NEW YORK: Boeing announced on Tuesday that David Calhoun would remain CEO potentially through 2028 as the aviation giant navigates a multi-year comeback following the 737 MAX scandal and the COVID-19 travel industry collapse. Boeing raised the company's retirement age for Calhoun to 70, ensuring a measure of continuity during a still-uncertain time in aviation and as questions linger over the company's practices after two tragic MAX crashes claimed 346 lives.
Boeing, which has a standard retirement age of 65, cited Calhoun's progress in "building regulator and customer confidence" and enabling the 737 MAX to return to service following a 20-month grounding. Changing Calhoun's retirement age allows "for flexibility," Boeing Chairman Larry Kellner said during an annual meeting.
At the meeting, investors reelected the company's board and voted down proposals that would have given shareholders more influence on the selection of new board members and required additional disclosure of corporate lobbying practices. "Under Dave's strong leadership, Boeing has effectively navigated one of the most challenging and complex periods in its long history," Kellner said in a press release. "His dedication to renewing the company's commitment to safety, quality and transparency has been critical in building regulator and customer confidence as Boeing returns the 737 MAX to service."
Recovery ahead?
Calhoun, 64, expressed confidence in a long-term aviation recovery once international flying and business travel returns. His top priorities are to finance Boeing's capital budget and to reduce debt. "I'm confident the cashflow will come back and be robust," said Calhoun, who cited the global availability of coronavirus vaccines as critical. "I can't pick a date," he said. "We need the markets to come back, and I'm confident they will."
But Calhoun gave no timeframe on when the company would resume an investor dividend. Shares of Boeing fell sharply, ending 4.1 percent down at $234.06. The company also said Chief Financial Officer Greg Smith, who is 54, would retire in July. Smith had previously been seen as a potential CEO. A longtime Boeing board member, Calhoun was named CEO in Dec 2019 as the company reeled from the scandal over the MAX.
He moved into the corner office in Jan 2020, and just two months later Boeing was faced with a second crisis as the coronavirus pandemic devastated airline travel. Under Calhoun, Boeing slashed thousands of jobs and settled a Department of Justice criminal probe on the MAX, agreeing to pay $2.5 billion in fines. The company also weighed whether to accept direct support from the US government after Congress included $17 billion in relief aimed at Boeing in the CARES Act enacted to help businesses impacted by the broad lockdowns a year ago. Instead, Boeing raised $25 billion in publicly-traded bonds in an effort overseen by Smith.
MAX fallout
The company's fortunes began improving late last year when regulators cleared the MAX to resume service. Since that time, major carriers such as United Airlines and Southwest Airlines have announced large new MAX orders. And earlier Tuesday, Boeing said it had sold 15 MAX jets to Dubai Aerospace Enterprise, a leasing company, for an undisclosed amount.
But Boeing also has had some stumbles. The company halted deliveries of the 787 Dreamliner for several months last fall due to production problems, before resuming in March. Earlier this month, Boeing recommended that 16 airlines flying the 737 MAX address a "potential electrical issue". Calhoun said the company is working with the Federal Aviation Administration on the problem, and once the agency signs off, remedying the issue "will be measured in days, not weeks or months."
Investment services and research firm Morningstar praised Calhoun, saying he was "dealt a difficult hand, and we are impressed that the firm achieved our goals in relatively short order". The company faces a series of "daunting" challenges, including ramping up 737 MAX production and lowering Boeing's debt level, Morningstar said, adding, "we're comfortable with the current leadership structure for Boeing's ongoing turnaround."
But Michael Stumo, whose daughter Samya was killed on a MAX plane, slammed Calhoun's record dating back to his service on the board. "Boeing needs to search for new leadership with demonstrated experience in and commitment to great engineering, flawless manufacturing and reinvesting in the business for the long term," Stumo said. - AFP