Boeing's new CEO faces an uphill battle to restore faith in the company and get the troubled 737 Max back in the air
- Boeing's new CEO, David L. Calhoun, started his new job on Monday.
- Calhoun, who has been on the Boeing board for a decade, is known as a "turnaround specialist" with experience leading companies and divisions through turbulent times.
- But the challenges awaiting him at Boeing are steep, as the company works to come out from under the 737 Max crisis. Here's what you need to know about Calhoun and Boeing.
- Sign up for Business Insider's transportation newsletter, Shifting Gears, to get more stories like this in your inbox.
- Visit Business Insider's homepage for more stories.
Boeing's new chief executive officer, David L. Calhoun, began his first day on the new job on Monday.An industry veteran who has been on Boeing's board for a decade, Calhoun is known as a "turnaround specialist," who has helped fix companies that were struggling, or pulled them through industry turmoil.Advertisement
As he assumes the new role at Boeing's helm, eyes will be on Calhoun as he faces a set of challenges unlike what he's dealt with before.
Here's what you need to know about Calhoun, his background, and the difficult job ahead of him.Get the latest Boeing stock price here.
Calhoun, 62, is a veteran industrial leader who is no stranger to crisis, so it's clear why he appealed to Boeing.
Until 2006, Calhoun was a senior executive at General Electric, where he spent 26 years. Starting just before the September 11 attacks, which roiled the airline and airplane industry, he headed up the unit that builds aircraft engines, a unit which posted $47 billion in annual sales by the end of his tenure.Advertisement
In 2006, Calhoun moved to Nielsen, the media ratings firm, where he was credited with helping to rebuild the company after a private equity takeover by KKR, Blackstone, and Carlyle Group.
In 2013, Calhoun joined Blackstone Group as the head of its portfolio operations group, advising owned companies and consulting on new buys. Then, in 2017, he was named chairman of Caterpillar, the construction equipment company that was under government scrutiny over tax and export practices, according to the New York Times.Advertisement
Calhoun was named to Boeing's board of directors in 2009, and became chairman in October after the rest of the board decided to strip Dennis Muilenburg of that title and split the chair and CEO roles.
Over his career, Calhoun became known as a decision-maker with an ability to execute on bold plans and strategies. He was mentored by famous GE CEO Jack Welch, and was courted by a wide range of companies by the end of his time at GE — the New York Times reported in 2006 that even Boeing had approached him over its chief executive role.Advertisement
As Calhoun arrives at Boeing for his first day on the job, he there are several objectives he'll need to start working towards immediately, with other long-term goals that can't be neglected.
Under Calhoun, Boeing's top priority will be getting the 737 Max back in the air. The company's flagship narrow-body jet has been grounded since March, 2019, following the second of two fatal crashes within a five-month period.Advertisement
Last week, the company temporarily halted production of the Max, causing disruptions to a vast global supply chain. One supplier, Spirit AeroSystems, said last week that it would be forced to lay off 2,800 workers due to the halt.
The grounding has cost Boeing a substantial amount. The company took a $5 billion charge last year as it planned to compensate airline customers which have been forced to recalculate expansion and route growth.Advertisement
A belated decision to recommend pilots undergo simulator training before flying the Max could cost Boeing an additional $5 billion.
To get the plane flying again, Calhoun's Boeing must complete regulators' requests while shepherding the plane through the FAA's certification process. The plane-maker may also need to work separately with other nations' regulators, some of which have indicated they will not reciprocate the FAA's certification decision.Advertisement
As Boeing gets the Max airworthy again, Calhoun will need to work to repair the company's frayed relationships with the FAA and Congress, which have been put out by the Max crisis itself, as well as Boeing's haphazard handling of it under Muilenburg.
Calhoun will also need to fix Boeing's relationships with angry airline customers, to convince the flying public that its planes are safe, and to rebuild trust with shareholders, after almost a year in which the company offered timing estimates and updates on the plane's return that turned out to be arbitrary.Advertisement
While the Max may be the highest profile and most pressing issue, it is not the only project on which Calhoun will have to focus.
Boeing's 777X program, the next generation of wide-body jetliners, has faced numerous delays and setbacks, leading the company to push the plane's timeline back and risking further delivery delays to customers. To avoid potentially missing out on further orders or losing money to late-delivery penalties, the company must bring the plane across the finish line.Advertisement
Similarly, Boeing's much rumored and discussed new midsize aircraft, or NMA, seems to be in a state of limbo as the plane-maker focuses on the Max.
It has already seen customers defect from the 757 to Airbus' solution, the A321XLR from rival plane-maker Airbus.Advertisement
While the highest profile issues and objectives are in Boeing's commercial division, Calhoun will also have objectives to meet in the defense arm.
Following years of trouble with the KC-46 tanker, leading to the plane's effective grounding by the Air Force in 2019, and a failed test flight of its Starliner space capsule in December, there are a number of projects and divisions that need to be addressed.Advertisement
Despite a decade on Boeing's board and three months as chairman, Calhoun faces a new set of challenges as chief executive that are perhaps more dire and existential than what he's managed at other companies.
Calhoun takes over as Boeing confronts an ongoing public relations nightmare stemming from the 737 Max crisis.Advertisement
Calhoun therefore faces an uphill battle as he tries to get the plane approved to fly again, and regain a degree of consumer confidence.
He'll also have to confront and address a culture at Boeing that has been widely described as "broken," as demonstrated by the emails.Advertisement
A renewed emphasis on engineering, ingenuity, and safety, with leadership corroborating those values and reporting structure that facilitates idea sharing and safety, will be vital to establish.
Boeing's costs are likely to continue to mount as long as the plane remains grounded, with a costly certification process, compensation due to airlines, and further liabilities over the crashes continuing to be assessed. Managing these will be crucial for Calhoun along with the board to help stabilize Boeing's finances.Advertisement
- On World Tourism Day, India’s Oil Minister asks prime tourist cities in the country to completely switch to clean fuels
- President Ram Nath Kovind approves all three farm bills which have been the reason for farmers' protests across the country
- Four Delhi cops face heat for misreporting drug seizure
- Former union minister Jaswant Singh passes away at 82
- Odisha man arrested for manufacturing fake Covid-19 vaccine