Can anyone mess up Boeing? He'll give it a try


When he got into the CEO job on Monday, Calhoun had to get permission to fly the 737 Max again. This is the first step in ending a 10-month crisis that has cost the company billions of dollars. He has to work too Regaining Boeing's reputation for safety and quality, which was severely damaged by the plane's landing in March after two accidents that killed 346 people.
To be successful, Calhoun, a veteran of General Electric (GE)The private equity firm Blackstone and the media company Nielsen have to regain the trust of some groups.
"What is Boeing (BA) need now? You need an inspiring leader, "said Ron Epstein, aerospace analyst at Bank of America Merrill Lynch." You have a workforce demoralized by the events. They need to make airline customers 'wellbeing easier and regulators' wellbeing easier. You have to be a good operator because your largest production line is down. Can Dave do it all? I'm not sure."

And he may not have much time to do what needs to be done.

Calhoun will turn 63 later this year. Boeing (BA) has never had a CEO older than 65 in the last 50 years.

It is not clear whether this is a guideline or just established practice in the company. Company officials would not comment on this question. However, some external observers do not believe that Calhoun will counteract this trend and continue in the role from the age of 66.

"I think how the situation has developed, he seems to be in a better position as caretaker," said Epstein.

Gaining confidence was made even more difficult with the recently released internal communications, in which Boeing employees mocked the 737 Max and questioned its safety.

One employee described the jet as "designed by clowns, who in turn are supervised by monkeys". Two other employees agreed that they would not allow their family members to fly on the plane. Boeing's publication of the documents included an apology to the FAA, Congress, the airlines and their passengers.

While the documents were released on Thursday, they were eventually released to the FAA in December. The company went into hopes this month that it could get approval to restart the aircraft before the end of 2019. But FAA administrator Stephen Dickson announced on December 11 that such approval would not be given until this year.
At the end of the month, the board of directors decided to replace CEO Dennis Muilenburg because "a change of leadership was required to restore confidence in the company as it continues to restore relationships with regulators, customers and all other stakeholders."

"Probably the most important bridges that need to be built right now are the regulators and airlines. These are the relationships that have been most hurt," said Epstein.

Turn things around

The good news is that the company is big enough and financially healthy enough to weather the crisis. As of September 30, the company had cash of $ 10.9 billion and sufficient credit to raise additional funds on the capital markets as needed.

And perhaps the biggest advantage for Boeing is that there is really no alternative to its survival.

Boeing and rival Airbus are a duopoly, providing virtually all of the commercial aircraft needed by the global aviation industry. As soon as an airline selects an aircraft model for a certain market segment, for example the single-aisle jets with the 737 Max, there are considerable costs for the switch to the models of the other company. Pilots who are qualified for the 737 must be retrained for the Airbus A320. The supply of spare parts for both aircraft at the different airports is expensive.

And both companies have such a large order backlog for their jets that if they dropped an order for the 737 Max and replaced it with an order for an Airbus A320, an airline would have to wait years to get the aircraft they needed.

But that does not mean that Boeing's finances are not affected by the crisis.

These are the mistakes Boeing CEO Dennis Muilenburg's job cost
It was about to make arrangements with the airlines as compensation for the Max's grip. $ 5 billion has already been billed for these costs. When the financial results were released on January 29, the total costs due to the 737 crisis should have more than doubled, according to analysts.
The company had continued to build the Max last year, even without being able to deliver it. It is preparing to temporarily suspend production of the model in the middle of this month.

"An important task"

Despite the many challenges that await Calhoun, the position of Boeing CEO appears to have been one that has interested him for some time.

Calhoun has been on the Boeing Board of Directors since 2009. According to Richard Aboulafia, aerospace analyst at Teal Group, Calhoun was an external candidate for the position of CEO of Boeing in 2015 when the board instead attacked Muilenburg, then a 30-year-old veteran of the company. Have company spokesman not comment on whether he had been a candidate.

Calhoun has been a member of the Boeing board of directors and a number of other corporate directors for the past ten years, although he's been in the process of leaving his other positions since he was appointed CEO.

In October, the board deprived Muilenburg of the position of chairman and gave Calhoun the position. In November, in one of his first interviews as chairman, Calhoun said that Muilenburg was the right man to get Boeing out of the 737 Max crisis.

"It is a difficult and important task. We believe that he can master it. It is a win," he said in an interview on CNBC. However, he also made it clear that the line would be short.

"The board advises every single meeting on the topic of our executives and how well they are doing and whether they have our trust," Calhoun said at the time.

This is a reality that he has to think about when he becomes CEO.