© Reuters. FILE PHOTO: A Boeing 737 Max aircraft during a display at the Farnborough International Airshow, in Farnborough, Britain, July 20, 2022. REUTERS/Peter Cziborra/File Photo
By Allison Lampert and Tim Hepher
(Reuters) -Boeing’s board has begun the search for a big-hitter to take the helm of the troubled planemaker following the turbulent tenure of CEO Dave Calhoun, with many industry executives and analysts predicting it will seek an outside remedy.
Facing mounting pressure from airlines, regulators and investors, Boeing (NYSE:) on Monday announced a broader than expected shakeup with Calhoun, 66, stepping down by year-end on the heels of the company’s commercial planemaking chief and its chairman.
The U.S. planemaker has been wrestling with a growing crisis following a January mid-air panel blowout on a 737 MAX plane.
The new CEO will face numerous tasks, including improving the company’s safety culture, addressing quality issues and regaining the trust of regulators, customers and the public.
Boeing will also have to deliver on goals to ramp up production and boost cashflow as it tries to reduce debt and make up ground against European rival Airbus.
Just three months ago, Boeing appeared to anoint Stephanie Pope as a future leader after naming her chief operating officer following a successful stint running its services division.
But on Monday, Pope was named head of Boeing’s commercial airplanes division, replacing Stan Deal who retires, with responsibilities including the MAX factory.
Her new position makes a move into the top job less likely, at least for now, analysts said.
“The company was teeing up Stephanie Pope to likely succeed Calhoun but that seems to have changed in favor of an external search for a new CEO,” Stifel analyst Bert Subin said.
“This could result in a high-profile hire.”
GE, SPIRIT CEOS
Many investors say GE CEO Larry Culp has the star quality Boeing desperately needs to rebuild confidence, having split the historic conglomerate into three public companies.
But Culp recently told reporters he was fully focused on leading GE Aerospace as a standalone engine maker, and that he looked forward to continuing to serve Boeing as a key partner and supplier.
GE is due to complete the split next week.
Pat Shanahan, an ex-Boeing executive and once acting U.S. defense secretary in the Trump administration who now heads struggling MAX fuselage supplier Spirit Aerosystems, is also cited as a possible frontrunner.
Shanahan could be elevated once the planemaker completes talks to buy Spirit, which was a Boeing subsidiary until 2005.
“He is the perfect outsider; he knows Boeing inside and out, and now knows the people who produce fuselages and who look like they will be part of Boeing again,” said industry veteran Adam Pilarski, who in January questioned how long Calhoun could last.
Shanahan might not want to commit to five years at Boeing, said a former company executive who worked with the former Boeing production chief. “This is an endurance game,” said the executive, speaking on condition of anonymity.
Spirit said Shanahan’s “sole priority remains building a culture of safety at Spirit AeroSystems (NYSE:).”
OTHER OPTIONS
Another Boeing veteran tipped for a possible return, industry sources said, is former Chief Financial Officer Greg Smith, who was edged out by Calhoun in 2021 and is now chairman of American Airlines (NASDAQ:).
Smith spent part of his career overseeing supply chains. American Airlines did not respond to a request for comment.
Boeing board member David Gitlin has been widely mentioned as a potential CEO candidate, but analysts said it was unclear whether he would be willing to give up his post as head of ventilation group Carrier Global (NYSE:). Boeing and Carrier declined to comment.
Several analysts said Boeing would prefer a clean break to stem a tide of safety criticism from regulators and Congress.
“(Boeing’s) culture of quality and manufacturing has been called into question over recent issues, and a new, outside perspective on operations could be encouraging for investors,” said RBC Capital Markets analyst Ken Herbert.
But unions, some of whom are entering a new phase of contract negotiations, want a return to basics after widespread criticism that Boeing has promoted shareholder value over quality and safety.
Ray Goforth, executive director of a key union at Boeing and Spirit, said the planemaker’s next CEO should be an engineer.
“This company thrived under engineering leadership for decades, but has lurched from crisis to crisis,” said the head of union SPEEA, which counts engineers among its members.
