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Boeing may turn to outsider CEO to tackle spiraling crisis
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Boeing may turn to outsider CEO to tackle spiraling crisis
Mar 25, 2024 5:45 PM

March 26 (Reuters) - Boeing's ( BA ) board has begun the

search for a big-hitter to take the helm of the troubled

planemaker following the turbulent tenure of CEO Dave Calhoun,

with many industry executives and analysts predicting it will

seek an outside remedy.

Facing mounting pressure from airlines, regulators and

investors, Boeing ( BA ) on Monday announced a broader than expected

shakeup with Calhoun, 66, stepping down by year-end on the heels

of the company's commercial planemaking chief and its chairman.

The U.S. planemaker has been wrestling with a growing crisis

following a January mid-air panel blowout on a 737 MAX plane.

The new CEO will face numerous tasks, including improving

the company's safety culture, addressing quality issues and

regaining the trust of regulators, customers and the public.

Boeing ( BA ) will also have to deliver on goals to ramp up

production and boost cashflow as it tries to reduce debt and

make up ground against European rival Airbus.

Just three months ago, Boeing ( BA ) appeared to anoint Stephanie

Pope as a future leader after naming her chief operating officer

following a successful stint running its services division.

But on Monday, Pope was named head of Boeing's ( BA ) commercial

airplanes division, replacing Stan Deal who retires, with

responsibilities including the MAX factory.

Her new position makes a move into the top job less likely,

at least for now, analysts said.

"The company was teeing up Stephanie Pope to likely succeed

Calhoun but that seems to have changed in favor of an external

search for a new CEO," Stifel analyst Bert Subin said.

"This could result in a high-profile hire."

GE, SPIRIT CEOS

Many investors say GE CEO Larry Culp has the star

quality Boeing ( BA ) desperately needs to rebuild confidence, having

split the historic conglomerate into three public companies.

But Culp recently told reporters he was fully focused on

leading GE Aerospace as a standalone engine maker, and that he

looked forward to continuing to serve Boeing ( BA ) as a key partner

and supplier.

GE is due to complete the split next week.

Pat Shanahan, an ex-Boeing ( BA ) executive and once acting U.S.

defense secretary in the Trump administration who now heads

struggling MAX fuselage supplier Spirit Aerosystems ( SPR ), is

also cited as a possible frontrunner.

Shanahan could be elevated once the planemaker completes

talks to buy Spirit, which was a Boeing ( BA ) subsidiary until 2005.

"He is the perfect outsider; he knows Boeing ( BA ) inside and out,

and now knows the people who produce fuselages and who look like

they will be part of Boeing ( BA ) again," said industry veteran Adam

Pilarski, who in January questioned how long Calhoun could last.

Shanahan might not want to commit to five years at Boeing ( BA ),

said a former company executive who worked with the former

Boeing production chief. "This is an endurance game," said the

executive, speaking on condition of anonymity.

Spirit said Shanahan's "sole priority remains building a

culture of safety at Spirit AeroSystems ( SPR )."

OTHER OPTIONS

Another Boeing ( BA ) veteran tipped for a possible return,

industry sources said, is former Chief Financial Officer Greg

Smith, who was edged out by Calhoun in 2021 and is now chairman

of American Airlines ( AAL ).

Smith spent part of his career overseeing supply chains.

American Airlines ( AAL ) did not respond to a request for comment.

Boeing ( BA ) board member David Gitlin has been widely mentioned

as a potential CEO candidate, but analysts said it was unclear

whether he would be willing to give up his post as head of

ventilation group Carrier Global ( CARR ). Boeing ( BA ) and Carrier

declined to comment.

Several analysts said Boeing ( BA ) would prefer a clean break to

stem a tide of safety criticism from regulators and Congress.

"(Boeing's ( BA )) culture of quality and manufacturing has been

called into question over recent issues, and a new, outside

perspective on operations could be encouraging for investors,"

said RBC Capital Markets analyst Ken Herbert.

But unions, some of whom are entering a new phase of

contract negotiations, want a return to basics after widespread

criticism that Boeing ( BA ) has promoted shareholder value over

quality and safety.

Ray Goforth, executive director of a key union at Boeing ( BA ) and

Spirit, said the planemaker's next CEO should be an engineer.

"This company thrived under engineering leadership for

decades, but has lurched from crisis to crisis," said the head

of union SPEEA, which counts engineers among its members.

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