Boeing on Monday fired its chief executive, Dennis 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 Mr. Muilenburg on Jan. 13. Until then, Boeing’s chief financial officer, Greg Smith, will serve as interim CEO effective immediately, the company said.
The Boeing board had stood by Mr. 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 Mr. Muilenburg, for 5 p.m. Eastern Time. 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.
The Sunday night call was not so unusual; as the Max crisis has dragged on, the board has often scheduled calls for Sunday evening, often the only time the group could gather on short notice. The board – which includes Washington power players such as Nikki Haley, the former ambassador to the United Nations; and Caroline Kennedy, the former ambassador to Japan; as well as several executives – was scattered around the country, preparing for the holidays.
On the call, the board made the unanimous decision to remove Mr. Muilenburg. After the decision was made, Mr. Calhoun, who was in New York, and Larry Kellner, a board member who was elevated to chairman of the company effective immediately, called Mr. Muilenburg to inform him of the decision, according to a person familiar with the situation. The call was brief, and Mr. Muilenburg accepted the board’s choice.
The firing of Mr. 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 system known as MCAS 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 per cent during this crisis, costing the company more than US$8-billion and affecting a supply chain that extends to 8,000 companies.
Mr. 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.
Boeing is also dealing with the damage to its reputation. The company has been particularly hurt by its uneven communication with lawmakers, regulators and aviation unions.
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,” Senator Richard Blumenthal of said on Monday, calling for a new Boeing hearing with Mr. 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.”
Mr. Muilenburg’s relationship with the FAA was particularly tattered after he was seen in recent months to be pressing the agency to return the planes to service.
The FAA said on Monday that it did not comment on staff 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.” Mr. Calhoun and Stephen Dickson, the FAA chief, said on Monday morning.
As recently as Friday, the Boeing board was standing by Mr. 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. On Friday, a company spokesman said Mr. Calhoun still stood by comments he made in November, saying the board supported Mr. Muilenburg.
But over the past week, Mr. Muilenburg faced more setbacks.
After the decision was made to suspend production, Mr. 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 MCAS, which was new to the 737 Max, was acting unpredictably in a flight simulator.
By Friday morning, Mr. 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, Mr. Muilenburg gathered with NASA officials and other Boeing executives, including Leanne Caret, head of Boeing’s defence 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 Mr. 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. Mr. 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 Mr. Muilenburg’s performance came to a head, leading to his ouster and the elevation of Mr. Calhoun, who is viewed internally as a more natural public communicator than Mr. 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.”
The pressure on the new CEO will be intense.
Mr. Muilenburg’s attempts to offer sincere public apologies for the accidents have been clumsy, leaving lawmakers irate and the families of victims feeling as if the company did not care about their loss.
“They’ve crushed the trust relationship,” said Dennis Tajer, a spokesman for the American Airlines pilot union. “This changes nothing when it comes to ensuring this aircraft is safe and that pilots are properly trained.”
Mr. Calhoun has been calling government officials, members of Congress, the CEOs of major airlines, as well as Boeing investors and executives for the company’s suppliers, pledging to keep the lines of communication open, a Boeing spokesman said.
On Monday morning, Mr. Smith sent a note to employees saying that Boeing would “proceed with a renewed commitment to full transparency, including effective and pro-active communications with the FAA, other global regulators and our customers.”
“This has obviously been a difficult time for our company, and our people have pulled together in extraordinary ways,” Mr. Smith added in the note, a copy of which was reviewed by The New York Times. “Over the next few weeks as we transition to new leadership, I am committed to ensuring above all that we meet the needs of our stakeholders – especially our regulators, customers and employees – with transparency and humility.”
Some of those who were frustrated with Mr. Muilenburg welcomed the news.
“Today is a turning point,” Sara Nelson, president of the Association of Flight Attendants union, said in an interview. “Public trust was lost and only has the chance for redemption with new leadership.”