Beleaguered Boeing Co is putting its hopes for the future on an industrial veteran who has led several companies in crisis, began his career at engine maker General Electric Co and already spent a decade on the board of the world’s largest planemaker.
Newly named Chief Executive David Calhoun, 62, was made Boeing’s chairman two months ago, in the midst of the crisis that has rocked the United States-based company since two fatal crashes led to the grounding of its 737 MAX. He succeeds Dennis Muilenburg who became CEO in 2015 and was fired on Monday.
That crisis shows no signs of easing. Boeing on Monday said shipments from the plane’s suppliers would be suspended for a month starting mid-January, adding that it was uncertain when production would restart. It has already announced it would halt 737 MAX production in January.
Stepping into the pilot’s seat at Boeing is not Calhoun’s first experience in navigating corporate upheaval.
Calhoun became chairman of the Caterpillar Inc board shortly after federal agents raided its headquarters in March 2017, headed a General Electric division that included aircraft engines after the September 11, 2001, attacks and led media research company Nielsen’s effort to go public. He has also been a longtime executive at Blackstone private equity group.
“Having seen him run GE’s aviation business after 9/11, I know he can execute under pressure,” former GE Chief Executive Jeff Immelt told Reuters by email when asked about Calhoun, adding that Calhoun would restore customer trust in Boeing.
Calhoun, who has co-written a book on business, How Companies Win, says being candid is part of leadership, an approach many critics say was absent from Boeing’s initially guarded approach to concerns about the 737 MAX.
“The second you get into the office till the second you leave, every interaction is judged,” he said in a video published in 2014 by the Jack Welch Management Institute.
“You try to hide anything from everybody and I think your body language becomes perfectly apparent.”
Yet in his short time as Boeing chairman, Calhoun has shown his ability to work discreetly behind the scenes, as seen by his role in the departure of Kevin McAllister as chief executive of Boeing’s planemaking arm in October. The removal was silent and swift, foreshadowing Muilenburg’s removal this past weekend.
Some insiders saw McAllister – another GE veteran – as a scapegoat for the MAX crisis. Others say he paid the price for failures, including widely publicized cracks in the company’s older 737NG jets, which caught the board off guard. The 737 MAX was not impacted by the cracking issue.
Boeing declined comment to Reuters on confidential board discussions.
McAllister and Muilenburg could not be reached, Reuters reported.
Calhoun has to repair frayed relations with regulators, continue to manage a cash squeeze from the crisis and bring the new 777X jet to market at a time of tough regulatory scrutiny.
Todd Curtis, CEO of airline safety and security website Airsafe.com and a former safety engineer at Boeing, says the company has work to do before it regains the trust of customers.
“There’s both a cultural and an organisational as well as a regulatory issue that is happening here. One of the major changes with the 737 MAX has, not just for Boeing, but throughout the industry, it’s the relationship between the [Federal Aviation Administration], which is the certifying authority, and the manufacturers, have changed,” Curtis told Al Jazeera.
“It gave more power to manufacturing managers as opposed to FAA managers. And although the investigations are still ongoing for the two 737 MAX crashes, that major change could be a part of what’s underlying the situation that’s happening now,” Curtis added.
Calhoun’s experience on the Boeing board will allow him to “take the reins in short order without the need for a longer period of familiarization,” said Timm Schulze-Melander, industrials specialist at European research house Redburn.
He also will have to face sceptics that Boeing can change, including Paul Njoroge, a Toronto-based investment professional, who lost his family in an Ethiopia Airlines crash on March 10. It was the second of the two fatal crashes involving the 737 MAX that killed a total of 346 people. The first involved a Lion Air plane in Indonesia on October 29, 2018.
“Boeing needs a revamp of its corporate governance. The board should be fired,” he said, adding of Calhoun, “I don’t think he is going to change the culture of Boeing.”
Others are less sure.
He is a “hard-nosed” leader who does not warm to dissent but who can inspire, said an executive who worked for him at Nielsen.
“(Boeing) might need someone as tough as Dave. I don’t think he would be a good manager over a long period of time. As a crisis manager, he might be able to get it done,” the person said.
Another executive who has encountered him called him even-handed and smart. “Boeing will come back quickly,” he predicted.