the IAM 751, will seek a seat on the Board of Directors in its contract negotiations that began on March 8.
The union assembles Boeing’s airplanes in the Renton and Everett (WA) factories.
LNA wrote in January 2020, when David Calhoun became CEO of The Boeing Co., that labor representation was needed on a Board of Directors that was filled with politicians, defense and finance people—but none versed in safety or even commercial aviation production. Commercial aviation was Boeing’s largest profit center for decades before the 2018-19 737 MAX crisis began.
The day Calhoun assumed his position on Jan. 13, 2020, LNA published a list of things facing the new CEO. Among them was a need to reconstitute the Board. Included in this was a suggestion that members from the IAM and Boeing’s engineering and technician union, SPEEA, be appointed (among other specific ideas).
About half the Board has changed since then, resolving some but not all of the issues raised—but neither the IAM nor SPEEA have representation on the Board.
Related Articles
- Boeing Board needs a major shake up (Jan. 13, 2020)
- Culture change needed at Boeing; labor talks could lead the way (Jan. 29, 2024)
- Boeing labor contract is opportunity for overdue culture change (Seattle Times, March 15, 2024)
On Jan. 29 of this year, LNA opined that the forthcoming labor contract negotiations with the IAM 751 was a good opportunity to begin changing the culture at Boeing. The following March 15, The Seattle Times editorialized the same theme (also citing our report in the process).
The administrator of the Federal Aviation Administration, Mike Whitaker, slammed Boeing’s culture in a March 19 interview with NBC Nightly News.
“There are issues around the safety culture in Boeing. Their priorities have been on production and not on safety and quality. So, what we really are focused on now is shifting that focus from production to safety and quality,” Whitaker told news anchor Lester Holt.
“If something requires us to cease production, we will do that:” FAA
By the Leeham News Team
March 13, 2024, © Leeham News: The Federal Aviation Administration (FAA) is considering whether to suspend the Production Certificate of Boeing Commercial Airplanes (BCA) if it’s not satisfied changes to its safety culture are sufficient, LNA has learned.
FAA Administrator Michael Whitaker. Credit: FAA
It’s the “nuclear option” LNA has written about on previous occasions following the Jan. 5 in-flight accident/explosive decompression of a Boeing 737-9 MAX operated by Alaska Airlines. Already under heightened scrutiny by the FAA, Boeing took yet another in a series of safety blows when a special panel of experts appointed by the FAA to independently review Boeing’s safety culture issued a scathing report on Feb. 26.
The FAA levied fines—and suspended some of them—for previous safety violations 36 times, according to a tracking website. And despite pledges and actions taken to improve safety following the 2018-2019 MAX crisis, Boeing still has fallen short.
Now, with an intensive FAA audit of the 737 production line, the FAA yet again found lapses. The FAA on Feb. 29 gave Boeing 90 days to come up with an actionable plan and shape up. It did not say what would happen if Boeing either fails to produce an acceptable plan or fails to implement it satisfactorily.
And, the National Transportation Safety Board (NTSB) chair complained Boeing is withholding information in the investigation into the Alaska Airlines MAX 9 accident.
The ultimate option is to suspend the Production Certificate that authorizes Boeing to build commercially-based airliners. Such a move would have huge political and economic implications, however.
Related Stories
- Boeing’s safety improvements need more work
- Safety study finds flaws with Boeing’s safety culture
- Boeing violated previous ODA, SMS agreements with FAA
- Boeing faces enormous scrutiny: Secretary of Transportation
- FAA Boeing audit finds dozens of violations: NY Times
Pontifications: “Boards are invested in their C.E.O.s until they’re not.”
By Scott Hamilton
March 12, 2024, © Leeham News: Loss of confidence in Boeing’s leadership from its customers is growing, according to industry sources.
It’s not just with the leadership at Boeing Commercial Airplanes (BCA), where CEO Stan Deal is under increasing pressure to fix a growing number of problems. Leadership at the corporate level of The Boeing Co. is also losing confidence from airlines and lessors.
Some airlines and lessors, most of whom want to remain anonymous to speak freely, want the departure of David Calhoun in addition to Deal and others in top leadership. In the past, most fingers were pointed at Deal and the leadership of BCA.
An increasing number of customers want Calhoun, the CEO of The Boeing Co., and others in the corporate leadership, also gone.
Tim Clark, the president of Emirates Airline, publicly criticized Boeing leadership many times. But he’s always avoided naming names in the public domain.
Michael O’Leary, the CEO of Ryanair, was not so reticent. Many times, he’s criticized the leadership of “Seattle” (a thinly veiled reference to Deal and his key people). But O’Leary generally defended Calhoun.
The latest series of Boeing anomalies and delivery delays prompted more customers to privately call for sweeping changes.
And, the New York Times reported that the six-week audit by the Federal Aviation Administration (FAA) found Boeing failed to follow proper procedures 37% of the time.
What happened to all the pledges by Boeing to improve safety after the 2018-19 MAX crashes that killed 346 people?
The buck stops with the CEOs of Boeing Commercial Airplanes and The Boeing Co.
