A new shake up in civil aviation is about to take place. After the abrupt goodbye to Akbar Al-Baker from Qatar Airways in late 2023, this year will see Dave Calhoun leave his post as CEO of Boeing. So why is this happening and what could change for the American plane manufacturer?
Why Is Dave Calhoun Leaving Boeing?
While we don’t exactly know why Al-Baker stepped down from his position as Qatar Airways CEO, I think it’s more clear why Dave Calhoun is leaving Boeing. Things weren’t particularly rosey when he took post, but they haven’t gotten any better. If anything they got even worse.
Boeing is constantly and inexorably loosing market share to its main competitor Airbus. Issues with the 737 MAX program haven’t been solved and further incidents have put another dent in the company’s reputation. Stock prices, which were at a very high level pre-covid, never recovered in the past 4 years and planes that should have been a lifeline for the company, such as the 737 MAX 7 and 10 along with the 777X are severely delayed. So much so that some airlines have even given up on some of these planes.
The company used to be renown for its safety first culture and high quality standards. That has all changed. The saying used to be “if it isn’t Boeing I ain’t going” but the general public has become more weary. We’ve also seen some cases of it IS Boeing I ain’t going behaviours, particularly with the 737 planes.
Clearly Dave Calhoun isn’t to blame for all of this. However things haven’t gotten any better under his leadership and a change more than just a necessity for Boeing. The company needs to return to basics, concentrate more on producing competitive planes more than being focused on stock prices. With a good product the value will follow.
He won’t however step down immediately. He will be leaving the company, along with Board Chair Larry Kellner, at the end of 2024. That indicates that the company decided to part ways with the CEO without having a name ready to take his place.
What Is In Store For Boeing’s Future?
Well first of all we’ll have to find out who will be Calhoun’s successor leading Boeing in coming years. A change in direction will be needed in both company culture and aircraft lineup.
The company will have to focus on putting safety and quality as its first priority. That means either keeping closer control over its production lines and its suppliers (such as Spirit Areosystems) or reabsorbing its strategically important suppliers.
Looking at the aircraft lineup on the other hand it seems quite clear that Boeing needs something new in the narrow body aircraft class to really be competitive with Airbus.
In other words, it might be time to start thinking about a successor or a substitute to the Boeing 737 or another narrow body plane developed from scratch.
More pressing issues though are the certification of the remaining 737 MAX and the 777X. Both goals that need to be achieved in the short term to win some brownie points with airlines and investors.
It’ll be certainly easier to tackle and faster to solve the culture inside the company than getting a new aircraft off the ground. However it’ll take quite a bit of time for Boeing to really bring on a serious fight to Airbus. Just the fact that Calhoun won’t leave until the end of the year means that things won’t significantly change until at last mid 2025. When the new CEO will have taken control of operations and had some time to get work and operations planned.
It’ll be a painful and hard process to regain top dog status in the aircraft manufacturing industry.
Calhoun’s Message to The Employees
It has been the greatest privilege of my life to serve Boeing, The eyes of the world are on us, and I know that we will come through this moment a better company. We will remain squarely focused on completing the work we have done together to return our company to stability after the extraordinary challenges of the past five years, with safety and quality at the forefront of everything that we do.
My decision to step down as CEO at the end of this year is one the board has been prepared for and will result in a number of changes at a management and governance level moving forward. My long-time partner in all things Boeing, our Chair Larry Kellner, has advised the board and me that he does not intend to stand for re-election at our upcoming Annual Meeting of Shareholders. The board has elected Steve Mollenkopf to succeed Larry as chair. Steve will lead the board process of selecting my successor as CEO. Larry, too, had been considering the appropriate moment to turn over the reins after more than four years as chair and 13 years on our board, and concluded that the CEO selection process should be led by a chair who will stay at the helm as a partner to the new CEO.
Boeing President and CEO Dave Calhoun
You can read the full letter here.
