January 13, 2020 / 10:02 AM / 14 days ago

New Boeing chief executive takes over with 737 MAX crisis unresolved

WASHINGTON, Jan 13 (Reuters) - Boeing Co’s new Chief Executive David Calhoun assumes the job Monday as the U.S. planemaker battles to recover from two fatal crashes of 737 MAX planes that killed 346 people in five months and led to the model’s worldwide grounding in March.

Calhoun, 62, a long-time Boeing director named chairman in October after the board stripped Dennis Muilenburg of the title, was named chief executive on Dec. 23 following the board’s firing of Muilenburg amid growing concerns about the company’s relationship with regulators and its handling of the MAX.

Boeing has estimated costs of the MAX grounding at more than $9 billion to date and is expected to disclose significant additional costs during its fourth-quarter earnings release on Jan. 29. Boeing faces rising costs from halting production of the MAX this month, compensating airlines for lost flights and assisting its supply chain. It is also considering raising more debt.

Calhoun, a longtime executive at Blackstone private equity group and corporate crisis manager, is already working to repair the company’s relationships with regulators, airlines and lawmakers. He previously headed a General Electric division that included airplane engines.

Last week, the board and its interim CEO reversed course and recommended regulators require simulator training for pilots before they resume flying the MAX. Directors also authorized the release of more than 100 pages of damaging internal messages that disclosed company efforts to avoid costly simulator training for the MAX amid troubling questions about its culture.

In one email, an employee said the 737 MAX was “designed by clowns who in turn are supervised by monkeys.”

A source close to Calhoun said Sunday that it was important employees saw the emails, which Boeing last week described as “completely unacceptable.”

Calhoun wants to “get rid of the culture of arrogance” at Boeing that led to the messages written by a small number of employees, and ensure staff “hold each other accountable,” the person said.

U.S. Representative Peter DeFazio, who chairs the House Transportation and Infrastructure Committee, told reporters Friday he advised Calhoun in a conversation he needs “to do something to relieve the pressure from Wall Street on your organization, which ultimately drove all this.”

Calhoun will be at Boeing’s Chicago headquarters and at its facilities in Washington State this week, the source said, talking with lots of employees.

On Friday, the board approved a $1.4 million annual salary for Calhoun and long-term compensation of $26.5 million if he achieves several milestones, including the return to service of 737 MAX.

Reuters has reported the FAA is not expected to approve the MAX’s return to service until at least February and potentially March or later. U.S. airlines have canceled MAX flights into early April or later. (Reporting by David Shepardson; Editing by Stephen Coates)

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