Boeing CEO Dennis Muilenburg’s fate Intertwines With 737 Max’s

posted on 2nd October 2019 by Eddie Saunders
Boeing CEO Dennis Muilenburg’s fate Intertwines With 737 Max’s

Boeing Co. is entering a crucial period for its grounded 737 Max jetliner and its chief executive officer.

Dennis Muilenburg’s future is inextricably entwined to that of the plane, which is nearing a key test with the U.S. Federal Aviation Administration amid a flying ban in its seventh month after two deadly crashes.

If regulators approve the aircraft to return to the skies, Boeing’s best-selling jet must still win acceptance from airline flight crews and the flying public.

Investors have been betting on Boeing’s resurgence in recent weeks, and any fresh setback for the company’s biggest source of profit would increase the murmurs for a leadership change.

“This is not about me, right? It’s about our company and what we do for our customers,” Muilenburg said in an interview when asked if he is the right person to lead Boeing through the crisis.

“I will serve in this role with everything that I have as long as the board wants me serving in this role.’’

Muilenburg, an aerospace engineer by training, has served as the company’s public face throughout the Max crisis. That’s made him a target of critics who contend Boeing was too slow to fully explain the role its flight-control software played in the crashes that killed 346 people and prompted the global grounding in March.

He will face U.S. Congress on Oct. 30, a year and a day after a Lion Air jet plunged into the Java Sea off the coast of Indonesia. An Ethiopian Airlines jet fell out of the sky less than five months later.

Inside Boeing, Muilenburg is carrying out a board-ordered revamp and adding initiatives of his own to sharpen the focus on safety.

The overhaul is “a very clear note that the board is paying very, very close attention and monitoring things,” said Jim Schrager, professor of entrepreneurship and strategy at the University of Chicago’s Booth School of Business.

Boeing has taken to heart the aerospace industry’s tradition of studying tragedies for ways to make flying safer, Muilenburg said in the interview at Boeing’s Chicago headquarters. But he reiterated Boeing’s oft-repeated refrain that there was no breakdown in the design and testing of the software feature known as MCAS that was implicated in both tragedies.

A report by the U.S. National Transportation Safety Board said Boeing classified MCAS’s risk of failure as “major,” the second-lowest of four hazard assessments. In addition, the manufacturer failed to conduct simulator testing of failure modes, like a broken angle-of-attack vane, that could potentially confuse pilots with multiple alarms.

“While that accident investigation and all the work we’ve been doing has been deep and intensive, we haven’t found anything there that I would characterize as a problem or issue we’re trying to solve,” Muilenburg said.

“Rather, when we look across what we’ve learned from both accidents, we always identify areas where we can improve.”

In addition to the board oversight panel, Boeing is establishing a new product and services safety organization, which will have sweeping responsibility including investigating concerns raised anonymously by employees.

The head of the new unit, Beth Pasztor, will report to the board’s safety committee as well as to Boeing’s chief engineer, Greg Hyslop. Muilenburg is also restructuring Boeing’s engineering corps. They will now report to Hyslop instead of business-unit managers.

According to Bloomberg Intelligence estimates prior to the grounding, the 737 program generated about 35% of Boeing’s operating profit and cash flow, and 30% of the planemaker’s revenue.

“If you’re Dennis, the program that matters absolutely the most to you beyond any other at the company is the 737,” said George Ferguson, an analyst with Bloomberg Intelligence. “You have to get that right.”

Boeing shares have rallied over the past six weeks on the first signs of the Max’s re-entry into commercial market. Since closing at $320.42 on Aug. 14, the stock has risen 17%, the best performance of the Dow Jones Industrial Average.