Boeing's new CEO must be 'strong engineering lead', Emirates boss says

The US plane maker needs a governance model that prioritises safety and quality

Boeing's headquarters in Arlington, Virginia. The plane maker's chief executive, Dave Calhoun, plans to leave the company by the end of the year. AFP
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Boeing needs a “strong engineering lead” after chief executive Dave Calhoun steps down, but “only time will tell” if management changes will resolve the problems facing the US plane maker, Emirates Airline's president has said.

The US company also needs to establish a governance model that prioritises safety and quality, Tim Clark, an aviation industry veteran, told The National.

“It is little wonder that the machinists' union wants a seat on the board, simply to ensure that the voice of the factory floor is part and parcel of the decision process and is fully integrated into the governance model’s risk-management strategies,” Mr Clark said.

“Whether, yet again, this changing of the guard will resolve Boeing’s issues, only time will tell, but time, unfortunately, is not on their side.”

Emirates is one of Boeing's biggest customers, and Mr Clark has previously called for changes at the US plane maker because of quality concerns and delivery delays.

His latest remarks came after Boeing announced on Monday that Mr Calhoun would leave the company at the end of 2024 as part of a broad management restructuring within the troubled aerospace company.

As the board starts the search for his successor, its next chief executive must possess a strong background in aerospace engineering, overhaul the corporate culture and ensure a long-term track record of high quality production, industry analysts said.

George Ferguson, senior aerospace analyst at Bloomberg Intelligence, said candidates would need to have a “strong resume” in manufacturing at a company with a robust engineering culture.

Several names such as GE chief executive Larry Culp and Spirit Aerosystems' chief executive Patrick Shanahan have been suggested by analysts as candidates.

“Boeing needs a strong manufacturing leader at the top to convince employees that times have changed and that safety and quality are paramount,” Mr Ferguson said told The National.

“I believe the [proposed] purchase of Spirit Aerosystems, working with the supply chain to improve its ability to deliver, along with a new CEO, are the key to a turnaround.

“If they don't get it right here, the risk to the company is very large.”

Leadership in the time of crisis

Steve Mollenkopf, a Boeing director since 2020, who has been appointed as the company's chairman of the board, replacing Larry Kellner, will lead the search for Mr Calhoun's successor.

“Potential candidates would likely need a blend of aerospace expertise, leadership acumen and a proven track record in corporate transformation,” Linus Bauer, founder and managing director of consultants BAA & Partners, told The National.

The ideal candidate would have a deep understanding of aerospace engineering, experience in managing complex global supply chains and the ability to navigate regulatory landscapes.

“Strong ethical convictions and commitment to safety and quality would be crucial to steer the company through its current challenges and restore stakeholder trust,” Mr Bauer said.

The leadership changes at Boeing come months after a near-catastrophic incident in January, when a fuselage panel on a Boeing 737 Max 9 jet operated by Alaska Airlines, blew off mid-flight, pushing the plane maker into crisis. It has come under intense scrutiny by the Federal Aviation Administration, airline customers and the flying public.

New CEO's priorities

Boeing’s new leadership will face many challenges – investigations, financial losses, regulatory scrutiny and losing market share to European rival Airbus.

The next chief executive will have their work cut out for them.

“At the get-go, it will be 'build a quality product the first time, full stop'. Nothing else matters: They must not worry about the pennies as they change the culture and improve the product,” Mr Ferguson said.

“It will mean more employee training and more oversight, both of which cost money and hurt margins. But in the near term, that doesn't matter as much as saving Boeing's reputation.”

Topping the list of priorities will be to convince the FAA that Boeing’s quality system is under “full control and fit for purpose” and ensure that no more quality-related high-profile incidents happen, Richard Evans, senior consultant at Ascend by Cirium, told The National.

Increasing the 737 Max production rates (after caps imposed by the FAA) and getting certification for the 737 Max 7 and Max 10 models quickly are also important, he said.

Is management shake-up enough to fix Boeing's problems?

Boeing's overhaul of top management is one of the most dramatic changes in its history as it attempts to tackle the series of incidents plaguing the company.

While the move is a step in the right direction, it needs to be coupled with other changes that ensure consistent high-quality manufacturing, rare defects in products and on-time jet deliveries over the long run, analysts say.

“It’s difficult to say if these [management] changes will, in themselves, be enough to rebuild and restore confidence in Boeing. I think the proof will be in the subsequent actions, and demonstrating far better quality control,” Mr Evans said.

Finding the right chief executive, with a strong track record of manufacturing excellence, “would go a long way” in repairing Boeing's reputation but it will take a “track record” to convince airline customers, regulator, suppliers and passengers that Boeing is on the right track, according to Mr Ferguson.

Whether the management changes are enough to fundamentally overhaul Boeing's work culture “remains to be seen” as such transformation requires “deep, sometimes painful” changes that go beyond leadership shifts, Mr Bauer said.

They involve re-evaluating processes, values and accountability across all levels of the company.

“The effectiveness of these efforts will depend on the company's ability to demonstrate a sustained commitment to quality, safety and transparency. Restoring confidence is a long-term endeavour that will require consistent evidence of cultural and operational improvements,” he said.

Rich Maslen, head of analysis at Capa Centre for Aviation, said that it is still “too early” to say if the changes will be enough to put Boeing back on track or deep enough to make the required transformation.

The management overhaul appears to be a “cosmetic change”, said Mark Martin, head of aviation consulting firm Martin Consulting. There is “no magic wand” to bring about a dramatic shift in quality manufacturing control at Boeing, he said.

“Boeing can transform itself but that will require taking back control of the entire aircraft manufacturing process … Steps to transform Boeing have to be phased and can't be done overnight with a management change,” he added.

A Boeing representative told The National that teams have made progress in several critical areas.

At its supplier Spirit AeroSystems, Boeing has implemented additional inspection points at their facility in Wichita.

This week, Boeing will also deploy its Safety Management System to conduct reviews of travelled work within its four walls.

“We will not hesitate in stopping a production line or keeping an aeroplane in position,” the representative said.

Shifting focus from finance to quality

Appointing a new chief executive is an opportunity for Boeing to shift away from the focus on cash that has driven its strategy for the past decade and focus on quality and safety, according to analysts.

“Too much emphasis was on getting the last nickel and dime out for profit as Boeing lost sight of suppliers being part of the required ecosystem to support aircraft manufacturing,” Mr Ferguson said.

This means having a more supportive relationship with its suppliers.

“Boeing has to realise, in order to go to higher production levels and build a quality product, they need a strong supplier base. Near term, I think this means margins don't bounce back to pre-pandemic.”

Implications for the aviation industry

Boeing's brand has long been synonymous with high quality planes and air travel, with the motto: “If it's not Boeing, I'm not going”. However, that brand has weakened in recent months.

“The path ahead for Boeing is undoubtedly complex, necessitating a delicate balance between immediate operational needs and long-term strategic objectives,” Mr Bauer said.

“The company's ability to navigate these challenges will not only affect its own future but also have implications for the global aviation industry, including competition, innovation and safety standards.”

Updated: March 26, 2024, 4:58 PM