Boeing (BA, Financial) is experiencing a slight uptick after CEO Dave Calhoun revealed plans to resign at the end of 2024. Concurrently, Board Chair Larry Kellner announced he will not seek re-election at the next Annual Shareholder meeting. Steve Mollenkopf has been elected as the new independent board chair, tasked with leading the search for Boeing's next CEO. Additionally, Boeing Commercial Airplanes CEO Stan Deal will retire, with Stephanie Pope stepping in to lead the BCA segment immediately.
Boeing has faced significant safety challenges over the past few years, beginning with the 737 MAX crashes in 2018-19 tied to its MCAS system update. Calhoun was appointed CEO in January 2020 to address these safety concerns. Yet, Boeing has encountered further issues, including a recent door blowout on an Alaska Airlines flight, prompting criminal investigations.
This management overhaul comes at a crucial time, possibly in response to dissatisfaction among airline CEOs with Boeing's safety record and its impact on operations, including schedule changes and delivery delays. This shakeup signals Boeing's commitment to addressing these concerns.
Boeing's stock has suffered due to these safety issues, dropping nearly 30% from $267.50 in December to around $190, a significant decline from the $330 mark at Calhoun's tenure's start. Despite recovering air travel demand, Boeing's shares have not rebounded to pre-pandemic levels, largely due to ongoing safety worries.
The market's reaction to these significant leadership changes has been surprisingly subdued, possibly because investors had hoped for Calhoun's earlier departure. However, with Pope assuming immediate control of the CA segment, this marks a pivotal moment for Boeing.
Initially perceived as isolated incidents, the continuous safety concerns have significantly damaged Boeing's reputation. Today's announcements reflect the company's acknowledgment of these issues and its commitment to improvement. This may involve taking more production steps in-house and prioritizing safety over speed and cost savings. The next CEO will face the critical task of restoring Boeing's safety image.