Airbus and Boeing need each other for healthy supply chain
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By Dan Catchpole
March 11, 2024, © Leeham News: In the public arena, Boeing is flailing. It’s the subject of public rebukes by government officials, a new criminal investigation by the US Department of Justice, and a seemingly endless stream of scathing headlines.
However, executives at its European counterpart, Airbus, are not celebrating Boeing’s struggles.
“Airbus needs Boeing,” said Joe Marcheschi, director of flying parts procurement services for Airbus Americas. “Disruption, and turmoil in the supply chain hurts Airbus, too.”
The industry’s supply chain depends in large part on the two aerospace giants—which means, indirectly, Boeing and Airbus need each other.
Instability at the airplane makers may in some sense have furthered this interdependence by prompting many suppliers dependent on one OEM to diversify by supplying both companies and by looking outside commercial aerospace.
Summary:
- Suppliers’ efforts to diversify beyond one OEM have deepened interdependence.
- Labor, materials are among biggest supply chain challenges.
- Airbus supporting suppliers to solve bottlenecks.
When does a larger airliner pay off
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By Bjorn Fehrm
March 7, 2024, © Leeham News: Over the last decades, the choice of domestic market airliners has gone from the typical 120-seater to today 200 seats or more. We will look into what drives these decisions and where the cross-over points are from, say, an Airbus A319 to A320 and then to A321. We will limit the investigation to the Airbus range as the Boeing 737 MAX range has still not their MAX 7 and MAX 10 in service.
We will use our Airliner Performance and Cost Model (APCM) to model typical sectors and investigate what load factors favor a switch.
Summary:
- The typical domestic cabins have gone from 120 to 150 seats to now 200 seats or above.
- As airliner types grow, their trip costs increase. At what load factors can you motivate an A321 instead of an A320?
Pontifications: Boeing violated previous FAA ODA, SMS demands—Been there, done that
March 5, 2024, © Leeham News: The Federal Aviation Administration (FAA) last week gave The Boeing Co. 90 days to come up with a real program that has measurable results to fix safety and quality shortcomings.
By Scott Hamilton
The move follows the release on Feb. 26 of a year-long safety audit by a panel of 24 industry experts appointed by the FAA. More than 50 recommendations were made. Much of the focus was on failures in Boeing’s Organization Designation Authority (ODA), the Safety Management System (SMS), and pressure and fear of retaliation of employees who came forward with alerts about safety issues during aircraft production at Boeing Commercial Airplanes (BCA).
ODAs are employed by Boeing but represent the FAA. The FAA is considering establishing an independent ODA system at Boeing.
In giving Boeing 90 days to come up with a solid safety program, Administrator Mike Whitaker was blunt: “Boeing must commit to real and profound improvements. Making foundational change will require a sustained effort from Boeing’s leadership, and we are going to hold them accountable every step of the way, with mutually understood milestones and expectations.”
Boeing is the top aerospace company with the most fines and number of records, according to the website Violation Tracker. This is for all types of fines, including aviation safety, environmental, worker safety (under the USA’s OSHA), etc. Detail of Boeing’s aviation safety violations is below. Boeing’s number above includes the $2.5bn fine for the 2018-19 MAX crisis. Airbus includes a $500m settlement to the US Department of Justice for ITAR violations. Click on image to enlarge.
But Boeing and the FAA have been down this road before. Boeing and the FAA established the ODA systems ago and the SMS was created in 2019. The FAA previously fined Boeing for failing to follow through on elements of both programs.
Machinists want new Boeing contract ensuring work for decades to come
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By Dan Catchpole
Updated 2:35 p.m., March 4, 2024
The IAM 741 began promoting a strike fund for 2024 Boeing contract negotiations in 2019. Source: IAM 751.
March 1, 2024 © Leeham News: When representatives from Boeing and the Seattle-area machinists union start formal negotiations on Friday, the context will be a world apart from when they bargained the existing contract 10 years ago. Back then, Boeing management had a new airplane program (777X) as leverage and exploited an internal fight in the International Association of Machinists and Aerospace Workers to push through a concession-laden contract.
Now, Boeing is battered after years of self-inflicted crises, a pandemic and problem-riddled supply chain, and, after decades of defeats, labor has scored major victories around the country, especially in aerospace.
Head of District Lodge 751 Jon Holden told Leeham News & Analysis during a recent interview that he is determined to get back what was taken from the roughly 31,000 members he represents in the Puget Sound area.
The union wants better work-life balance, better pay and retirement benefits, and guarantees that will keep it healthy for years to come.
Given its ongoing struggles, Boeing can little afford to alienate the union representing the vast majority of people assembling its commercial jetliners, industry analysts say.
However, Boeing management and the IAM have had a rocky relationship since workers at the company organized in 1935. In the past 20 years, company leadership has taken a hard line against organized labor and repeatedly pushed for concessions despite banking substantial profits and spending billions on share buybacks.
Summary
- Unions are resurgent in tight labor market
- Analysts: Boeing can’t afford a labor unrest
- Talks breakdown between SPEEA, Boeing over Tech and Safety Pilots contract
- Boeing firefighters reject latest offer