Needless to say, it’s been a bad year for Boeing.
Shares of the company have fallen more than 20% since the second fatal crash of the Boeing 737 Max 8 airplane model, which sparked a crisis cluttered with flight cancellations and groundings. Boeing’s stock has shed nearly 8% just in December as the manufacturer grappled with delays in getting its production and order slates back up and running.
The negativity culminated Monday when Boeing fired its CEO, Dennis Muilenburg, after months of resisting the pressure to oust him. Muilenburg will leave immediately, with Chairman David Calhoun stepping into the CEO role on Jan. 13.
Here’s what four Wall Street pros think of the move, and what they’re watching now:
Jim Cramer, host of CNBC’s “Mad Money,” attributed Muilenburg’s ouster in part to pressure from regulators:
“There may have been one of these situations where it was impossible to get clearance with all these different entities as long as he was there, because he presided over what happened. If someone has to be held accountable, it’s going to be the top guy. Boeing is an honest, great company, and … they did have these underlings that left, and I think a lot of us kind of felt like, ‘Wait a second. How about the top guy?’ … You basically have to reinvent the plane. That was another thing that really bothered me about what Dennis was doing. Why not ever just come out and say, ‘You know what? We didn’t make enough redundancies in this plane. We screwed up. It was bad. We thought it was safe. It’s certainly safer than any other plane, but you know what? We should’ve had a third redundancy.’ And … people say, ‘Well, why is it taking so long?’ Well, you’re rebuilding a plane. They keep thinking it’s [like] a software change. They have to rebuild this plane. The plane did not have enough redundancies.”
Sheila Kahyaoglu, senior aerospace and defense equity research analyst at Jefferies, said Calhoun was a good fit for the job:
“I think you need somebody with industry experience and company experience. This is not like GE where … you’re bringing in Larry Culp, somebody with operational experience. You need somebody fairly close to the situation, so, I think this is the right fit for now. … There’s a reason there’s only two commercial [original equipment manufacturer]s out there. There’s Airbus and Boeing. Bombardier and Embraer have joined forces with each of them, respectively. There’s a handful of defense OEMs. So, this is really hard. Development programs are always delayed, and this isn’t something new, but I think investor perception and credibility have gone out the door as we’ve been too optimistic about the return to service, so, the board signaled that there needed to be a change. But I don’t think there needs to be a cultural overhaul at Boeing. It is fairly difficult and we have to kind of honor that.”
Gordon Bethune, former CEO of Continental Holdings — which is now part of United Airlines Holdings — said Calhoun, who worked at GE for over 20 years, was a good turnaround candidate for the beleaguered airplane manufacturer:
“[Muilenburg’s ouster was] inevitable, so to speak, given the current changes or lack of change at Boeing and lack of progress in getting the airplane back, and I’m talking about the Max. Certainly, the new chairman, Larry Kellner, is well known to me as my successor and [is the] perfect choice for the job, and I think that David in the new CEO role will really add some value. But I think it shows mostly that Boeing is committed to get this worked out and get it fixed. … Mr. Calhoun’s got a terrific resume and a grand reputation of being this steady, hands-on manager. Lots of years at GE, and I’m sure that he’ll take that same approach within Boeing and get whatever needs straightening out straightened. But it’ll go quickly. It won’t take a long time for him to take action, I’m sure.”
Jeff Sonnenfeld, Yale University School of Management’s associate dean for leadership studies, called the timing of Muilenburg’s departure “noteworthy”:
“We’ve probably been expecting that Dennis would not be … surviving very much longer as CEO, and many people thought that it would be [around] the return to service in the spring, in April. It is unusual to have a CEO basically shot at sundown here so that he’s removed immediately when there’s no gross malfeasance in office, no deception or integrity issue, and also to have it in the holiday season and to have it in the middle of an unwinding crisis. Usually, they’d have somebody kind of steer us through it and then make the change unless the person truly was corrupt, and there’s no sign of any such corruption here. So, the timing’s noteworthy.”
