Boeing Ousts Top Executive as 737 Max Crisis Swells

Boeing Ousts Top Executive as 737 Max Crisis Swells


Boeing ousted one of its top executive on Tuesday, the most significant management change the airplane maker has made as it struggles to contain the crisis following the crashes of two 737 Max jets that killed 346 people.

The executive, Kevin McAllister, was the head of Boeing’s commercial airplanes division. He had been at the center of the company’s response to the crashes and its troubled efforts to return the Max to service after regulators grounded it. This month, The New York Times reported that he was under scrutiny inside the company for his poor handling of relationships with airlines, and his management of the commercial division, which is Boeing’s largest business.

The ouster was Boeing’s most direct effort to hold someone in senior leadership accountable for the bungled handling of the Max crisis, which continues to spiral out of control. The company’s board stopped short of removing Boeing’s chief executive, Dennis A. Muilenburg, though it stripped him of his title of chairman just over a week ago.

The decision to remove Mr. McAllister was made while the Boeing board met in San Antonio on Monday. With directors and senior executives gathered for tense meetings at the plant where the company builds Air Force One, Boeing’s stock took a beating. Two analysts issued downgrades and shares plummeted to their lowest level in more than three months.

The management change adds an element of volatility to the biggest crisis in the company’s 103-year-history. The Max jets have been grounded since March, costing Boeing at least $8 billion and roiling the global aviation industry.

The company is also facing intense pressure from lawmakers in Washington. On Friday, messages became public that suggested a pilot involved in the development of the Max had voiced concerns about the automated system in 2016, months before the Federal Aviation Administration certified the plane. That system, known as MCAS, was found to have played a role in the accidents.

Those messages are expected to be of central importance when Mr. Muilenburg testifies before Congress next week. Lawmakers have spent the last several days hammering the company and its board for failing to hold anyone accountable for mistakes that may have contributed to the two crashes.

“If nothing else, it gives Dennis Muilenburg something to point to when he is on the Hill,” Richard Aboulafia, vice president for analysis at the Teal Group, a consulting firm, said of Mr. McAllister’s departure. “People are calling for action. Rightly or wrongly, he can point to this as a form of action.”

Inside Boeing, Mr. McAllister faced criticism for alienating important customers and for the cascading series of delays that has kept the Max grounded for more than seven months.

The commercial division is dealing with a raft of issues beyond the Max. They include claims of shoddy production at Boeing’s plant in Charleston, S.C.; cracking on the 737 NG, the Max’s predecessor; and the discovery of foreign objects inside the KC-46 tanker, a military aircraft that the group builds.

“There were several challenging issues in the pipeline beyond the 737 Max problems,” said Jeffrey Sonnenfeld, a professor at the Yale School of Management. “He had too much under his watch that was off target to maintain credibility.”

Stanley A. Deal, who had been acting as the head of global services for Boeing, will replace Mr. McAllister immediately. Mr. Deal, who has spent more than three decades at the company, has held several senior roles throughout the company, including at in the commercial airplanes division.

“We’re grateful to Kevin for his dedicated and tireless service to Boeing, its customers and its communities during a challenging time, and for his commitment to support this transition,” Mr. Muilenburg said in a statement.

Until recently, the Boeing board had resisted shaking up senior management of the company while the Max remains out of service. Several directors also were said to be sympathetic to Mr. McAllister’s argument that he had inherited many of the problems his division was dealing with, according to people familiar with the matter.

Mr. McAllister took over the commercial division in November 2016, after much of the development on the Max was completed, but before it was certified by the F.A.A.

Boeing is facing multiple investigations and lawsuits related to the crashes, including a criminal investigation being led by the Department of Justice.

Next week is the one-year anniversary of the first crash, of Lion Air Flight 610 in Indonesia. Boeing reports quarterly earnings on Wednesday, which are expected to show further slumps in sales and profits.

Since the Max’s grounding shortly after the second crash, airlines have canceled thousands of flights and lost hundreds of millions of dollars in revenue.

The Max’s return to service has been delayed multiple times as Boeing and global regulators have uncovered new problems with the plane. Airlines do not expect the plane to fly again until next year.

Boeing has said that if the delays persist much longer, it may be forced to halt production of the Max. Such a move would represent a drastic setback for the division that Mr. McAllister oversaw, severely disrupting Boeing’s enormous manufacturing work force and its vast network of suppliers.

“The Boeing board fully supports these leadership moves,” Boeing’s chairman, David Calhoun, said in a statement. “Boeing will emerge stronger than ever from its current challenges and the changes we’re making throughout Boeing will benefit the flying public well into the future.”



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