On Saturday night Boeing’s board of directors asked Dennis Muilenburg to step down from CEO’s position. The decision came after a lot of ongoing issues with Boeing’s 737 Max aircraft along with other hindrances that occurred during his tenure. The board, however, didn’t directly address Dennis’s future at the board meeting last weekend.
Dennis’s tenure at Boeing began in 1985 as an intern and held numerous engineering and management positions on various projects. In December 2013, he became the president of Boeing and in July 2015, he led the conglomerate from the front as its CEO.
David Calhoun former chairman of Boeing company will be president and CEO with effect from 13th January 2020.
Issues with 737 Max:
Their bestselling product, 737 max fleet was in the spotlight and discussed at FAA’s office. Last year 737 Max crashed 2 times, in Indonesia (Jakarta) and Ethiopia (Ejere) that took the lives of 346 passengers.
In response, all Max flights were stopped globally. Southwest Airlines, Boeing’s biggest customer in the US announced that it canceling 1000s of flights till mid-April and will search for alternatives for affected passengers.
Stephen M. Dickson (Admin of FAA) said: “The situation with 737 Max is not yet known, we need to make sure that public has confidence in the airplane and I’m confident that I would put my own family & those Boeing employees would put their family on the airplane”.
Pieces of evidence indicated that a system designed to help the place avoid stalls seems to be malfunctioning. The automated system known as MCAS was new to the Max, but most pilots were unaware of it until the first crash.
A year after the Lion Air crash, Indonesian investigators concluded that Boeing’s MCAS an automated system or autopiloting was malfunctioning and had serious issues that need to be corrected.
“They completely discounted the human factor component, the startle effect, the tsunami of alerts in a system that we had no knowledge of that was powerful, relentless and terrifying in the end” – Dennis Taier, the spokesperson for the American Airlines pilot’s union, said of Boeing.
Another senior engineer at Boeing disclosed that to keep costs down, Boeing rejected a safety system that could have reduced the risks that contributed to the 2 deadly crashes.
Boeing reported 3 straight quarterly losses since the happening of a second air crash. Revenues and profits are like to keep falling sources said.
Sometime ago Boeing achieved an order for 200 Max jets from the parent company of British Airways in June. But other airlines suggested that they need to reconsider the deal. Carriers like Southwest Airlines and American Airlines canceled thousands of flights and some are demanding compensation from Boeing while their Maxes were unable to fly.
Was Dennis fired solely because of 737 Max Failure?
Failure of 737 Max added to the list of overall failures Dennis did in his term. Authorities say that Boeing knew about the problem with the inflight control system after 1st crash happened but they still didn’t work on the plane. A whistle-blower from the factory did alarm about it but it was taken casually.
Another version of 737 Max, 737 VG aircraft was found to have structural cracks that forced the airlines to inspect fleets.
Apart from product deficiencies, Dennis also lapsed project deadlines and didn’t stand well on either customer’s expectations nor authorities’ expectations.
A spacecraft the company was building to send NASA astronauts to the International Space Station malfunctioned last week during its 1st ever trip to space. Questions were raised on their attitude regarding projects and there was a serious deficiency between what they deliver and what they committed.
The company was also criticized over billion-dollar cost overruns and missed deadlines with another NASA contract where they were to build a space launch system, a rocket to be used to return humans to the moon.
Edward Pierson former Senior Manager added, “737 factory was in chaos, every single factory health metric was getting record low marks and each one of them was trading in the wrong direction”.
“A change in leadership was necessary to restore confidence in the company moving forward as it works to repair relationships with regulators, customers, and stakeholders: the company officials said.
With David Calhoun as Boeing’s next CEO, he has got a lot of work to do. Not only he needs to regain the trust of customers, employees, and suppliers but he needs to get back their bestselling air fleet back into action again. Otherwise, it won’t take much of the time for their competitor Airbus to surpass them and become the air fleet giant.
Boeing being a deep-pocketed company said it won’t lay off its factory workers due to uncertain production halt in 737 Mac factories. Rather, they will be shifted to other ongoing projects. But a sudden halt in 737 Max production does have ripple effects in the economy in general.
But when we look at the supply chain, some of their vendors who supply them crucial widgets & pieces & parts they don’t have as deep pockets as Boeing has and they are the ones who will be the most affected. They are expecting layoffs at a larger scale. A decision forced some 8000 companies to scale down their production and some might even lay off their workers.
Credit ratings were brought down by Moody and S&P as they said they aircraft makers move to halt 737 Max production comes with increased risks. S&P cut ratings from A to A- whereas Moody’s cut their ratings from A2 to A3.
Muilenburg was informed Sunday night that Boeing’s board of directors would ask him to resign. The call came after board members met in person last weekend and expressed their concerns that Mullen got sideways with the FAA and have hurt customer sentiments.
For now, the industry has lost faith in 737 Max and Boeing expects a lot from Dennis as he not only needs to bring back the aircraft, but he needs to restore the faith of several parties in Boeing.