Boeing's Chairman of Board Stripped of Title Amidst 737 MAX Crashes
Last week, Boeing's board scheduled a last-minute conference call that would result in the stripping of chairman of the board title from its chief executive Dennis A. Muilenburg, according to the New York Times. Mr. Mulienburg was not invited nor present during the conference call.
The board replaced Mr. Mulienburg as chairman with its lead independent director, David L. Calhoun. The company had been actively defending Boeing's senior leadership after two crashes of its 737 MAX jet killed 346 people. Furthermore, in April a shareholder proposal to split the chairman and CEO roles was voted down and at the time commented on their confidence in Mr. Muilenburg by stating "we think we've got the right guy."
Since that statement, Boeing has been hit hard. The 737 MAX was the company's best selling jet and one of the largest sources of revenue but now remains to be grounded after 7 months. The company has stated that they expect the plane to be operational by the end of 2019, but new problems with the plane have continued to arise, which have led to repeated delays in flights. Internal regulators are skeptical to let the plane back into the air since the automated system present in the planes contributed to both fatal incidents.
Since early March, Boeing's share price has declined by about 15 percent. Furthermore, the company announced $8 billion in costs tied to crashes. Customers have lost hundreds of millions of dollars due to the groundings, and impatience is flaring. Executives are becoming increasingly concerned about long term damage to their relationship with airlines.
Michael O'Leary, CEO of European airline Ryanair, commented "The relationship at the moment is rocky... Given that we are their largest customer in Europe, we are deeply disappointed. Our view is that Boeing has not addressed this as seriously as was warranted." Mr. Muilenburg is scheduled to testify in front of Congress at the end of the month, and the board was eager to make a move before the hearing to avoid criticism that pressure from lawmakers caused the change.
The decision to strip Mr. Muilenburg of his chairman title was the result of a long discussion on whether or not the company should hold top executives accountable for the recent performance of the company.