As 737 Max crisis festers, Boeing fires its leader

Dennis Muilenburg, Boeing's chief executive, appears before the Senate Committee on Commerce, Science, and Transportation in Washington on October 29, 2019. Boeing, which has been mired in crisis since the crashes of two 737 Max jets killed 346 people, fired Muilenburg on Monday, Dec. 23, 2019. (Anna Moneymaker/The New York Times)

Boeing said on Monday that it had fired its chief executive, Dennis A. Muilenburg, who was unable to stabilize the company after two crashes involving its best-selling 737 Max plane killed 346 people and set off the worst crisis in the manufacturing giant’s 103-year history.

The plane has been grounded by regulators since March, and the company and its airline customers have lost billions of dollars. Boeing has faced a series of delays as it tries to fix the Max, and the jetliner’s return to the air remains months away at best.

President Donald Trump recently called Muilenburg for an update on how the company was doing, underscoring its importance to the U.S. economy. Last week, Boeing said it would temporarily shut down production of the Max, a decision that will force some of the 8,000 companies in the supply chain to scale back production and perhaps lay off workers.

Muilenburg’s performance during the crisis angered lawmakers, airlines, regulators and victims’ families. He repeatedly made overly optimistic projections about how quickly the plane would be allowed to fly again. That created chaos for airlines, which had to cancel thousands of flights.

The Federal Aviation Administration saw the pronouncements as an attempt to pressure it to clear the Max for service. Muilenburg’s attempts to offer sincere public apologies for the accidents, including at two congressional hearings in October, have been clumsy, inflicting further damage on Boeing’s reputation.

The firing of Muilenburg, 55, adds to Boeing’s challenges. The company said David L. Calhoun, its chairman, will replace Muilenburg on Jan. 13. Until then, Boeing’s chief financial officer, Greg Smith, will serve as interim chief executive.

The grounding has already cost Boeing more than $8 billion, a figure that will rise sharply, and shaved 20% off the company’s stock price. The last week was especially brutal for the company. In addition to announcing the production halt, Boeing botched the launch of a space capsule designed for the National Aeronautics and Space Administration.

With no timetable for the return of the Max, the future of Boeing is unsettled. In the coming months, the company’s new leaders must prove to skeptical regulators that the plane is safe to fly. It must also regain the trust of its principal Max customers — the airlines that pay as much as $100 million per airplane — and ultimately the flying public.

In discussions among themselves in recent days, board members concluded that it was time to replace Muilenburg, according to two people familiar with the matter. On Sunday morning, the board scheduled a call for 5 p.m. Eastern time to discuss Muilenburg’s future.

On the call, the board members, who were scattered around the country preparing for the holidays, made the unanimous decision to remove Muilenburg.

Calhoun, who was in New York, and Larry Kellner, a board member and former airline executive who is Calhoun’s immediate replacement as chairman, called Muilenburg to inform him of the decision, according to a person familiar with the situation. The call was brief.

It was a striking turnaround. At a board meeting last week in Chicago, where the Max factory production shutdown was deliberated, there was no talk of removing Muilenburg, according to two people familiar with the matter. On Friday, a company spokesman said Calhoun stood by comments he made in November, saying the board supported Muilenburg.

Calhoun, 62, who started his career at General Electric and ran GE’s airplane-engine business in the aftermath of the Sept. 11, 2001, attacks, faces a daunting challenge. Before the 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 FAA with all the documents needed to fully describe the software fix.

The FAA, whose relationship with Muilenburg had grown increasingly tense during the Max crisis, said Monday that it did not comment on personnel 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.”

In a note sent to employees on Monday, Smith, the interim chief executive, pledged “full transparency, including effective and proactive communications with the FAA, other global regulators and our customers.”

“This has obviously been a difficult time for our company,” Smith added in the note, a copy of which was reviewed by The New York Times. “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.”

On Sunday morning, The Times published an article detailing Muilenburg’s tattered relationship with the FAA and airlines. In it, Gary Kelly, chief executive of Southwest Airlines, which is Boeing’s largest 737 customer, said of Boeing that “this hasn’t been their best and finest hour.”

By the end of the day, Muilenburg was out.

Boeing said in a statement on Monday that its board “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.”

Calhoun, an experienced executive who was elevated to chairman in October when the board stripped Muilenburg of that title, is viewed internally as a more natural public communicator than Muilenburg. In the course of the board’s routine succession planning in recent months, Calhoun was identified as the likely successor if Muilenburg needed to be removed.

Calhoun spent Monday calling government officials, including the head of the FAA, Stephen Dickson; members of Congress; the chief executives 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.

Yet some key lawmakers remained skeptical.

“What is most dispiriting is appointing Calhoun as CEO after he said that Dennis was doing everything right,” said Sen. Richard Blumenthal, D-Conn. “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.”

Blumenthal, who did not speak with Calhoun on Monday, called for a new Boeing hearing with the new chief executive as soon as possible.

But to some aviation officials and relatives of crash victims, who were deeply frustrated by Muilenburg’s performance, the management change was welcome news.

“Mr. Muilenburg’s resignation is a good first step toward restoring Boeing to a company that focuses on safety and innovation,” said Michael Stumo, whose daughter Samya was killed in the second Max crash.

It was not immediately clear how much compensation Muilenburg would receive as he exited the company.

“Today is a turning point,” Sara Nelson, president of the Association of Flight Attendants union, said in an interview. “Public trust was lost, and Boeing only has the chance for redemption with new leadership.”

©2019 New York Times News Service